I’m a Buyer

Is your head spinning? Whether you’re a first-time buyer or building a property portfolio, the real estate market never stops evolving. Our research room is full of information to help you make an informed decision and to try to stop the head scratching.

What is a Buyer’s Agent? How do they get paid and what role can they play to help find my ideal property?

A buyer’s agent, or buyer’s advocate, works on behalf of the buyer to provide them with impartial advice and expedite the process of buying a property.

A buyer’s agent will establish a shortlist of properties that meet the specific requirements of their client, thereby saving their buyer time by eliminating the need to look at properties that are unsuitable or outside of their budget.

A buyer’s agent will inspect selected properties with their client and negotiate the purchase of a property on their client’s behalf, including bidding at auction where required. A buyer’s agent will charge a fee for their service.

What is the estate agent’s responsibilities to the buyer?

As a buyer, you will not pay an agent for services provided in selling the property.

Buyers may deal with several agents or agent’s representatives, depending on who is handling the sale of the property they are interested in.

You can leave details with one or more agents indicating the type of property you are seeking and an approximate price range. The agent may contact you when suitable properties become available.

As a buyer, you can expect an agent to:

• take your details and provide advice about relevant properties for sale
• answer your questions about listed properties
• arrange inspections
• provide you with a copy of the vendor’s statement and contract of sale when available
• communicate genuine offers from you to the seller
• organise the signing of the contract of sale.

Source: CAV

How many homes should I inspect when looking for a property?

When buying a home, it is important to gain a comprehensive understanding of the marketplace. Therefore we suggest you inspect as many properties as it takes for you to feel that you can easily gauge whether a location appeals to you and that the property you are interested in buying represents value for money.

Leverage your time and use the internet to view properties online as a way to research the market efficiently.

For a comprehensive market analysis on the property, with details of similar properties currently for sale or in the same area, speak to your local Brad Teal team member.

What is a Section 32?

Before a property is sold, the seller must provide the buyer with a vendor’s statement or section 32.

This is usually prepared by the seller’s legal practitioner or conveyancer. It is then signed by the seller and made available to prospective buyers, usually by the agent before the sale or auction. The buyer may then have the statement checked by his or her own legal practitioner or conveyancer prior to purchase.

The vendor’s statement contains information about the property’s title, including mortgages, covenants, easements, zoning and outgoings such as rates. It does not include any information about the condition of buildings, whether they comply with building regulations or if measurements on the certificate of title (or similar documents evidencing title) are accurate. It is the buyer’s responsibility to find out about anything not covered in the vendor’s statement.

The information that must be included in the vendor’s statement is outlined in section 32 of the Sale of Land Act 1962. This can be viewed online at the Victorian legislation and parliamentary documents website.

The vendor’s statement is a legal document and must be factually accurate and complete. If the vendor’s statement contains false, incorrect or insufficient information, a buyer may be able to withdraw from the sale or take legal action.

Source: CAV

Making an offer - how does it work?

In order for an offer to be legally binding, the offer for the purchase of a property should be made on a formal contract document, irrespective of whether the offer is via a real estate agent or directly with a seller (the vendor). A verbal offer is not legally binding and should not be relied upon by either party.

When an offer is submitted to the vendor, they have several options. A vendor can agree to the offer price and terms and sign the contract. If the offer is not acceptable to the vendor, the vendor can amend the price and/or terms and return it to the buyer for further consideration. This is known as a counter offer. This back and forth process may continue until both parties are happy and agree to the terms of the sale. Where both parties cannot reach agreement on the offer price and/or terms, the parties will walk away from the deal.

Can I submit an offer with a “subject to” clause eg: 'subject to finance?'

Yes, you can offer to purchase a property subject to various clauses.
Common clauses include: subject to the sale of the buyer’s existing property within a prescribed timeframe, subject to finance or subject to a building and/or pest inspection.

Where an offer is submitted subject to a clause and that clause falls through, depending on the nature of the clause the buyer or the seller may have the right to exercise their option to exit the contract.

For example, if the buyer’s offer is subject to the sale of another property, commonly the family home, the offer may be terminated by the buyer if their property is not sold within an agreed timeframe. Likewise an offer, made subject to the purchaser obtaining finance for the purchase, may not proceed if the purchaser is unable to secure the necessary funding.

What deposit amount is required?

In Victoria, the deposit paid is generally 10% of the purchase price. However the deposit amount payable is open to negotiation by both parties.

