Who to trust when buying Property
It is said that buying a house is the biggest investment someone will make in their life. It is also noted that the process of buying and moving is one of the top three most stressful things you can do – depending on the list you read it usually rates up there with divorce and bereavement.
Given the significance of a property investment and the stress involved, it never ceases to amaze me how a property transaction appears on my desk.
In the majority of cases a signed contract turns up in the mail, or most likely in a completely unreadable fashion by fax. Some time later an email or phone call follows from the client, or potential client who has been referred my details and is someone I have not yet met, advising me they have bought a house - and by the way can we act for them.
Barring a conflict of interest the answer is of course yes, we would be happy to…but lets wind this series of events back to the start…
Given the significance of the investment it may help to engage your professionals prior to the ink being dry. While in the majority of cases a residential house purchase, or even a commercial purchase for that matter, are pretty straight forward, once you have signed an agreement – either at auction, or by negotiation – its too late to get advice as to the types of clauses you may need to add in, or what you should be looking for.
The first tip in house buying, when working out who to trust, is to remember that the real estate agent is the vendor’s agent. Nothing wrong with that - the vendor pays their fee. But as agents are commission based they are always keen to make a sale so they can put food on their table. Real estate agents, by and large, have great experience and can be very helpful assisting you to put an offer together, but in the back of your mind always remember that they act for the vendor…not you.
With recent changes to the law surrounding the conduct of real estate agents, make sure you read the Real Estate Agents Authority guides that the agents have to provide. Ask agents as many questions as you can, and write down the answers they give, although you should probably ignore any figures they give in terms of expected price (remembering that they want you to think you can afford it, so that you get emotionally connected to the property)!!
If you need building reports or inspections make sure you have enquired from the inspection company as to what they will provide you with. Each company is different and there are a range of types of inspection available – from thermal imaging companies that show moisture issues, to builders that will note down every scratch and door handle missing. Again, its best to select based on what you need – if the house is modern and you are concerned with moisture then a report with thermal photos may be ideal, but if it is an older house and you want to know about the alterations and foundations you may need to use someone else.
And as for lawyers, I would recommend you at least contact your lawyer before you buy, if only to warn them its coming!! They will be able to help you with the appropriate clauses if you have concerns, or answer any questions you may have with supporting documents. This is especially true where you are buying at auction and you need to have reviewed your LIM reports and done your homework before hand. There is nothing worse than receiving a signed unconditional contract across your desk and then having the client ask questions about the various issues they may have encountered. Too late!
One small niggle I have is pre-auction offers. Often a useful tactic to try and shed a few potential buyers as they may not have had time to do their checks and homework, but each real estate company seems to have different processes for how a pre-auction offer is treated. Make sure you ask questions as to the process and how it works. If you are not comfortable with it, seek legal advice.
We had a recent example where the agent advised that a pre-auction offer must be kept open for 48 hours for the vendor to be able to accept. Unfortunately a pre-auction offer is still an offer, and the basic rules of offer and acceptance apply – the offer can be retracted at any time prior to the communication of acceptance. If you haven’t provided separate consideration for the pre-auction offer it simply forms part of your offer and you can withdraw it if you want.
That is just one example of how seemingly “standard” procedures may actually be incorrect, so make sure you seek the advice of professionals before you commit!
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