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Property purchasers beware

By Louise MacCallaugh - 15 Jun 2012

Last week's announcement that the OCR will remain unchanged is good news if you're looking to purchase a new home ... provided you can find a house to buy! Reports of limited residential housing stock are rife, creating a fertile environment for vendors to achieve premium prices.  However, it is also a time when purchasers may be tempted to take additional risks in an effort to secure a property.

In this market we strongly encourage purchasers to seek legal advice before attending an auction or placing an offer on a property.  Your lawyer can advise you of potential issues with the property title and ensure that the agreement contains clauses to protect you. Remember, real estate agents act for the vendor and have the vendor's interests in mind.

Things for purchasers to bear in mind in a competitive real estate market are:

  1. Don't rely on verbal information you receive from the real estate agent or vendor. Ideally all queries relating to the property should be put in writing (eg. via email), particularly if the query relates to the quality of the house (for example has the vendor had any issues with leaks? Has the vendor carried out any repairs or other building work on the property?)
  2. If you're buying a unit or an apartment, obtain a copy of the minutes for at least the last three meetings of the body corporate. Body corporate minutes contain very valuable commentary about potential issues with a property that may not have been disclosed by the vendor.
  3. Don't rely on your bank's pre-approval letter if you have the opportunity to add in a finance condition to the contract. Most pre-approvals are conditional on the bank approving the sale and purchase agreement and your bank can refuse to lend if they are not satisfied with an aspect of the agreement.
  4. Don't rely on a pre-purchase inspection report prepared for the vendor. If the report is inaccurate, you may not have a right of recourse against the company that prepared the report for the vendor.
  5. Do your homework.  There is a lot of free information available on the internet about particular areas but nothing beats taking a drive around the suburb you're interested in and, better still, knocking on the doors of neighbouring properties to get an idea of potential problems with the house you are interested in and neighbourhood.

For more information contact Louise MacCallaugh.


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