The deposit is paid by the purchaser as a sign of good faith. The deposit is usually paid to the real estate agent (on behalf of the vendor) and kept in the trust account of the real estate office handling the sale of the property. At settlement, the deposit is applied to the overall purchase price.

What is a Vendor bid?

A vendor bid is a bid made by an auctioneer on behalf of the vendor, when conducting an auction of a property.

Only the auctioneer can make a vendor bid and only when the auction rules allow it. On auction day, the auctioneer will include this statement in his or her preamble before asking for an opening bid from the crowd.

As or before each vendor bid is made, the auctioneer will state that he or she is making a vendor bid, then state the amount of that vendor bid.

The property was passed in at auction. The reserve price was a lot higher than the price range advertised. Isn’t this illegal?

No. In many instances a reserve price is not known until the day of the auction. It may then change, depending on the strength of the bidding.

If a vendor will not divulge their reserve until shortly before or at their auction, and an agent wishes to give intending bidders an indication of the possible range within which the property may sell, the agent’s estimate of the selling price may be used in pre-auction advertising.

The vendor is entitled to set a reserve of their choice and does not have to adopt the agent’s estimate. If, however, the vendor’s reserve is known prior to the auction, the advertised reserve, or price indicator published by the agent, must not be less than the vendor’s figure.

Source: REIV

A property sold at auction for a price much higher than the advertised range. Isn’t this illegal?

No. The amount offered for a property at auction is determined by the bidding.

If there is competitive bidding, it is always possible a property may sell for a figure higher than the advertised range.

Source: REIV

What is the first home owners grant?

The First Home Owner Grant provides eligible first home owners with a one-off payment. Some lenders will help to arrange the First Home Owner Grant application for you.

Eligibility criteria and application forms are available from the State Revenue Office website.

Source: CAV

What is an owners corporation?

If you buy a unit, flat or apartment, you will be provided with your own certificate of title. However, you are not just purchasing the individual property but also the shared ownership of, and the right to use, common property as set out by the plan of subdivision.

Where a plan of subdivision creates common property, there must be an owners corporation. The owners are referred to as lot owners or members.

As a member of an owners corporation, you have the right to vote on decisions about its operation. You will be required to contribute to costs for repairs, maintenance and insurance for the common property shared with the other lot owners.

Before buying, make sure you carefully check:

• the cost of being a member of an owners corporation
• how the owners corporation operates, including whether it uses an owners corporation manager
• the vendor’s statement
• the owners corporation certificate, attached to the vendor’s statement, which states whether there are any proposed works, fee increases or potential or existing legal claims affecting the property
• the plan of subdivision, to determine lot boundaries and common property
• the contents and conditions of the contract of sale
• the owners corporation rules
• any leases or licences of common property
• minutes of previous annual general meetings.

Source: CAV

What does Buying off the plan mean?

Buying a house or unit before the building works have been completed is known as buying off the plan. In some cases, construction may not have started whilst in others it may only be partially built. The design of the building and sketches of its final appearance may be included in advertising material well before occupation is possible.

People are often attracted to off-the-plan sales as there is a reduced amount of duty (formerly stamp duty) to pay. The amount depends on how advanced the construction of the building is and its current value. If construction is close to completion, the duty is likely to be higher. You can get more information about duty by visiting the State Revenue Office website.

Other benefits for buyers include more input into the design and a price at today’s market value that is locked in at the time the contract is signed.
Buying off the plan without being able to observe the finished product has risks, including:

• being unable to inspect the actual property. You have to rely on an artist’s impression, floor plan and advertising material for information about what you are paying for
• differences in the expected and actual quality of the final finishes
• unexpected changes to the plans or specifications
• an uncertain completion date
• complex contracts
• limited recourse with the builder if there is a dispute. This is because the developer, not the buyer, enters into a major domestic building contract with the builder
• property market volatility causing the value of an off the plan home at settlement to be less than the contract price.
If you buy off the plan and the plan of subdivision is not registered, the law protects you by requiring that the deposit is no more than 10 per cent of the contract price.

Source: CAV

Do I need to organise a professional building inspection

Before signing a contract, consider paying an independent qualified building inspector, surveyor or architect to do a professional building inspection report on the property. A qualified inspector will know what to look for and will see through any cosmetic improvements covering up faults that may otherwise be missed.

The inspector will provide a written report listing faults, whether they can be repaired and the likely cost. The report will also highlight any unsafe renovations or extensions.

