Hello! I hope all my readers are doing well. Today, as I write this blog, I feel like it’s something very important to discuss. I always try to focus on the main issues—not just to get great reviews on the website—but because I genuinely want my readers to be well-informed. You don’t want to miss the important details that might make you say later, “How did I overlook this?”
A few days ago, I was having dinner with my family. During our meal, I overheard a couple talking about how they forgot to read an important part of their property contract before signing it. Naturally, I was curious, so I asked them what happened. They told me they had missed reading some crucial details in the agreement and ended up signing the property document without realising it. As a result, they now have to deal with unexpected expenses—trust me, it was a lot of money!
This conversation got me thinking that this is an issue worth addressing. So, I decided to write down the key points you should consider before signing an investment property agreement.
Remember, being aware and cautious can save you a lot of trouble down the road!
After what seems like an eternity of open houses, you’ve finally found the perfect property for your requirements, both now and in the future. But now what? Many things should be carefully reviewed at least twice before finalising a deal for a new home.
Everything you need to know before signing an agreement is laid out in this handy guide.
What is a Contract?
After reaching an agreement on the purchase price of a house, a contract of sale is provided. In essence, the contract of sale is a legally binding agreement created by lawyers or conveyancers that spells forth the terms and conditions agreed upon by the buyer and seller.
When a property is sold privately as opposed to at auction, the seller must have a contract of sale written and ready for review before they may market the property for sale. In most circumstances, the contract will be written by either the seller’s solicitor, conveyancer or real estate agent.
Once both the buyer and the seller have signed the agreement, it is exchanged meaning it is now a legally binding agreement.
Who prepared the contract?
Prior to advertising their property for sale, vendors must have an agreement of sale ready and accessible for examination when selling property by private sale treaty (rather than auction). The vendor’s legal representative, real estate agent, or conveyancer will often write the contract.
After the cooling-off period has ended and the contracts have been signed and exchanged by both parties, the property is considered sold.
What does a contract of sale contain?
In a standard sales contract, the following information is included:
- The parties’ names and addresses.
- The amount and date of the purchase.
- The date of the property settlement and any pending conditions.
- The property details, including any fixtures and fittings (such as a dryer or curtains), as well as the property itself.
- If the property is off the plan, a sunset clause allows you to cancel the contract if the development isn’t finished by an agreed date.
- Whether the property is vacant or subject to a lease.
- The method by which funds are to be transferred.
- What happens in the event of a contract breach.
When should you ask for a contract?
Before you buy, you should look at the home at least twice and let the seller or their agent know you’re interested in buying. See the home at different times of the day or on different days to really get a feel for things like noise, parking, how busy the area can get, and so on. It’s important to remember that there are two copies of the contract: one for you as the buyer and one for the seller.
The price shouldn’t be on the front page of the sale deal at this point. You can either make an offer over the phone or in writing if you decide to buy the house. That information (buyer’s information, sale price, deposit amount, etc.) will be put on the front page of the contract for sale before the exchange, if you and the seller agree on the terms of the contract and the price at which it will be sold.
How to review the contract?
If you plan to buy a home on your own, you should look over the contract of sale before you start the buying process. It happens way too often that buyers look at the fine print of a property deal after falling in love with a home, only to find that the terms don’t meet their needs. Many people who want to buy a home will not read the contract until they have fallen in love with it. If the terms listed in the contract of sale can’t be changed, there isn’t much point in going any further with the purchase if the property won’t meet your needs.
Make sure you read the whole property deal on your own and write down any words, conditions, or terms that make you uncertain. It is also important to have your lawyer or attorney carefully look over the contract. After all, they are working for you. Before you sign the contract, make sure you read all of the terms and listen to any changes that your lawyer may suggest. Take your changes back to the seller if you want to make them. They will decide whether to make the changes or stand fast. You should not sign the sales contract until both of you are happy with the final terms and conditions.
Key Questions
To assist you in learning the ins and outs of a contract of sale, the following questions will serve as a basic foundation for your understanding of the contract. If you ask these questions of your real estate agent, conveyancer, or solicitor, it will be easier for you to determine whether or not the property is suitable for your needs.
- What am I going to purchase?
- Are there any particular prerequisites that must be satisfied before proceeding?
- What is the amount of the deposit?
- Date of the settlement, if you please.
- Does there exist a time of cooling off?
Get in touch with one of our lending experts or peruse ASK Financials’ selection of affordable house loans if you’re ready to take the next step towards homeownership.
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