HOME BUYER’S GUIDE Your step by step guide to buying the home of your dreams
Proudly provided as a guide to home buyers by
www.nfn.com.au
CONTENTS Introduction
2
What kind of home do you want?
4
What can you afford?
5
A few basics about home loans
6
Choosing a home loan that’s right for you
7
How to apply for a home loan
8
So now you’re ready to find your new home
8
What do you do now?
10
What should you do at an auction?
11
What do you do when your bid is successful?
12
What happens on settlement day?
13
Moving Countdown
14
Kids and Moving
18
Budget Worksheet
20
Purchase Worksheet
22
Ten essentials for the home of my dreams
24
Definition of terms
25
Understanding technical, legal and building terms
27
"Turning the home of your dreams into a reality is easier if you’re prepared."
IMPORTANT NOTICE: The content of this publication is not to be relied upon as advice. The information should only be used as an overview, as individual circumstances vary. The information may be subject to change without notice and may contain errors. You should obtain all legal, financial and accounting advice from an appropriately qualified and licensed advisor. Published by First National Group of Independent Real Estate Agents Limited. A.C.N. 005 942 192 IMPORTANT NOTICE: First National Financial Solutions is a division of Suncorp-Metway Ltd ABN 66 010 831 722. Banking products are issued by Suncorp-Metway Ltd. Various products and services are provided by different entities in the Suncorp Group. The different entities in the Suncorp Group are not responsible or liable in respect of products or services provided by other entities in the Suncorp Group.
1
INTRODUCTION Life is full of decisions: relationships, children, career and lifestyle. Buying a home is about the biggest financial commitment and decision you’ll ever have to make. However, it’s also going to be an exciting turning point, one that will almost certainly make the most impact on your lifestyle. For many it will be something never done before. Selecting the right home, in the right area, organising finance and negotiating the sale - it all sounds a little daunting. Yet it isn’t as complicated as you may think and there are many ways your First National Real Estate agent can help. This book is just the start. It will guide you through the complete process, from finding the home of your dreams through to finance arrangements and finally the move. We’ve included work sheets that will help you prioritise and ensure you find a home that will suit your needs both now and well into the future. Of course, if there is anything else you need to know, just ask. You’ll find your First National Real Estate agent happy to help. IMPORTANT NOTICE: This booklet is only an overview and is not intended to advise you as to the financial and legal implications of buying a home, but rather provide an overview of the considerations relevant to buying a home. You should obtain all legal, financial and accounting advice from an appropriately qualified and licensed adviser.
2
“This is an important and exciting time in your life and we want you to make sure it’s enjoyable and all goes smoothly”
3
WHAT KIND OF HOME DO YOU WANT?
Establish family priorities • Start an all-family member housing priority discussion before beginning to look at your options. Begin with a realistic family requirements "must list". Include every member of the family
The first step is to decide what
in the discussion, especially the kids.
kind of home will suit your
Anticipate potential changes in your
tastes and your lifestyle.
family’s lifestyle and size, children,
You’ll find First National worksheets in this booklet to save you time and help you focus on factors you may have
grandparents moving in, job changes and these days, the growing trend towards working from home. • What location will be convenient for all family members?
otherwise overlooked. They will
• Home purchases are too often based on
also serve as a reminder of your
the type of house without sufficient
priorities when you start looking
thought about schools,
at homes.
• Shops or extracurricular activities important to all household members. If there is more than one wage earner, think about the convenience and cost of both commuting to work. • Do
you
need
to
make
special
considerations for books, collections, art, clothes, seasonal storage, sports, games, hobbies and valuables. • Establish the price range you can afford to consider by completing the Budget Worksheet at the back of this book. • How long do you expect to live in the home? If it’s only for a short time, resale value may be of paramount importance.
4
Next define individual priorities
buyer’s gross income that can prudently be
• What are the privacy and needs of each
allotted for debt, based on your income or incomes.
family member? • Do some children or family members
The rule of thumb used by many lenders is
enjoy sports, hobbies, activities that
28% or 36%, which limits the sum of
require allocated space inside or outside
monthly mortgage principle, interest, tax
the home?
and insurance payments (PITI) to 28% of
• Anticipate the inevitable, short-term
the home owner’s gross monthly income
changing needs of your family. Keep in
and further limits the total of all long-term
mind that the space needs of children
debt payments to 36%.
change dramatically as children mature. Privacy and their own space become a priority especially during high school years.
Even before you start looking at homes, First National Real Estate can help by assisting you to determine both your
• Are your leisure activities based away
priorities and your potential price range.
from or around the home? • Why consider a house that requires time, money and effort to maintain if most of your free time is spent away from the home?
For more information, ask your local First National Real Estate agent. Sometimes it can be hard to get to a bank to arrange a home loan. Rather than you having to go to them, First National
What can you afford?
Financial Solutions* have a fleet of
Before you actively begin to look for a
can visit you, even after hours. As well as
home, there’s one more very important
offering highly competitive rates, our
thing you need to determine - what you
Lenders can provide all the home loan
can comfortably afford to pay for your new
help, information and advice you need.
home? The Budget Worksheet on page 20
Phone First National Financial Solutions
and 21 will help you establish what you can
on 1800 720 363
relationship lenders out on the road who
afford to pay each month. A
lending
institution
will
apply
a
Qualifying Ratio, the percentage of a home
IMPORTANT NOTICE: First National Financial Solutions is a division of Suncorp-Metway Ltd ABN 66 010 831 722. Banking products are issued by Suncorp-Metway Ltd. Various products and services are provided by different entities in the Suncorp Group. The different entities in the Suncorp Group are not responsible or liable in respect of products or services provided by other entities in the Suncorp Group.