You may be able to use this report to negotiate conditions in the contract – and possibly the price – with the seller. The inspection service should have full professional indemnity insurance to protect you, as the buyer, if a problem is missed in the inspection.

Source: CAV

What does ‘Passed in’ mean

If bidding does not reach the seller’s reserve price, then the property may be ‘passed in’.

The highest bidder then has the first right to negotiate with the seller.

What happens to the deposit?

The deposit is generally paid by the buyer to the seller’s agent. This happens either when the buyer makes their offer or by the date stated in the contract of sale. The deposit is held by the seller’s agent, conveyancer or legal practitioner, in a trust account, until settlement.

A seller who does not have an agent and who receives a deposit must pay it to their legal practitioner or conveyancer, or bank it in a special purpose account in an authorised Victorian deposit-taking institution. The account must be in both the seller’s and the buyer’s name.

In certain circumstances, the buyer may release the deposit money to the seller before settlement. In this case, the contract must have become unconditional and the buyer must be satisfied with the proof of debts information – that is, a statement by a seller detailing any mortgage or any other loans relating to the property. When this occurs, the deposit can be released no earlier than 28 days after the date the contract was signed.

Source: CAV

Do I need to carry out a final inspection on the property I am buying?

Yes. When you are buying a property, one critical step prior to settlement taking place is to do a final inspection or walk through of the property. The purpose of a final inspection is to ensure that the property is in the same condition as it was when you signed the contract of sale.

Take along with you a list of things to check. Ensure any fixtures and fitting included on the contract are still present, eg: a particular dishwasher in the kitchen or curtains in the bedrooms. Be sure to check that the property was not damaged by the previous occupants when they moved out.

What is settlement date?

The settlement date is the date on which the balance of the purchase price is paid to the seller in exchange for the property title.
This is an official process conducted between legal and financial representatives of the buyer and seller. The settlement date is also the date on which the buyer can take possession of the property, unless otherwise arranged.

At settlement all outgoings such as rates and other charges will be adjusted between the seller and the buyer. The seller is responsible for rates up to and including the day of settlement. The buyer is liable from the day after settlement.

Source: CAV

Can't find the answer to your question? Email us and we'll find you the answer.

YOUR GUIDE TO BUYING AT AUCTION

Buying a property at an auction can be a nerve-wracking or exhilarating experience (and can often be both!).

A proven and popular method of property sale in Victoria, the auction process allows the market to determine in a very transparent and clear way the value of each property.

Major overhauls of legislation regarding the conduct of real estate auctions and the rights and responsibilities of all parties were introduced in 2004 and 2008, when the Victorian Government introduced changes to the legislation pertaining to the conduct of real estate auctions. This page outlines these changes and answers some frequently asked questions.

How to bid at an Auction Video
What is a vendor bid?

A bid made on behalf of the vendor (the owner of the property), not a buyer. A vendor bid can only be made by the auctioneer, who must declare to bidders that the bid is being made on behalf of the vendor.

How many bids can a vendor make?

There is no restriction but best practice is to keep to a limit of one or two vendor bids.

What is a reserve price?

The price at which the vendor is prepared to sell the property. This price may fluctuate over the course of a campaign and is often set by the vendor on the day of the auction.

What does ‘passed in’ mean?

The bidding has not reached the vendor’s reserve price and the property is not sold.

If the property is ‘passed in’, who gets the first opportunity to buy the property?

The highest bidder has exclusive rights to negotiate with the vendor at the completion of the auction. If the highest bidder does not purchase the property, the vendor’s agent is then at liberty to negotiate with any genuine buyer.

If the property is ‘passed in’ on a vendor bid, what happens then?

The vendor’s agent is at liberty to negotiate with any genuine buyer.

Do I have to register prior to bidding at an auction?

Not in Victoria.

What is a genuine bid?

All bids are genuine. There are vendor bids and buyer bids. There are strict penalties for ‘dummy’ bids.

Do I need to pay a 10% deposit if I buy on auction day?

Yes. If the contract calls for 10%, or if the vendor agrees to a lesser amount by prior arrangement.

Must I sign the contract on the day of the auction if I buy? Yes. To buy on the day you must sign a contract and pay a deposit.

Yes. To buy on the day you must sign a contract and pay a deposit.

If I am not the highest bidder, can I make an offer after the auction?

