Step 1 - Initial Offer (Pre-approval, Inspections, Timelines etc.)

Hi all,
My wife and I will be looking to buy our first property (PPOR) here in Adelaide in the next 12 - 24 months or so with around 500K cash as capital, and I have a few newbie questions that I hope members don't mind answering.

We will be looking to purchase a property somewhere in the 500K - 900K range (or finding a cheap knockdown to rebuild on) so is it worthwhile arranging any sort of pre-approval etc. with a bank or broker etc? I assume we wouldn't have any real issue getting finance approved fairly quickly?

What is the best foolproof method of ensuring that relevant inspections (B&P etc.) are completed to properly assess the value of a property prior to or after making an offer? Are there any other inspections other than Building and Pest inspections that should definitely be done before any purchase?

If you are keen on a property, should the inspections be done prior to putting in an offer etc. so that any works can be taken into consideration when submitting an offer or should any potential works be negotiated after the offer submission and hope for a positive outcome? How long does it take to get a B&P inspection done and how easy it to get access to the vendors property?

My understanding is that once an offer has been accepted, there is a cooling off period (48 hours here in SA) so how do you ensure that any issues are sorted and reflected in the agreed price? Obviously B&P inspections come with a cost so it is not something that you would want to do on every potentially suitable property so I would assume it is best after the offer?

What are the absolute 'must' terms that need to be included on the initial offer contract to allow for any inspections etc? Any other advice on the initial offer process would be much appreciated also.

Cheers.

 

Here is the buying process in SA:
1. Call the agent and negotiate a price you can agree on.

2. Some agents will make you fill out an offer form and if accepted go to sales contract, some agents go directly to sales contract which you sign at the bottom and initial all pages and send back to them. On the conditions section, make it subject to finance if you need (but not building and pest, see step 5). Sometimes it's best not to make subject to finance too, so that your offer appears stronger than other peoples but only do this if you're very sure you can get finance.

3. If the vendor accepts it, they'll sign the same contract and scan/copy it back to you. You'll need to give this to your conveyancer and mortgage broker (I can recommend if you need)

4. The agent will send you whats called a Form 1. This is a package of all the title searches, council/water information, encumbrances, easements etc. You need to read & sign this and return it to him. This is similar to what conveyancers do in other states but here the sales agent provides it.
5. You have a cooling off period of 2 clear full business days from when he sends you Form 1. This is when you do your Building and Pest inspection. If it comes back bad, then you can pull out of the deal utilising the cooling off period at no cost if you wish. For this reason, you don't need to put it as a conditional in your contract, because you get to exit anyway.

6. Ask the agent for his details so you can pay deposit and get a receipt. Deposit can be any amount and is not a fixed percentage like in NSW. In the past I've used $1k, $5k, $10k. Some will ask for enough to cover their sales comission, in case their vendor doesn't pay but I think its silly since its just going to sit in trust account anyway.

7. Organise finance with your mortgage broker

8. Wait til settlement (42 days is common, but can be 30, 60 or 90 depending on what you negotiate)

9. Give your favourite PM a call to arrange tenants. Possibly even during settlement so that he can line tenants up for you

 

Thanks D.T. for a very prompt reply!

Are you able to get B&P Inspections organised and completed within 2 clear business days easily?

 

Yea, never had a problem with it with any of mine.

 

Do you organise with the sellers agent the date and time etc. so that the vendor provides access to the property? Obviously it's in the vendors best interests to ensure that this can be completed promptly but what if it couldn't be organised within the the cooling off period?

 

Usually give the sales agents number to the b & p guy and let them tee it up between them. They're not going to dawdle and lose their buyer.

 

One amendment, @D.T.

 

Sorry for all the questions but then if there was to be a delay of any sort, is it in your best interests as a buyer to have something in the contract that says subject to B&P inspection, on top of the cooling off period.

Apologies if I am being pedantic but what if a vendor delays the inspection past the cooling off period either intentionally or unintentionally?

 

Only had 1 case where a client's b&p guy couldn't tee up a time with sales agent - just called a different b&p guy.

Start putting conditions in the contract and you scare the sales agents away. Adelaide ones are really meek.

What areas are you considering?

 

Looking at North of the City.....preferably North East so suburbs like Gulfview Heights, Golden Grove, Wynn Vale, Greenwith, Tea Tree Gully would be ideal...........depends on what's available really.

Wife works in the City and I work in the North East so that's the preferred areas.....

 

Is this a PPoR?

Its really not as scary as you think it is. I keep impulse purchasing properties without thinking very hard about it and it usually works out ok.

Don't buy anything with a HIA order though. Those are horrible and very hard to get rid of, I've owned two HIA houses and never managed to get either one lifted.

