Process for buying your first home in Western Australia
Buying a property is one of the biggest financial steps that you will take as a first home buyer, therefore, it is critical for you to understand your rights as a buyer and just how the home buying process works. Unfortunately, the home buying process isn’t transparent across the country as each state has their own rules & processes when it comes to buying your first home.
The 6th edition in our ‘Guide to buying your first home’ series is Australia’s largest state by area – Western Australia (WA). Below you will learn more information how the buying process works in WA. Buying a home is not only one of the largest purchases you’re likely to make, it can also be one of the best long-term investments – so it’ s important that you get it right.
Important: The below information assumes you have got a home loan pre-approval, and have done your research and found the property you are looking to purchase through a private treaty. This article is general in nature and should not be relied upon. We recommend you seek your own advice or use the services of the relevant professionals. Speak to an FHBA Coach for details.
Before signing the contract
1. Congratulations! You’ve found a property that you like as it has all the features you’ve been searching for and now you are ready to make an offer to purchase. Before submitting offers it is important you engage the services of a conveyancer/solicitor or legal representative (legal rep).
Important Tip: It is wise not to use the legal representative recommended by the real estate agent, as they have the seller’s interests in mind. It is always best to source your own legal rep, or talk to our preferred solicitors – Lawlab, who have already helped many first home buyers.
2. The standard contract for buying your first home in WA is often called an Offer and Acceptance (O & A) contract. The contract, which is prepared by the REIWA, has two equally important parts:
- The contract for Sale of Land or Strata Title By Offer and Acceptance – referred to as the O & A
- Joint Form of General Conditions for the Sale of Land – referred to as the ‘General Conditions’
When making an offer to buy a property, you state the price that you are prepared to pay for the property on the O & A Contract. Generally, the price will be the subject of negotiation between you and the seller.
Important Tip: If the contract does not include a cooling off period, you cannot get out of a contract to buy a property because you have changed your mind, therefore it is important you state the cooling off clauses in the contract.
3. You will need to indicate on the O & A Contract the amount of a deposit if any, that you are willing to pay up-front (i.e. when your offer is accepted by the seller). The amount of any deposit you offer when buying a property is negotiable between you and the seller. The deposit is usually held in the trust account of the seller’s real estate agent.
Important Tip: One of the purposes of the deposit is to show that you are serious about purchasing the property, therefore it is important to put an amount that shows you are somewhat serious about purchasing the property. If the contract does not proceed for valid reasons, e.g. if you are genuinely unable to get a home loan, the deposit must be refunded.
At the point of signing the contract
4. After you have decided the deposit amount it is important to set the finance date & settlement date, as this will provide significant protection. The finance term in the O & A Contract states that date you must get the unconditional home loan approval by. The settlement date is the deadline for all the terms made in the contract to be completed and the official date you can move into your first home.
Important Tip: Be careful when negotiating a settlement date with the seller. It is understandable that you may want to move into the property as soon as possible, but it is necessary to leave enough time before the settlement date so that you can get all the loan documents signed and sent back to the lender. It is recommended that you discuss the settlement date with your lender and legal rep.
5. If you are buying the property with someone else, you will need to provide your legal rep with the type of ownership you will have. There are two types of shared ownership; joint tenants or tenants in common.
Important Tip: Speak to an FHBA Coach to get some guidance on which option is best suited to your needs. Your legal rep is also qualified to provide advice on which type of ownership is your best option.
After signing the contract
6. As you will have time to get the checks & approvals in place, you will need to ensure you have done your checks (i.e. building & pest inspection if applicable) and obtain unconditional finance approval within this time frame. During this time, enquiries and searches are made and documents prepared by your legal rep. It is important the dates for these checks & approvals are clearly mentioned in the contract of sale.
Important Tip: It is wise to get the building & pest inspection and the unconditional loan approval as soon as possible after the contract is signed. This will allow you to save time if you don’t end up proceeding with the purchase and have to find another property.
7. Ultimately, the seller has the power to set the date of settlement in the contract of sale. The settlement period is usually 4 to 6 weeks. Keep in mind that your lender may take at least 2 to 3 weeks to confirm formal approval, issue loan documents and be in a position to settle. Furthermore, if the seller has requested a longer settlement when the contracts were signed, their demands will need to be met.
Important Tip: Once the settlement date is confirmed, make sure you have given enough notice to your current landlord (if you are renting) to ensure you don’t have to pay rent and your mortgage at the same time.
Getting ready for settlement
8. Transfer (stamp) duty is payable on the purchase of the property, regardless of whether you purchase an established dwelling or a vacant land for the purposes of constructing your first home. Your legal rep will advise you when and how stamp duty will need to be paid (which may be required before or at settlement depending on the settlement date and transaction type).
Important Tip: It is a good idea to look at the current government incentives that are available in the state of WA before starting your first home buying journey.
9. Prior to settlement, your lender will also send you the loan offer documents for you to review and sign. If a guarantor is guaranteeing the loan then they may need to obtain independent legal and financial advice before the lender can be ready for settlement. Once the documents have been received and certified by the lender, they will be in a position to advise your solicitor what funds they will be contributing the purchase, allowing your legal rep to advise if you have any remaining deposit amount to contribute to the purchase.
Important Tip: It is a good idea to get these documents signed and send back to the lender as early as possible to ensure you still have enough in case they need to be redone or re-signed. It is why we suggest you use a broker, who can guide you through this process.
10. As most lenders will require you to have an Insurance policy instated from the future settlement date, it is important you get this policy sorted well ahead of the settlement date.
Important Tip: Speak to an FHBA Coach to get an Insurance quote that is competitive and best ensures that you are covered in case something goes wrong with the property.
11. You should contact the real estate agent to arrange a final inspection of the property on the day before or day of settlement. This gives you an opportunity to make sure that the property is in the same condition as at the contract date and that any items that were in the contract are left on the premises. If there are any discrepancies, you should contact your legal rep immediately as the other party may be in breach of the contract.
Important Tip: Take the ‘contract of sale’with you to ensure you remember all the special conditions have been met.
The big day – Settlement Day!
12. On the morning of the settlement day, you should check in with your legal rep to ensure that your funds (if applicable) have been received and if the settlement will take place as planned. There is usually no need for you to attend settlement as your legal rep will attend settlement on your behalf. Once settlement has occurred your legal rep will usually contact you immediately to advise that your purchase has settled! You can then collect any keys from the real estate agent.
Important Tip: Our final tip is that you should speak to an expert before starting the process of buying your first home in WA, as there are many steps in the process and an expert can ensure everything is done smoothly.
If you want to start your first home buying journey today or if you would like a complimentary chat with a first home buyer expert, please complete the form below:
First Home Buyers Australia