5
No matter which lending institution you decide to consider, begin the mortgage dialogue early. You can make the home buying process a lot easier by becoming pre-approved, or at least pre-qualified, before you settle on a particular home. These terms mean: Pre-approved: Your mortgage lender has reviewed your formal mortgage application and financial records, completed a satisfactory credit check and approved you for a specific loan amount, subject to an appraisal and possibly an inspection of the home you decide to buy. Pre-qualified: Your income, employment history and your available down payment qualify you as a potentially approvable mortgagee. You will still be subject to the mortgage lender’s approval of a completed application, satisfactory credit check, home appraisal, and home inspection.
A few basics about home loans To obtain a home loan, you’ll need to be 18 years or older and have the income to meet
the
loan
repayments.
Most
institutions will lend money for a home whether it’s a flat, unit, house or land package. A number of different home loan options are available.
6
Many lenders maximum term is 30 years
Variable Rate Home Loan:
for a home loan and 25 years for a
• The interest rate is described as variable
residential land loan, however you should
because it may change during the term
consult your lender in this regard.
of the loan depending on economic
Generally, you have the option of paying your loan on a weekly, fortnightly or monthly basis depending on what suits your requirements. The more often you can make repayments, the lower the
conditions. • You can usually make your repayments monthly, fortnightly or weekly. • The maximum term is usually 30 years with many lenders.
interest cost and the sooner your loan will
• Interest is calculated on the daily
be repaid. If you hope to pay off your loan
outstanding balance of your loan and
earlier, ensure that your loan allows for
charged to your account monthly, so any
additional repayments, increasing the monthly repayment amount, or occasional
additional or increased repayments will benefit you immediately.
lump sum repayments that may be made at
• Unless the loan is paid out in the first
any time. You should also ensure that you
five years, there are seldom extra costs
can pay out the loan in full at any time without incurring any penalties. Fixed Rate Home Loans generally have charges for early repayment.
for early repayment of the loan, other than Government/Bank discharge fees. Fixed Rate Home Loan: • As the name implies, this home loan has a fixed rate of interest for a set term.
Repayments are determined by the
Terms can vary from one to five years.
amount borrowed, term of your loan and
After
the interest rate.
renegotiated for another fixed rate
which,
the
loan
can
be
period or transferred to a variable rate home loan.
Choosing a home loan that’s right for you
• Repayments also remain fixed for the negotiated term. • You may be able to choose to repay
There are two basic types of home loans
interest only or principal and interest.
available, both offering you a range of
• There may be additional costs if you opt
repayment options.
for early repayment of the loan.
7
4. Your budget
How to apply for a home loan
Use the worksheets included at the back of this book to help both you and
Call First National Financial Solutions* or your bank / lending institution and make
your lender determine how much money is available to service the loan.
an appointment to discuss your needs. It
With this information, you can discuss
is not essential to have a specific property
your options and the kind of home loan
or home in mind. The lender will give you
and repayments that are right for you.
an indication of the amount you’ll be able
Your home loan consultant can then issue
to borrow. Later, when you have found a
you with a pre-approval or pre-qualified
home,
an
certificate that states how much they are
appointment for the normal approval and
prepared to lend you for a home. With
application process. When you’re going to
this certificate, you can start house-
meet with your lender, you can speed up
hunting with confidence. It also serves to
the process by being prepared with all of
put you ahead of the race when other
the necessary information.
would-be purchasers are interested in the
simply
ring
to
set
up
same property as you are. Remember to bring the following: 1. Current employment and income records Take confirmation of details of your employment and income for the last
So now you’re ready to find your new home
three years (for example, Tax Returns, Group certificates. or a salary or wages slip). 2. List of assets Note down your assets (money on deposit in the bank, cars, investments, real estate, stocks and bonds, collections and other assets) and their values. 3. List of liabilities
You probably have an image of the type of home you would like, and you may have a list of suburbs you’re interested in. Your First National Real Estate consultant will help you by identifying your needs in relation to your new home and assisting you to find the home that will suit your family and your budget. There will be
Write down what you owe (credit
many properties on their books and even
cards, personal or car loans, charge
if they don’t immediately have "that
accounts). Credit card numbers can
special home", they know of properties
speed up the process.
coming up for sale and will often be able to fit buyer with seller without the home
8
ever appearing in their window. First National Real Estate also have an internet site firstnational.com.au which has details of many homes for sale. When there’s something
you
want
to
see,
your
consultant will arrange a visit. If you decide you’re interested, go back and take a look at a different time of day. With older houses
you
architectural
may report
want on
to
get
an
foundations,
structure, etc. Don’t forget to take the Check List in the back of this guide so you can go back to your notes and make sure it fits your needs. It’s easy to get carried away and forget what you decided on. Your local First National Real Estate office is a member of one of Australasia’s largest real estate networks. Like all First National Real Estate members, the office is locally owned and locally operated. They are a part of the community they live in so they know local values and you’ll find them a wealth of knowledge about the localities they service. The strength of dealing with a network like First National Real Estate is that your new home can be found no matter where in the world you may want to buy. Most offices have technology links that will enable you to view a potential home on the other side of the city, in another state or even another country. Ask your local First National Real Estate office for assistance or call 13 16 66 for details of your nearest office.
9
IT’S THE HOME OF YOUR DREAMS AND YOU CAN AFFORD IT. What do you do now?
