The Buying Process
This begins with your enquiry at an Open House and then what usually happens is –
Discussions take place as to price between you and me, the Agent present on site, and that offer is then taken to the Vendor.
Your verbal non-binding Offer is accepted, perhaps after further negotiation, by the Vendor.
Your $ offer is almost always conditional as you will say, upon at least –
(i) A Pest & Building Report
(ii) Your Conveyancer/ Solicitor looking at the Marketing Contract for Sale of Land
(iii) The obtaining of a letter confirming that “your finance is available for this particular purchase” – not just a general or “pre- Approval” approval.
Your Financier may wish to value the property and consider more details.
(iv) Any other condition you wish to nominate.
Remember that this is unenforceable until EXCHANGE – you can change your mind!.
Note: No Solicitor/Conveyancer in NSW will allow their purchaser (in the absence of written instructions to the contrary) to Exchange contracts (see below) without having the capacity to not only pay the deposit but also to complete the payment at Settlement (see below). Otherwise the deposit might be lost!
2. THE “SALES ADVICE” – A DOCUMENT SENT BY THE AGENT TO THE SOLICITOR/ CONVEYANCERS FOR BOTH VENDOR AND PURCHASER.
Upon this verbal (unenforceable) conditional $ price offer being accepted by the Vendor the Real Estate Agent for the Vendor prepares a “Sales Advice“.
That is a document that merely notes your verbal (unenforceable) conditional offer and provides details necessary for the next step.
That next step is the Vendor’s Solicitor/ Conveyancer sending the “final form” of the Contract for Sale of Land to the Purchaser’s Solicitor/ Conveyancer.
Those Sales Advices include the price, the conditions to be met, including: Pest and Building, finance letter, legal advice on the Contract, and anything else nominated.
3. SALES ADVICE DETAILS
That Sales Advice requires :
i) The Purchaser’s full name (or the Company entity they are buying the property in), full contact details including mailing address (perhaps you wish to be included as a copy), phone number, email address, and fax number if available.
ii) The Purchasers Solicitor’s/Conveyancer’s personal name, Solicitor’s/Conveyancer’s firm name, full contact details including mailing address, phone number, email address, and fax number if available.
4. THE “CONTRACT FOR SALE AND PURCHASE OF LAND”
That “Sales Advice” is then sent to the Vendor’s and Purchaser’s Solicitor/Conveyancer by the Agent.
The Vendor’s Solicitor/Conveyancer then relooks at the “Contract for Sale of Land” that we have a version of in our file.
(In NSW Real Estate Agents have to have in their file, before the commencement of marketing of the property, an “Agency Agreement” and a “Contract for Sale of Land”.
This initial draft “Contract” is referred to as a “Marketing Contract” and is only there for compliance purposes. Although it must contain the Section 149 BMCC Certificate (now called a Section 10), it may not have the “inclusions” completed (usually the blinds, light fittings, and that sort of thing), or the other Special Conditions, completed.)
The Vendors Solicitor/Conveyancer then prepares the “final version” of the Contract and sends it to the Purchaser’s Solicitor/Conveyancer.
5. THE “FINAL VERSION” OF THE CONTRACT
The Purchaser’s Solicitor/Conveyancer then receives that “final version” of the Contract for Sale of Land. Of course the Solicitor/Conveyancers of both parties may then negotiate detailed changes to some terms.
The Solicitor/Conveyancer for the Purchaser then calls their client to discuss the Contract and its details and attends to any amendments.
The Purchasers may then sign the Contract and leave it held by their Solicitor/Conveyancer pending instructions to Exchange.
6. VERIFICATION OF IDENTIFICATION (VOI)
Be aware the “Lands Titles Office” (LPI) has entirely changed the Conveyancing system. Now Verification of Identification (VOI) is required. That means you must have photo ID and other documents.
This is because the whole Transfer and Settlement process is done by the LPI electronically.
7. BEFORE EXCHANGE.
A discussion and decision should be made with your Advisors and the Real Estate Agent, as to whether Exchange is going to be by way of a “Cooling Off Period” or by way of Section 66W Certificate.
The Section 66W Certificate is preferred as the “Cooling Off” type only binds the Vendor.
Before 66W type Exchange (see below), the Purchaser will not only have had the discussion with their Solicitor/Conveyancer as to the Contract but will also have a Pest and Building Report completed, obtained the Finance Letter, and any other documents they require.
At that point there may be some further discussion as to price, if for example the Pest and Building Report has shown some real problems.
Both Vendor and Purchaser have signed the “Contract for Sale of Land” and those documents are now swapped – “Exchanged!” – and the $ deposit paid.
The Contract is now enforceable and the Purchaser becomes the “Equitable Owner” (Insurance should be considered), with your advices.
9. AFTER EXCHANGE.
After Exchange and before Settlement, the Purchasers Conveyancer/Solicitor then checks things such as the validity of the Title and any other formal matters that might go to Title.
Assuming that is all clear, the matter then proceeds to Settlement.
The Conveyancer/Solicitors for the Purchaser/Vendors agree to meet (it is done electronically now in NSW), together with the financing people, and monies and the Certificate of Title are “swapped”. The new Certificate of Title (now all electronic) nominating the Purchaser as the owner, perhaps with a mortgage registered thereon, is registered with the LPI.
Now, the former owner, the Vendor, has their money!
And THE PURCHASER has become the new registered owner in “indefeasible” Title –
None of this can be “triggered” until there is at least verbal agreement on price.