 

Hi Rumpled,
Yes PPOR. No, I'm not scared about doing it, I just want to ensure that I have all my ducks in a row when the time to purchase is right. Will use this forum to research and learn as much of the process as possible, as I like to be fully aware of the pro's/cons and in control of the steps involved. I have been invested previously in shares, precious metals etc. but have yet to get into property market.

Will be looking to invest in IP's in the future but priority is currently PPOR.

Not in a rush as I am happy to sit on the sidelines ATM due to current economic conditions but would like to have PPOR sorted in the next 12 - 24 months. It's my opinion only but I am expecting a major correction in all markets in that timeframe so am happy to be sitting on the sidelines with cash and PM's etc. and strike when the iron is hot. If something comes along in the near future and we like the place, I would also be happy to buy as it will be our PPOR anyway.

Excuse my ignorance but what exactly is a HIA property? I assume it is a property that has some kind of maintenance order attached to the property?

 

I'm after a PPoR too but where I want to buy, my timeframe and the prices for anything that isn't old and crap it works out cheaper to build, so that's what I'm going to do

Housing Improvement Act order placed on the property. Its a SA thing, and you assume right.

My ex-in-laws live in Newton and ex-SIL lived somewhat closer to the city in the north east in a suburb I forget the name of, which are kind of in your target area. Prices were pretty variable last time I looked but that was a while ago, some of those areas have a large discrepancy between anything old and awful (usually small house, large block, gets snapped up as a development site), nice large established houses and tiny new houses built where the old and awful ones got knocked down. I'm a bit wary of anything that was built as a development for resale, sometimes the finishes used are pretty but terrible quality.

 

Yeah, we are also very open to building (that is actually my preference) but we would prefer a block of land minimum 550 sqm but preferably 700 - 1000 sqm for a decent price. Not easy to find these days.....especially in the areas I am interested in.

That's probably the good part.....we are open to buying a block of land and building (even a cheap knockdown), buying a cheaper established property that we can modernise or buy something fancy that we can walk straight into (both of these options are my wife's preference). Hopefully we will just 'know' when the right property or land option comes along.

 

2. Some agents will make you fill out an offer form and if accepted go to sales contract, some agents go directly to sales contract which you sign at the bottom and initial all pages and send back to them. On the conditions section, make it subject to finance if you need (but not building and pest, see step 5). Sometimes it's best not to make subject to finance too, so that your offer appears stronger than other peoples but only do this if you're very sure you can get finance

Thank you for your info D.T. that is really helpful.

I'm currently looking around at houses for my first PPOR and wondering if anyone has a "template" for submitting an offer that they use to cover the above bases? Or does the offer really only need to be in a short email and then the "conditions of sale" such as subject to finance are included in the sales contract and a conveyancer is engaged at this point?

I know it's probably a simple question but couldn't seem to find the answer I was looking for through a search

.

 

Hi all.
I have read with interest this old thread, as I will move to Adelaide soon and am interested in understanding the purchase process in South Australia.
Just wondering if the procedure described by D.T. is still current, or in the meanwhile something has changed under South Australia's law.

 

Hello

The info is still current , but keep in mind the market is booming here at the moment so there is lots of competition. This compresses up the timeline on some of the steps and also means deposit in step 6 will likely be higher.

cheers
Dave

 

Thank you, Dave.
It seems you have plenty of knowledge about Adelaide.
What/where would you advise to buy a house as PPOR with a maximum budget of $800,000?
Looking for a detached house to live in, in a nice area suitable for families, and would love to have a bit of land (let's say at least 600 sqm, even bigger if possible).
I will work in the CBD or - occasionally - in the Fullarton area.

Another question: in NSW I can find the official sale price of properties on a website called "Valuer General". I can type-in the suburb and the street and the site gives me the sales of last 20 years. Here is the LINK. Is there something similar in South Australia?

 

BUMP

 

Ppor is different to investment as you have to like the area

Depends a bit on what your preferences are but in my opinion I’d look at the following to start with :

East: wouldn’t bother based on your criteria

North: Prospect or Oakden depending on if your preference is older or newer home respectively.

West: quite a few options, but scattered around - ie won’t get land criteria in most western areas but might get a nice place in a nice neighbourhood by combing through any Lockleys to North Haven.

South: inner is more desirable but not going to get land size for your budget. If you venture south west you could prob do Brighton North / Glenelg East / Seacliff (near the beach, Brighton is good school zone etc). There’s also some south eastern or outer south options that might have nice views etc but longer commute.

Not sure if there’s an equivalent for free in SA. SAILIS used to have good info like that but they started charging for it.