Your offer is accepted Once your offer has been accepted, you
There are two ways to buying a home -
will be expected to pay the deposit as
auction or private sale (direct from either
specified in the offer document. You may
the owner or through owner’s agent).
have already paid a partial deposit or a
Offers to purchase may be made in two
‘token deposit’ (prior to acceptance of the
ways – conditional or unconditional.
offer) as a show of good faith and your
An unconditional offer means you are committed to buying the house as listed (with or without drapes, fixtures, etc.) at the price agreed without any other conditions.
intention to buy. (Of course, the balance of the deposit would be paid at a later date after acceptance.) The vendor will then sign the offer document. At this point, a ‘contract’ exists which legally binds you and the
A conditional offer means that you will
vendor. Some states have a cooling off period
buy the property only if certain conditions
that enables you, the purchaser to terminate
are met. These must be listed on the Offer
the Contract of Sale that you have entered
to Purchase. For example, your offer may
into. There are generally many limitations
be conditional on arranging finance. If
applying to this right and in any event the
finance cannot be arranged within a
vendor is generally allowed to retain a portion
certain period of time, the offer is void.
of the deposit paid. If you are unsure about
For your own protection, you should
your rights, seek advice from your solicitor
nominate a specific lender as your source
before entering into Contract of Sale.
of finance. Leaving out a nominated lender or having open-ended finance conditions on your Offer to Purchase may
Auctions may be held either at the
force
at
property, agent’s office or hotel seminar
perhaps
room. You will be given a chance to inspect
shorter terms, and from a lender you
the property usually at an open day a week
would not normally deal with. Another
or two before the auction or by arrangement.
condition might be an up-to-date survey
Laws are different in all states so you should
or soil test of the property. If the seller
contact the First National Real Estate agent
cannot do so within a specified period,
in the area you wish to purchase. They can
the deal will fall through.
advise you on how best to proceed.
you
substantially
10
Buying at Auction
to
take
higher
up
finance
rates,
Before you attend an auction, contact your
• Details of any caveats, encumbrances or
lender. It is advisable to let them know that
easements that apply to the property.
your search has been successful and you
• Details of any other interests that people
have chosen a property you wish to buy.
or organisations may hold in the
All things in order, you will have obtained
property. (For instance, road construction
a Pre-approval Certificate which is an
authorities may have plans for a new
indication of how much money you will be
highway or road widening in your street
able to borrow. Arranging this form of
or in the vicinity of the property).
preliminary financing is very important as it demonstrates your ability to repay a home loan and your sincerity to purchase.
• Details of any builder’s guarantees applying to the property. • Council permits for any renovations, additions or alterations to the property.
What should you do at an auction?
• If the property has a strata title, it is important to see the folio of the Register for the lot and common property and a copy of
Prior to the auction, it is advisable to always
the strata plan and body corporate minutes.
have your solicitor review the terms and
It is a good idea to attend an auction or
conditions of the Contract of Sale of Real
two before bidding yourself. The most
Estate. Whatever the disclosure requirements
important thing to keep in mind at an
are in your state, you should seek the
auction is your financial limit. Keep a
following information from the vendor:
cool head and bid for the property, not just against another bidder. Once you have
• Search of the title documents (which details
made a bid, it cannot be withdrawn.
the names of the owners and other aspects of the property, such as encumbrances
In some states, to bid at auction you must
and caveats).
first register with the agent selling the
• Sewerage diagram. • Full list of the annual out-goings, such as water and council rates. • The zoning of the property (zonings can
home and obtain a bidders number. To do this, you will need some form of identification e.g. a drivers license. Then when you bid, you must display your bidder number each and every time.
be industrial, rural, residential high density, residential, or if there are any
As this legislation is not applicable in all
proposals for re-zoning, consult your
states, it is advisable to consult with the
solicitor).
agent prior to the auction to determine
• Details of the mortgage (if any) currently
whether registration is a requirement.
attached to the property. 11
What do you do when your bid is successful? When your bid is successful, you will be required to pay the deposit (usually 10% of the purchase price) immediately. There are a number of ways you can have the money ready: • cash, which can be very risky • personal
cheque
with
adequate
identification • bank cheque Immediately after the bidding, contracts are signed and the deposit is paid. There is no cooling off period. You are committed to buy. There are occasions when the bidding does not reach the owner’s ‘Reserve Price’ and the house is not sold. The house is then considered to be ‘passed in’. If the house is passed in, the highest bidder usually has first opportunity to negotiate with the seller and the agent.
12
CONGRATULATIONS,YOU NOW OWN THE HOME OF YOUR DREAMS! What happens on settlement day? Settlement takes place at a pre-arranged date. It varies from state to state and could be 30, 42, 60, 90 or 120 days after the sale or auction. The following is a typical account of settlement: • The lender authorises payment of the loan money and payment is made to the vendor. • You or your solicitor authorise the vendor to collect the deposit money from the estate agent where it has been held in trust. • You
pay
adjustments
or
receive
reimbursements such as taxes, council and water rates that were prepaid by the vendor. • You receive a signed transfer of the title deed and your solicitor or bank will arrange for the Registrar General to register the transfer and the home loan. The title deeds and mortgage will be held by the lender until the term of the home loan is completed. • You pay the stamp duty on the home loan. • You have the keys and the house is yours.
13
READY FOR THE MOVE?
6 weeks before the move Discuss
costs,
packing,
loading,
delivery, and the claims procedure with your mover.