No. The law prohibits late bids. Once the property has been announced ‘sold’ by the auctioneer, no other offers are taken.

Can I cool off if I buy under auction conditions?

No. The law states that there is no cooling off at a public auction.

Auction Rules

Brad Teal Real Estate is a member of the Real Estate Institute of Victoria (REIV) and conduct all auctions in accordance with the institute guidelines.

By law, the auctioneer must advise the following at the commencement of an auction:

1.  Today’s auction will be conducted in accordance with the rules in Schedule 1 of the Sale of Land Regulations 2004 and any additional conditions that were made available for inspection before the start of the auction.

2.  The auction rules permit the making of bids on behalf of the vendor.

3.  The law prohibits the making of vendor bids other than by the auctioneer.

4.  During the auction, the auctioneer will say, “VENDOR BID”, when making bids on the vendor’s behalf.

5.  The auctioneer will indicate bidders on request.

6.  The law prohibits a person from falsely claiming or falsely acknowledging that he or she made a bid.

7.  The law prohibits an intending bidder or a person acting on behalf of an intending bidder from intentionally preventing or causing a major disruption to the auction.

8.  The law provides for substantial penalties for any person who engages in prohibited conduct.

REIV Auctioneer Statements at Public Auctions Required under the Sale of Land (Regulations) 2004

Due Diligence Check List

Due diligence checklist – for home and residential property buyers

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Need Finance Help

Whether you’re looking for a loan for a new home, an investment property, or simply refinancing your existing loan, Teal Financial can help.

The service is provided at no cost to you and Teal Financial can conveniently arrange appointments at a time and location that suit you. Teal Financial will listen, then source a loan that best meets your individual circumstances. By dealing with lenders on your behalf Teal Financial are often able to negotiate discounts on fees and rates. Teal Financial have no alliance with any particular lender, so you can be confident their advice is impartial and in your best interest.

Visit: the Teal Financial website or contact registered mortgage broker Dylan Morris on 0418 945 425 or email dmorris@tealfinancial.com.au

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Is your head spinning? Whether you’re a first-time buyer or building a property portfolio, the real estate market never stops evolving. Our research room is full of information to help you make an informed decision and to try to stop the head scratching.

What is commercial real estate?

Commercial real estate refers to property used solely for business purposes. It generally consists of offices, restaurants, petrol stations or retail shops. The term “commercial real estate” may also be used to refer to industrial real estate.

What is industrial real estate?

Industrial real estate generally refers to property used for manufacturing and production and usually consists of factories and warehouses. The term “commercial real estate” may also be used to refer to industrial real estate.

How are sale assessments of industrial and commercial buildings calculated?

Similarly to how a commercial rental is calculated, factors such as location, size and quality of the building are considered. The potential sale price of the property is then calculated using a number of conventions. These may include analysis of comparable sales and replacement costs or, where a property is leased, an analysis of the Capitalisation of Net Return.

How could zoning or planning restrictions affect my intended use?

Use of any land and buildings is controlled by Planning Schemes and zoning as set out by both local and state governments. Where any intended use is not permitted under these rules, the relevant local authority can require you to stop operating. Therefore it is important to understand any planning or zoning rules that apply to any particular property prior to making a commitment to either purchase or lease a property.

Zoning and planning schemes define the sorts of activities that may be undertaken at or within a particular property or land. In Victoria, the common zones in use are Industrial 1, Industrial 3 and Commercial 2 which apply to most types of manufacturing or warehousing. Special zones may also apply, as may mixed use, retail, commercial, residential, heavy chemical or petrochemical use zoning.

Each zoning type will attract general or special conditions of operation, so be sure to check with your local authority. Further, even where the zoning appears to be suitable, be sure to check for any restrictive covenant on the land or buildings that may limit their use. A restrictive covenant will be registered on the Certificate of Title and is a private written agreement that restricts the use or development of the land. It is designed to be for the benefit of the landowners. For example, a developer may restrict the use and development of lots within a development at the time the land is subdivided, to benefit or protect other lots within the development. Other examples include a restriction on the type of building materials to be used in housing construction or when building a commercial building.

What does a special condition mean in a commercial real estate contract?

When a commercial or industrial property is being sold, a buyer can make the purchase subject to certain conditions. Any special condition must be met before the buyer is legally bound to complete the sale. Failure to meet a special condition allows the buyer the option to exit the contract without penalty. Examples include a sale being subject to a building or pest inspection, a buyer successfully securing finance

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