The Contract Process in Queensland Explained: From making an offer until collecting the keys!
Whether you are a seasoned investor or a first time buyer, the process of submitting an offer to purchase a property can be a daunting one. As Brisbane Buyer’s Agents we are commonly asked: How exactly do I submit an offer? And what happens if/once my offer is accepted? Below is our step-by step guide to the contract process in Queensland from making an offer until collecting the keys!
1. Request a copy of the Contract from the sales agent.
After you have inspected the property, completed your due diligence and decided to submit an offer – What is the next step? Submitting an offer is not as simple as calling the agent to tell them how much you’re willing to spend. There are also terms and conditions that both parties need to agree on.
It is always best to submit a written offer on a property (rather than a verbal offer) using a contract of sale. This ensures that both parties have a clear understanding about exactly what is being offered. A written offer also demonstrates to the seller that the buyer is serious about their intention to purchase the property.
The sales agent should be able to provide a copy of the contract including the details of the seller and property.
2. Complete the Contract with your details and the terms and conditions of the offer:
Purchaser’s full name
Make sure it is spelled correctly and include any middle names!
Make sure you know the entity that will be purchasing the property (eg individual name, joint names, company or trust). This is very important as it may be both difficult and costly to change the purchaser’s name once the contract has been executed.
Nominate a solicitor of your choice. Conveyancing is a complex process and it is best to leave it to experts.
Purchase price and deposit amounts
The amount of your offer will depend upon the value of the property, current market conditions (is it a buyer’s market, or a seller’s market), the seller’s level of motivation, how long the property has been on the market, and the level of competition. Obtaining expert advice from a buyer’s agent is important to ensure you secure the property, but don’t overpay. Your Property Hound Buyer’s Agents will prepare a detailed Comparative Market Analysis providing an independent opinion on market value, and will devise a negotiation strategy to secure the property at the best possible price.
The deposit amount is also negotiable. A typical deposit varies between 2.5-10% of the purchase price. A small deposit is usually made upfront (around 0.25% of the purchase price), and the balance of the deposit is paid when the contract goes unconditional. If deposit money is to be paid electronically, the contract should allow time for these payments to clear. Deposit money is held in the sales agent’s trust account, and cannot be accessed by the seller until settlement.
In Queensland, most contracts are subject to the buyer obtaining finance approval, and a satisfactory building, pest and pool (if applicable) inspection. The standard deadline for meeting these conditions is 14 days from the date of signing the contract, but this may be negotiable.
Settlement date is when the property ownership gets transferred from the seller to the buyer. This is the day you formally take possession of the property. The settlement date is usually expressed as a number of days from the contract date. A 30 day settlement is most common in Queensland.
Include any required special conditions
The buyer and the seller are able to make a contract subject to special conditions. These could include asking for access to the property before settlement, a due-diligence clause, and/or Body Corporate searches (if applicable).Special conditions should be drafted by a solicitor.
Read and understand all terms and conditions
If you don’t have a lot of experience with contracts, it may be worth getting your solicitor to review the contract and answer any questions. It is very important to fully understand what is being signed. Most agents in Queensland use standard contracts approved by the Real Estate Institute of Queensland and the Queensland Law Society.
Sign the contract
A contract must be signed by the purchaser(s) and their signatures witnessed (as necessary).
3. Submit the contract to the sales agent for the vendor’s consideration.
Remember that timing an offer is very important. As part of the negotiation strategy, Your Property Hound buyer’s agents will advise on the best time to submit an offer to help guarantee the best results.
4. Wait for the seller’s feedback.
After the contract has been submitted the seller may respond in a number of ways
- Accept the offer, in which case they will sign and date the contract and it becomes binding on both parties
- Decline the offer without any further negotiations
- Make a counter offer. The seller may change the purchase price and/or conditions and seek the approval of the buyer.
Once agreement is reached the contract is signed, dated and a copy is sent to both parties and their solicitors. This is usually when the initial deposit is payable to the sales agent’s trust account.
Conveyancing is the legal process required for the transfer of ownership to take place on the settlement date. The solicitor will prepare and lodge legal documents, and conduct appropriate searches/inquiries regarding the property.
7. Unconditional Contract
Once all conditions of the contract are met, the contract becomes unconditional. This means that the buyer is satisfied with their finance approval, building and pest inspection and any other conditions on the contract. Once the contract becomes unconditional, the banks and conveyancers work in the background making sure all applicable paperwork is submitted to the relevant government bodies in order for settlement to occur on the specified date. At this point the balance of the deposit is payable and contract proceeds to settlement.
It usually takes at least 14 days from the date a contract becomes unconditional until it settles. The settlement date is when the property ownership is transferred from the seller to the buyer. Settlement is attended by the representatives of the bank and the solicitor. Once settlement has occurred, the keys can be collected from the sales agent’s office.
Purchasing a home or investment property in Queensland is a complex process. Buyers are cautioned to seek the expert help of an independent buyers agent and solicitor to help guide them through the contract process in Queensland. Your Property Hound is a local expert on the Brisbane property market and provides personalised service to investors and homebuyers. Contact us for more information.