Moving Countdown
Make inventory of all of your
Planning and preparing down to the last few details will make your move easier. Following a schedule that organises tasks within a time frame will keep you on track.
possessions now determine what can be sold and what can be donated to charity. Get copies of your records from doctors, dentists, lawyers, accountants,
8 weeks before the move
etc. Make arrangements to transfer
If you are using a professional mover,
your children’s school records.
get estimates from different moving
Go to the post office and obtain a
companies and choose the one that is
change of address kit and start filling
best suited to your needs. If you are
out the cards. Don’t forget about
moving yourself, get estimates from
changing the address on magazine
truck rental companies. Be sure to
subscriptions, catalogues, etc.
reserve in advance. 4 weeks before the move Draw a floor plan of your new house. This will help you decide what furniture stays and what furniture will go.
mover do all the packing for you, arrange to have this task completed a day or two before loading the truck.
Use up things that can’t be moved such as the food in your freezer and flammable
If you have contracted to have the
household
aerosol
cleaning supplies. Contact the information office or local council in your future location and
If you need it, arrange for storage. Clean
or
repair
any
furniture,
curtains, or carpets that need it. Hold a garage sale. Use the extra cash to splurge a little on your new place.
start gathering information about
If you are moving yourself, work out
your new home town.
how many boxes you’ll need. (Many truck rental companies will provide this service)
14
Do-it-yourselves should take stock of
Make any special arrangements to
non-boxable items. Add 15 percent to
move pets, such as purchasing airline
their combined cubic feet (along with
reservations and travelling containers.
total cubic feet of boxes to be loaded) to
Consult your veterinarian about how
determine the size of truck you’ll need.
to make moving easier for your pet.
3 weeks before the move Assemble packing material
Make arrangements for new telephone service. Cancel any direct deposit or automatic
Furniture pads
payment
arrangements
Hand truck
accounts you are closing.
Packing tape
Cancel delivery services.
Bubble wrap Styrofoam "peanuts"
on
bank
1 week before the move Transfer all medical prescriptions to a
Nylon packing string and rope
pharmacy in your location.
Crumpled newspapers
If you will need a babysitter, arrange
Scissors
for moving day service.
Utility knife Large self-stick labels
Return library books and videotapes. 2 or 3 days before the move
Felt-tip markers
Defrost your refrigerator and freezer.
Boxes, boxes, boxes
Have the movers pack your shipment.
Begin packing items that you won’t
Arrange to have cash, a certified
need. Don’t pack too much weight in
cheque, or money order ready to pay
an un-reinforced box.
the driver on delivery day.
Arrange to cancel utilities and services at your old home and have them installed at your new home.
Set aside valuables and legal documents to go with you, not on the van. Pack clothing and toiletries to go with you; take a day or two’s extra clothes
2 weeks before the move
in case of delay.
Arrange to transfer all of your bank
Pack your first-day handy items box
accounts to new branch locations.
(see "Delivery Day") to go with you.
15
Moving Day Do-it-yourself movers should pick up the truck early. Make a list of every item and box loaded onto the truck. Let the mover know where you can be reached. Before you sign your agreement with the mover, read the conditions. Keep it in a safe place until your goods are delivered, charges are paid, and any claims are settled.
Masking tape Bath towels Trash bags Toiletries kit Shelf liner Check off all boxes and items as they come off the truck. Make sure the utilities are connected. Unpack kids’ toys. Be on hand to answer questions, pay the driver, give direction and examine your goods.
Check your old house to make sure you’ve turned off water, appliances etc. Inspect basement, attic, garage. Be on hand to answer questions and
Things to Do Tick When Completed
give directions to the mover. Here’s a final checklist of contacts to be Delivery Day
made:
Assemble first-day handy items: Scissors Utility knife
Financial / Legal (notify in writing) Bank (inc. children’s accounts) Building Society (loan and savings accounts)
Coffee cups Credit Union Tea kettle Age / Invalid / Repatriation Pensions Paper plates Toilet paper Instant coffee, tea, soft drinks Soap
16
(Social Security/Repatriation Departments)
Public library Life insurance company (quote policy no.) Property insurance company (quote
Pencils and paper
policy no.)
Local phone book
Car insurance company (quote policy no.)
Any other insurance (children’s accident, etc.)
Health fund
Hire purchase company
Social clubs
Credit cards (Diners Club, store accounts, etc.)
Children’s activities (Scouts, Ballet, etc.)
Car registration
Sporting clubs (whether a player or a member)
Driver’s license
Neighbours
Electoral Office (address in telephone
Relations
directory under Government section)
Friends
Local police (if you have any driving summonses,
Other
etc. pending, or if you are to be a witness in a case, etc.)
