The work doesn’t stop when the auction hammer falls and a sale price is agreed. This is the business end of selling your home. Now is the time to get your paperwork in order, finalise your finance and prepare to move. Find out everything that you need to do in the lead up to settlement day.
Once a property is sold, the next step is paperwork. First is conveyancing. It’s the process of transferring legal ownership of a property from one person to another and is required in every real estate purchase in Australia. It can only be done by licensed conveyancers and solicitors. The conveyancer or solicitor prepares a contract of sale for the property, which includes details of the owners, title, settlement dates, all conditions, what’s included in it, as well as the zoning certificate and sewer diagrams. The exchange of contracts is the formal legal process that creates a binding contract for the sale on agreed terms. The seller and buyer each sign a copy of the sale contract and exchange these documents, making the contract legally binding. Cooling off periods can apply.
So, what happens on settlement day? Settlement is the final stage of the sale, when the buyer completes the payment of the contract price to the vendor and takes legal possession of the property.
Cooling-off periods exist in most states and territories to allow buyers to back out of a sale at either no cost or only a small percentage of the sale price. How long this period lasts and what it will cost the buyer who backs out varies from state to state. For example, in Victoria, a buyer has three days to make this decision, at a cost of either $100 or 0.2% of the sale price, whichever is greater. In New South Wales, it’s five days at a cost of 0.25% of the sale price. Cooling-off periods don’t apply to auctions and there are other exemptions that vary between the states.
If you’re like most Australians, you’ll be selling your property before the mortgage has been paid off. You will have to arrange payment of the outstanding amount on your loan before settlement takes place. Arranging this can sometimes take a few weeks, so it’s important to start this process with your lender as soon as possible in the settlement period. While the process is straightforward if you’re selling for more than you owe, you should, if possible, avoid the situation where the sale price will not cover the outstanding amount on your loan. In this case, the lender can recoup the amount by asking you to provide it out of your own funds, which can include the sale of assets.
While the conventional wisdom is that it’s safer to sell a home first, then buy another, as it reduces your risk and means you don’t have to get bridging finance, it’s possible to do both at the same time, but it all comes down to research. You have to know the markets you’re buying and selling in well and work closely with your agent on both sides, as well as your lender, to pull off simultaneous property transactions, which are popular in spring. It all comes down to research and preparation. While it’s not common, in a rising market, it’s also possible to buy first and sell second. If the property you’re selling is desirable and will have a high level of demand, there’s no reason you can’t look to buy first.
You’ve sold and now it’s time to move on. While the idea of moving house strikes fear into the hearts of most, sparking memories of lifting heavy furniture and not being able to find toilet paper at the new place, it doesn’t have to be super-stressful. It all comes down to planning and taking advice from a few experts.
Here’s some advice from those in the know.
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