Buying a property, whether as an investment or as a place to call home, is a team sport. Given the complexity of real estate markets and the nature of the transaction itself, there are a number of different professionals that you could, or should, call upon. As purchases get more complex and if you move into development or other more complex strategies, there maybe other professionals that you need. For this article however, I’ll focus on a standard residential purchase.
So, let’s move through the transaction and find out who you need at each touch-point.
Starting the property search
The first professional that most buyers seem to call on is the bank, or increasingly a mortgage broker. With the share of new mortgages being written by mortgage brokers now at more than 50% and climbing, they are increasingly an important part of the property landscape. Personally, I always use brokers to source my loans. I’ve dealt with banks previously, and to my mind, the support given by brokers and the access they provide to different loan products makes it a simple decision. Finding a good mortgage broker is key, and it’s worth spending some time with them to make sure they understand what your goals are.
If you’re thinking beyond this property and are looking at creating a portfolio, it’s important that this is discussed. This may impact the type of loan you choose and help define the features you need in a loan. Brokers will help you with things like borrowing capacity, organising a pre-approval and a good one will help you understand if a potential property you’re looking at will be looked at favourably by the bank. For a little more on this, I’ve written a dedicated post addressing this issue.
But….arguably the very first person you should call is your property savvy accountant. They’ll help you understand the best way to hold the property, whether it’s in a personal name or a different structure and help unpack what plans you have for the property. Spending a little time upfront with your accountant is critical, though often overlooked in my experience. Given the high costs of stamp duty, and considerations such as how investment income will be taxed as well as potential capital gains tax issues, it may well be the most valuable phone call you’ll make. It’s a non-negotiable as far as I’m concerned.
I’ve found a property, now what?
Hopefully, by now you’ve identified a good solicitor or conveyancer that you’d like to work with. If not, now’s the time! Many solicitors and conveyancers will offer a service where they will review a property contract for you, for free or a nominal fee, if you state you’ll be using them if you secure the property. I always get my solicitor to review a contract before I make an offer on a property. Even though property contracts can look similar on the surface, it’s important you understand the fine print and that the different conditions are explained to you. They’ll also help you craft any terms that you’d like added to the contract.
You may or may not be buying subject to a satisfactory pest and build inspection, or any other number of other due diligence requirements. Regardless, however, it’s important that you consider engaging a qualified pest and building inspector, as well as purchase a strata inspection report if you’re looking at purchasing a strata property. Depending on the results of these reports, you might also need to engage other professionals such as structural engineers, or other specialised inspectors. If you’re looking at anything to do with major renovations, sub-divisions or developments, a qualified town planner is also going to be a crucial part of your team. For properties that you’ll need to do some work on, it’s important to also canvas a few builders or tradesmen to get some quotes on work that you might need to undertake, now or into the future.
Whether you do these inspections prior to making an offer or during the due diligence period will depend on the state you’re buying in and the nature of the transaction. There is a cost involved in each, and obviously there’s a risk of spending money on reports for a property that ultimately you won’t end up purchasing, but these should be looked at as a cost of doing business. Each property is different, and the checks and reports needed for each may differ. However, it’s really important that you don’t try to save a few dollars here and skimp on getting the proper reports done.
We can’t forget insurance. Depending on the state, the responsibility for who is responsible for insuring at what stage of the property sales process differs. Suffice to say however, it’s best to speak to your solicitor prior to signing any documents to double check what insurances you’ll need. In some states the insurance is required at settlement, while in others it’s a requirement that the buyer has it in place at exchange. A good insurance broker can also be of assistance here to help decide what insurances you’ll need.
My offer has been accepted, now what?
During the cooling off phase (if applicable) and the settlement phase, you’ll be working closely with your chosen conveyancer or solicitor, and the mortgage broker (or directly with the bank if you chose that route). The cooling off period may also be the time that you do your checks, depending on the state you’re buying in and the conditions of sale.
The solicitor will walk you through the legal aspects of the purchase and recommend certain checks are performed, and the mortgage broker/bank will handle the formal side of getting the finance arranged. The settlement period can differ from state to state, and can be set as part of a negotiation, however the standard in NSW is 42 days. Whilst most of the work will be handled by the professionals on your team, it’s important to stay in touch. Keep the phone on, and advise them if you’ll be away (eg overseas) so they can make arrangements if need be.
If you’re looking to move into the property, it’s a good idea to speak to utilities companies as early as you can, to ensure you’ll have things like electricity and gas when you move in. I missed this step once, it wasn’t a fun experience! I’ve previously used Direct Connect, though there are many other providers out there that can help you, or you can approach each service provider directly.
If you’re looking to rent the property out, now is the time to start interviewing some property managers. I find speaking to at least three is preferable. My advice is to not focus solely on price, but to really get an idea of what you get for your money. You need to understand how they work with tenants, how you’ll get paid, what systems and software they use, and really understand what it is that sets them apart. Remember, they’ll be managing your asset that is worth hundreds of thousands of dollars, so focus on value, not price. In the future I’ll be writing an article on this subject, so stay tuned.
Finally it’s worth a call to a Quantity Surveyor, to get a depreciation report completed, or to at least understand if one will be beneficial for you. This is only relevant if you’re looking to rent the property out.
It’s settled, anything else to do?
OK, so you’re now the proud owner of your new property! Nothing more to do, right? This is where we tie up loose ends and make sure nothing is missed. Review the settlement documents provided by your conveyancer or solicitor, and double check the transactions that are listed are all accounted for in your bank statements. Double (triple!) check that all the required insurances are taken care of…and then pop open the champagne.
The key to buying a property is to be prepared. Finding professionals that you can work well with will make your life substantially easier, and allow you to be confident that you’re ticking all the right boxes. Regardless of if you’re buying a place to live or purchasing an investment property, the sums involved are large and it’s important that you engage the right professionals along the journey.
Is there anyone else I need?
Well….it would be remiss of me to not mention Buyer’s Agents in this list! As professional Buyer’s Agents, we work exclusively for the buyer. We help tilt the property landscape in the favour of our clients, and help them navigate the entire purchase, that is, everything mentioned above, and more. If you’d like to chat to us about how we an help you purchase a place to call home, or to get you an investment grade property, email us or drop us a line to have a chat.
This isn’t an exhaustive list, and you’ll need to make your own enquiries to ensure you don’t miss anything, but hopefully it’s a good start to get you thinking about which professionals you’ll need to use to ensure a smooth property purchase.
Please note: the above information and analysis does not constitute financial advice in any way, and it should not be relied upon. It’s important that you seek guidance from licensed professionals, who can provide advice based on your individual needs. No investment decision or activity should be undertaken on the basis of this information without first seeking qualified and professional advice.
