- Proper procedures must be taken to have a smooth sailing property transaction
- Important to have correct documentation submitted on time to avoid settlement delays
- Sellers should ensure all fixtures are in working order before final inspection
Australia’s housing market has continued to boom, albeit with a slight slowdown in recent weeks. Nonetheless, properties are selling fast – but for some, the transaction may not be so smooth sailing if proper control of the process is not taken early.
Talk to your broker
According to licensed conveyancer from C&R Settlements, Claire Bull, “Potential buyers should talk to their mortgage broker about the amount of time it may take to get their finance approved before they sign a contract, as unrealistic timeframes may potentially end in the termination of the contract because finance isn’t approved by the due date.”
A common sales process will be that buyers seek finance from approved lenders, and the sellers will discharge their current mortgage. The bank is central to this process, so it is crucial to have all the relevant documentation. Failing to do so can cause issues, grinding the entire process to a halt.
Ms Bull also warns sellers that they may be in a situation where they bought the property when prices were high and banks were lending 100%.
“Now, when it’s time to sell the sale price is less than the outstanding balance on their loan. This won’t sort itself out, so they need to speak to their lender and make arrangements for the shortfall.”
Tips to avoid delays
Ms Bull provides the following tips on how to avoid settlement delays:
- Reduce the risk of delay due to bank complications by supplying all the required and correct documentation;
- Allow a realistic and good amount of time in the contract for finance approval and settlement;
- Return documents promptly, informing the settlement agent of any circumstances that may hinder the ability to complete them on time;
- Sellers should ensure all plumbing, electrical and gas fixtures are in good working order before the final inspection; and
- Be extra vigilant if the transaction is part of a chain, where your sale is subject to the sale or purchase of another property (as more factors are involved, meaning it can more easily lead to a settlement delay).
One of The Property Tribune contributors, property lawyer Jules Lewin has also provided similar advice on how to avoid the pitfalls of property buying.