Shares & investments Government bonds Personal/Social Employers Apprenticeship Commission if one of the family is apprenticed (quote apprenticeship number)
Kindergarten Primary school
Housekeeping Newsagent (with date last paper required) Electricity department "off" at old address "on" at new address Gas company "off" at old address "on" at new address Telephone (Contact Regional Sales Office) "off" at old address "on" at new address Post office (pay a monthly fee for
Secondary school
redirected mail)
Part time, evening and correspondence
Magazine subscriptions (anything received
courses
by mail)-
Other (when children change school, you may
numbers
save wrappers with reference
need an official transfer)
Doctor Dentist Hospital (if you are an outpatient, etc.) Baby health centre
17
Here’s a good idea - make up a "Moving
Kids and Moving
Notice" and photocopy enough for your requirements. It will save time writing
Moving to a new home can be one of the
letters. Here’s a sample:
biggest changes that a family can face, especially for young children, so it is
!! MOVING WE ARE
g are leavin ary Brown n w John & M to eet, Smith 1 Smith Str e at and will b treet S n w ro 10 B ATE 0000 S VILLE T BROWNS ovember From 1st N 0000 0000 e: hon (00) New Telep
important
to
take
them
into
consideration. With sensitive planning these changes can be put into positive framework. The following are a few points to take into consideration. • Prepare your children for the move by giving them lots of information about the reasons for moving and letting them know what they can expect in their new home. • Invite children to talk about their feelings with you. • Listen to what they have to say and assure them that you understand. • Avoid being over optimistic and insisting everything will be wonderful. Even if the new home is fantastic it may still take time for them to adjust. • Try not to take it personally if your child is having trouble adjusting to the move and blames you for causing it.
18
• Try to explain that sometimes big decisions need to be made and some cannot be avoided. • Provide
emotional
support
and
understanding. • Share the feelings that you may have had during your childhood. • Don’t forget to share your feelings with someone,
adults
sometimes
need
support as well. • Focus on the positive aspects of your new
home,
neighbourhood
and
community. Remember, your local First National Real Estate consultant is part of the community you’re moving into and can assist in providing information and contacts for settling into your new area.
19
BUDGET WORKSHEET How much you can afford to pay each month/fortnight? Your Income: You
Your partner
(per fortnight/month)
(per fortnight/month)
Net Salary/wages
Money from boarders
(after tax and super is taken out)
(including family)
$ $
$
$ Net rent received
Regular overtime (after tax and super is taken out)
$
$ $
Net interest/dividends $
Part-time employment (after tax and super is taken out)
$
$
Other income (including business income, benefits)
$
$ $
$
Commission (after tax and super is taken out)
$
TOTAL $
A$
B$
TOTAL A + B = TOTAL C Transfer this to TOTAL C across
20
Your Expenditure (per fortnight/month)
Mortgage payments other than this loan $ Rent or board (if applicable) $ Credit card repayments $
Other household expenses (estimate amount for gas, electricity and water, telephone, maintenance etc)
$ Food and clothing $ Other living expenses (estimate amounts for gifts, travelling, entertainment holidays, donations, subscriptions, etc)
Hire purchase payments $ $ Other expenses - give details Repayment of other loan(s) $ $ $ Estimated motor vehicle expenses (fuel, maintenance, registration, insurance, etc)
$ Life insurance and superannuation payments $
TOTAL D $
Total fortnightly/monthly income (from above) TOTAL C $
School and childcare fees/maintenance $
Less total monthly/fortnightly expenses (from above)
Rates
TOTAL D $
$ Medical insurance
TOTAL MONTHLY/FORTNIGHTLY UNCOMMITTED INCOME
$ $ House and contents insurance $
You would use this uncommitted income to make your mortgage repayments, but don’t forget to allow yourself a sufficient amount for any unexpected expenses.
21
PURCHASE WORKSHEET Potential deposit Savings
$
Shares
$
(approx. current value)
Other investments
$
Assets
$
(approx. market value)
Other sources
$
TOTAL AVAILABLE $ FOR CONTRIBUTION Note: Combine savings, shares, etc. if this is a joint purchase.
22
The additional costs of buying a house
Lump sums you may have to pay when you move in: Insurance House
$
Valuer’s fee
$
Solicitor’s fee
$
Loan approval fee
$
Protection $
Moving costs
$
Mortgage
New appliances
$
Contents
$
Mortgage
Insurance $ or fittings
Rates
$
Bonds or establishment $
Other
$
Urgent maintenance
$
fees you may have to pay Electricity
$
or repairs
Gas
$
Other
$
Telephone
$
Real Estate agent fees
$
Other
$
(if you are selling a house and buying another)
TOTAL ADDITIONAL $ COSTS Note: You can add these costs to the amount you borrow.
23
Ten essentials for the home of my dreams 1. Number of bedrooms 2. Number of bathrooms 3. Family room 4. Style of home
5. Locality 6. Size of block 7. Garage/carport 8. Single/double story
9.
10.
