We live in unprecedented times. How quickly all our lives have changed in the last two weeks. And yet there are still people ready, willing and able to purchase property. Here are some tips for them.
These tips are aimed at Victorian property, but they may be applicable in other States too.
Tip 1: 21 days for “subject to finance approval”
Unless you already have 100% of the purchase price as cash, ready to go, you must make any offer subject to 21 days unconditional finance approval. No more buying at (digital) auctions or unconditional offers please. All the banks and lenders are now very slow with processing new loan applications, so the safest thing is to include a 21 day finance clause, just in case. You don’t need to wait out the full 21 days if you don’t end up needing it. And please insist on not paying more than $1,000 deposit until finance is unconditionally approved first.
Tip 2: At least 60 days for settlement
The settlement period must be a minimum of 60 days. This is to ensure there is enough time for the banks to be ready to settle. Some banks, such as the Westpac Group and ANZ, are currently experiencing severe delays with the issuing of new mortgage documents. Settlement can always be brought forward earlier if everyone is ready earlier and agrees. Better to build in prudent buffer time upfront, than risk defaulting.
Tip 3: Insist on special conditions
Insist on specific special conditions to advantage the purchaser. These could include (where relevant) no land tax apportionment, and specific financial penalties (by way of adjustments to the settlement amount) if fixtures (like TV brackets and light fittings) are removed prior to settlement, or rubbish isn’t removed. Don’t, under any circumstances, let the agent draft any special conditions: insist that the purchaser’s lawyer will provide the wording to ensure it financially penalises the vendor at settlement if they don’t adhere to any customised special condition.
The power has now dramatically swung to purchasers: use it wisely - and keep well!
P.S. This is not legal advice.