24
Definition of terms What are the advertisements in the real estate pages really saying? Ac
air conditioning
Alc
alcove
Bi
built-in
Bir
built-in-robe
bics
built-in-cupboards
br
bedroom
bt
brick walls with tile roof
f tld
fully tiled
gi
galvanised iron
grge
garage
ghws
gas hot water service
htr
heater
include
including
ingr pl
in-ground pool
int
interest
intl
internal
ctl
cement tile
cnr
corner
crm
cream
crpt
carpet
kit
kitchen
cpds
cupboards
k’ette
kitchenette
dep
deposit
lge
large
det
detached
l/fitt
light fittings
din rm
dining room
liv
living
dble
double
lnge
lounge
dble fr
double fronted
ldr
lounge dining room
dbr
double bedroom
lug
lock up garage
elf
electric light fittings
mais
maisonette
elhws
electric hot water service
mstr
master
encl
enclosed
mtge
mortgage
estab
established
ext
external
oil/htr
oil heater
ofp
open fire place
fib
fibro cement
ono
or nearest offer
fitts
fittings
oyo
own your own
fl covs
floor coverings
ophws
off peak hot water system
f/furn
fully furnished
OS
Old System Title
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Osp
off street parking
ven blds venetian blinds vp
vacant possession
ped bsn pedestal basin pa
per annum
wc
water closet
p mth
per month
wi pant
walk-in pantry
p wk
per week
ww
wall to wall
pol flr
polished floor
wb
weatherboard
posn
position
wi
wrought iron
qual
quality
rec
recess
ren
renovated
rend
rendered
rc
reverse cycle
rf
roof
rm
room
row
right of way
sc
self-contained
shwr rcs shower recess
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sgle fr
single fronted
s’out
sleepout
spac
spacious
tc tile
terracotta tile
t’out
throughout
tld rf
tiled roof
tmbr
timber
tf
timber frame
TT
Torrens Title
umr
under main roof
Understanding technical, legal and building terms ADJUSTMENTS - Apportionment of rates, taxes, body corporate, rent, insurances etc. Up to the date of possession or settlement on a sale. ALLOTMENT - A small area of land sufficient for building a house. An allotment is also referred to as a building block, lot or block of land. AMORTISATION - The process of recovering, over a stated period of time, the capital investment through scheduled, systematic
AUCTION AGENCY AGREEMENT - An agreement that the vendor must sign when a property is listed for auction. Details the reserve price of the house and the costs of the auction, including advertising and the agent's commission. Usually includes a condition that one agent will have the exclusive right to sell the property for a period during and after the auction. BREACH OF CONTRACT - Breaking the terms of the contract. BRICK VENEER - A building which has brick face external walls with some other material behind, usually fibrous plaster or gyprock on a timber frame.
repayments at regular intervals. Periodic contribution sot a sinking fund to discharge a debt or make a replacement at a future date. APPRAISAL - The term commonly used in America to indicate what in Australia is termed a valuation. In Australia the term means an opinion or summation of the saleability of a property without resorting to a full-scale valuation. ASSETS - Real and personal property in which a person has an unencumbered ownership or equity and which has value. AUCTION - The selling of any property, real or personal, in public by a licensed auctioneer, who offers the property for sale, starting at a price possibly much below its value, and endeavours to persuade those present to make successively increased offers until it is knocked down to the highest bidder. A reserve price may be placed on the property by the owner and no sale can then
BRIDGING FINANCE - The need often arises for purchasers to effect settlement of a real estate transaction prior to the date that the finance becomes available. Under these circumstances it is necessary to obtain bridging finance (a temporary loan) to provide for the time gap in order to comply with the terms of the contract in regard to settlement pending the availability of the long term finance. BUILDING REGULATIONS - Laws adopted and enforced by Local Government Authorities which specify the method of construction of buildings and the nature and materials to be used, below which standards the buildings must not fall. They are designed to ensure public safety, health and the minimum acceptable society standards as to design, construction, alteration, repair and occupancy. Also referred to as Building ByLaws and Building Code.
be made below this price.
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CAVEAT - A caveat can be lodged on the Land Titles Register by anyone with a legal interest in the property, preventing the sale of the property without their knowledge. CAVEAT EMPTOR - Let the buyer beware. In real estate, in the absence of specific representations by the vendor or his agent as to the conditions of a property or the uses to which it may be put, the buyer takes the risk and must make his own inquiries. CERTIFICATE OF TITLE - The document of title to land held under the Torrens System. It consists of duplicate deeds stating the fact and extent of the interest of a person (the registered proprietor) in land held under the Torrens System. The deeds are numbered. One is kept in the Titles Office and the other is held by the registered proprietor. When the land is dealt with, a note of the dealing is made on both copies by the Titles Office. CHATTELS - Any property other than freehold land. Chattels are treated as personal property, although they are divisible into chattels real and chattels personal. CLADDING - A term applied to relatively thin sheets or slabs used to enclose a framework, e.g. imitation bricks, aluminium, etc. COMMERCIAL PROPERTY - Property intended for use by all types of retail and wholesale stores, office buildings, hotels and service establishments. COMMISSION - Remuneration of a real estate agent for services rendered, e.g. to effect the sale of property. The amount being a prescribed percentage based on the consideration of the contract or agreement.
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COMMON PROPERTY - (i) Land or a tract of land considered as the property of the public in which all persons enjoy equal rights. A property not owned by individuals but by groups. (ii) In a home (villa) unit or flat development that part of the property owned and used in common by all the unit or flat owners or occupiers and which is maintained by the Body Corporate. COMPANY TITLE - Rights to occupation in perpetuity of property based on the ownership of shares in a company in which is vested the title to the property. This was the common method of home unit ownership prior to the introduction of strata title ownership. CONDITIONS OF SALE - The conditions under which a purchaser takes property sold to them. CONTRACT OF SALE - An agreement relating to the sale of property, which expresses the terms and conditions of sale. CONVEYANCE - An instrument (ie document) which transfers property or a right in property from one person to another. CUL-DE-SAC - An access street with a blind end in the form of a turning space for vehicles. DATE OF SETTLEMENT - In relation to real estate transactions, it is the day on which under the terms of the contract the vendor is required to transfer his or her estate or interest in property to the purchaser. DEPOSIT - Non-refundable percentage of purchase price paid by buyer when contracts are signed and exchanged. Deposit must be held by estate agency or seller's solicitor in a trust account or held jointly in a trust account by seller and buyer.
DWELLING - A residence. A place of abode
FITTINGS - Those things installed by a tenant
or a structure occupied exclusively for living
for the purpose of trade, ornament or
purposes.
domestic use which may be removed without
EASEMENT - A right which a person has to
causing irreparable damage to the demised
use land belonging to another in a particular
premises or land. (Fittings may, of course, be
manner not involving the taking of any part
installed by the owner or landlord of property).
of the natural produce of that land — or of any
FIXED FLOOR COVERINGS - Wall to wall
part of its soil; or a right to prevent the owner
carpet, kitchen linoleum, vinyl tiles, etc. This
of that land from using that land in a
term does not cover loose rugs.
particular manner. The most usual easements are rights of way, easements for light and easements for the flow of water over and through another’s land.
FREEHOLD - The highest form of estate in land, and the nearest the law allows a real property owner to approach complete ownership. A freehold estate is one which is
EDWARDIAN RESIDENCE - Architectural
of unlimited duration, that is to say, it cannot
style that flourished during 1901 — 1916.
be said of an estate of freehold at the time of
Characteristics of the style include: chunky
its creation when it will come to an end.
building, solid and compact constructed out of common red bricks with bold horizontal
GAZUMPING - Where the vendor agrees to
lines at floor levels, the cornice and parapets
sell a property, but then sells it to someone
were plastered in flat planes and painted.
else or raises the price.
Verandahs were discarded and walls carried
GENERAL LAW TITLE - There are two
up to form parapets to reveal the baldness of
systems of providing title to land. One is the
the building. Cast iron in all forms was
Torrens Title System which uses government
not used.
- recorded certificates of title. The other is the
ENCROACHMENT - An unlawful gaining
very much older system under which title is
upon the possession of a neighbour. An
proved by showing what is known as a good
encroachment is usually in the form of a
root of title, that is a series of documents
fence, or portion of a building, erected by one
showing the whole of the history of the land
person upon land of an adjoining neighbour;
over a prescribed period and showing by that
or a structure overhanging the land of a
history who is currently the lawful proprietor
neighbour. An encroachment may similarly
of the land. Also referred to as; common law
occur upon a street.
title, and old systems title.
EXCLUSIVE AGENCY AGREEMENT - An
GEORGIAN ARCHITECTURE - A formal
agreement which entitles one agent only to
colonial style adapted from English design of
sell the property.
the eighteenth century; characterised by simple lines, balanced window openings, doors and chimneys.
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GRACE PERIOD - A period when a mortgage payment or other debt becomes past due, and before it goes into default. Most mortgages provide for a specified period of time when it can be paid without penalty or default. HOLDING DEPOSIT - An amount given by a buyer to the estate agent acting for the seller. It shows the buyer's serious commitment to the property, but is not compulsory and is refundable if the offer is rejected. INSULATION - A heat-retarding material applied in outside walls, top-flooring ceiling or in roof to prevent passage of heat or cold into or out of the house. Also, the process of insulating a house. INVESTMENT - Monies placed in a property with the expectation of producing a profit, assuming a reasonable degree of safety and ultimate recover of principle; especially for permanent use, as opposed to speculation. INVESTMENT PROPERTY - That real estate property which a person would invest in to get a return on money. JOINT TENANTS and TENANTS IN COMMON - Property, whether real or person, may be owned under joint tenancy or tenancy in common. Joint tenancy is ownership in equal undivided shares, state to have the technical requisites of unity of possession, interest, title and time. The most important feature of joint tenancy is known as survivorship; on the death of one joint tenant, that person’s share passes to the survivors so that they remain joint tenants of the whole. Joint tenants are regarded
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collectively as a single person in respect of their dealings with others. In the case of tenancy in common, although each has an undivided share, such share is distinct and separate. The interests need not be equal; thus ‘A’ may have one undivided third share, and ‘B’ two undivided third shares of the same property. The most important feature is that the share of a tenant-in-common may be separately disposed of during a person’s lifetime, or by will. On death it passes, not to the other tenants-in-common, but by will, or by the laws of intestacy. LAND TAX - An annual tax paid to the state government, calculated according to the value of the property. LAND USAGE - The use being made of land or the uses permitted under zoning ordinances. Zoning ordinances act to control land usage in a community by establishing building codes and set back requirements. Proper land usage attempts to assign the highest and best use to each parcel. LEASE - Possession but not ownership of a property for a set period of time. The terms and conditions are set out in a document signed by both tenant and owner. LESSEE - One who possess the right to use or occupy a property under a lease agreement. LESSOR - Property owner who rents it out. LIMITED TITLE - The Torrens Title that applies before a property has been surveyed. LISTING - The recording of properties as being available for sale.
LONG-TERM LEASE - Generally considered to be a lease agreement extending for 10 years or more. Under such leases the tenant may desire, or be required, to do extensive remodelling: or if the property leased is land, to construct a building or other improvements. MARKET PRICE - The price actually paid, or to be paid, for a property. MEZZANINE - A low-storey between two floors of a building, especially the first two floors; an intermediary floor. In a theatre, a shallow balcony between the main floor and the first balcony. MORTGAGE - A written contract giving the lender certain rights over the specific property for example, the house being bought
OCCUPANCY - Having possession of property. Physically taking and holding it and residing thereon as a tenant or owner. ON SITE AUCTION - Auction sale held on premises being offered for sale or chattels being offered at the owners residence as distinct from an auction held at the premises of the auctioneer or auction rooms. OPEN AGENCY AGREEMENT - When any number of agents may market the vendor's property for sale. OPTION - A right given for a consideration to purchase property on or before a fixed date, on terms previously agreed upon. OWNERSHIP - The right to possess and use property to the exclusion of others. PASSED-IN - If a property is not sold at
by the borrower, as security for the loan. MORTGAGEE - The source of funds for a mortgage loan and in whose favour the property serving as security is mortgaged, i.e. the person who lends money on the mortgage against some security normally real property
auction because the owner’s reserve price has not been reached, it is passed in. The highest bidder has first option to purchase at the reserve price. It is then possible to negotiate for the purchase, either on the same day or afterwards. Properties so passed in are mostly
or goods.
sold shortly afterwards at a price close to the MORTGAGOR - The owner of property who
passed-in figure.
borrows money and mortgages the property PENTHOUSE – An apartment build on a
as security for the loan. MULTIPLE
LISTING
-
A
method
of
exchanging exclusive entries for the sale of properties between real estate agents who are members of the same organisation. NEGATIVE GEARING - When the income
portion of the roof or top floor of a building. Typically, such units are larger and more luxurious than most apartments. PREFERRED LISTINGS – Entrusting the sale at least in the first instance to one agent only.
received from an investment property is less
PRIVATE SALE – An owner sells a property
than the cost of the investment, you can
without using an estate agent.
deduct this amount from your taxable income, reducing your total tax bill.
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PRIVATE TREATY SALES – An owner sells a
RESTORATION – Remodelling a building to
property using an estate agent who deals
its
directly with the buyer/s. The property is
rehabilitation.
not offered for auction.
ROW HOUSING – A group of one or two-
PURCHASE PRICE – The price paid; the
storey dwellings separated by fire rated
amount for which a property is sold.
party walls; more often known as a terrace
PURCHASER – The buyer. The one who
form;
contrasted
with
of housing.
acquires title to a property or an interest
SALEABLE PROPERTY – Property that can
therein.
be readily sold; marketable because of
QUALIFIED TITLE – An Old System Title that has been updated to the Torrens system, but which may not have been comprehensively investigated to find out all the enduring legal interests in the property.
location, demand, price or some other desirable factor. SEMI-DETACHED – Party detached. A pair of homes joined together and forming a block by themselves.
QUANTITY SURVEYOR – A person who undertakes the preparation of a statement of the quantities of material involved in the carrying out of constructional work.
SETTLEMENT – This is the final stage of the
RANCH HOUSE – A one-storey ramblingstyle home, usually having a low-pitched gable or roof line.
SOLE AGENT – An agent appointed upon
RATEABLE PROPERTY – Real estate property in respect of which there is power to impose rates.
STAMP DUTY – State governments impose
RATEABLE VALUE – The value of property on which rates are assessed.
calculated as a percentage of the property’s
REDEVELOPMENT – The development or improvement of cleared or undeveloped land in an urban renewal area.
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original
sale when the purchaser completes the payment of the contract price to the vendor and takes legal possession of the property.
their own for the sale of, or other dealings with a property. An exclusive listing.
a stamp duty, or tax, on the purchase of property. The amount of tax payable is purchase price. Only buyers pay stamp duty. STRATA TITLE – A building is subdivided and each part or unit in the building is
REDEVELOPMENT ZONE – An area of land designated by a planning scheme as an area in which the existing development is to be replaced by a new development of the kind specified in the planning scheme.
owned separately.
RESERVE PRICE – The minimum price at which the owner of a property is prepared to sell a property at auction.
approved by the council, other statutory
SUB-DIVISION – Literally a division into parts. The term is generally used in the sense of dividing land into building lots. Before the land can be sold, it must be authorities and the Titles Office, as
appropriate.
SURVEY – The measurement of a property to
VENDOR – One who sells anything. In real
confirm where its boundaries are, and what
estate transactions it is the person selling the
improvements have been made to it.
property.
SURVEYOR – A person qualified and licensed
VILLA – A term widely used in Victoria, elsewhere known as a cottage. The popular definition is a detached single-storey house.
to practice land surveying. TERRACE – A row of houses in one block with shared dividing walls. The houses are usually all built to a uniform style. TITLE – The ownership of property, or the documents constituting the evidence of such ownership. TITLE DEEDS – Documents evidencing the ownership of property that are transferred to the new owner when the property is sold.
VISIBLE IMPROVEMENTS – Those improvements which are apparent on inspection such as buildings, fences, orchards, etc. WATER CLOSET – A room equipped with toilet fixtures and facilities. WATERFRONT PROPERTY – Any property that has frontage on an ocean, river or other
watercourse.
TORRENS TITLE – This term derives its name from the late Sir Robert Torrens of South
WATER RIGHTS – A right to a definite or
Australia, who was mainly responsible for
conditional flow of water, usually for use at
originating this form of title more than 100
stated times and in stated quantities for
years ago, although he was not the author of
irrigation or for hydroelectric power
the scheme but the one who was able to put
development.
the scheme into effect. Under the Torrens system dealings and ownership of land are managed by registration with the Titles Office. TOWN HOUSE – The term is used to describe
WEATHERBOARDING – External wall sheeting formed with overlapping or rebated boards.
those residential developments which permit
WITHOUT RESERVE – An auction term
single-family construction on high cost land
signifying that the goods offered will be
by use of row houses.
sold to the highest bidder, whatever that
UNENCUMBERED PROPERTY – Property
bid may be.
free and clear of mortgages, restrictive covenants, leases, and assessments of any kind. UNIT – Each subdivided area registered within a strata title building. VALUATION – A written assessment of how much a property is worth, by a registered valuer.
ZONING – Local planning authorities control
the
present
and
future
development of land, including residential, business and industrial uses. Acknowledgment: Information provided by the Real Estate Institute of Australia (REIA), the national professional association for the real estate industry in Australia. For more information, see: www.reia.com.au
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