Buyers Guide to a successful Settlement

Buying a property is a huge achievement in a person’s life, the process can be long and stressful at times but the prize at the finish line is all worth it!

The buyer’s first step for a successful settlement is to recruit a strong team of competent advisors that will show support throughout the process. Doing this will ensure that everything will go smoothly and help reach the best outcome possible. It’s also important for the buyer to be educated on what is involved in settlement and this is what we will be discussing today.

Firstly, let’s cover what actually is settlement. It is when the ownership of a property is legally passed from a seller to the buyer. Here are the final steps in the lead up to the final settlement date.

A last look at the property

On settlement the property should be exactly how described in the contract. The final inspection should take place close to the settlement date as possible and with the seller’s agent present always, this is also known as the pre-settlement inspection. The property should be in the same condition as it was as it was initially viewed, during this inspection you should take the time to ensure that all appliances, plumbing are in good working order. It is a good opportunity to check if any conditions have been met that were required by the contract, for example, if there was a condition for the property to be professionally cleaned, you would check this. Likewise if there was a plumbing repair, you would check this has also been completed. Make sure you raise any issues that are required by the contract to the selling agent.

It is important that the buyer fully understands what is included in the contract and the sales agent should clarify any concerns the buyer may have.

touch base with settlement agent

A good settlement agent will ensure that any caveats on the property have been lifted prior to settlement to ensure that a change of ownership may occur. However, this is something the buyer can question to ensure the settlement will go ahead. 

When touching base with the settlement agent, you can confirm that you were happy with the final inspection or alternatively, there are items the seller needs to address. 

Once you’re with the settlement agent discussing these final points, it is a good time to bring attention to the following point.

Arrange payment

The buyer’s settlement agent is generally responsible for holding the remainder of the purchase price until the date of settlement which then is paid to the seller.

All the rates and other property charges will be adjusted between the buyer and seller by the conveyancer. Up until the settlement date, the seller is responsible for all rates etc, however once the settlement has been confirmed, the responsibility goes to the buyer.

Don’t forget taxes

 The settlement agent will have informed the buyer of taxes triggered by the transfer of property, these include stamp duties and the GST. State and territory stamp duty is imposed on some transfers of land and dealing with interests in land. Stamp duty is paid by the buyer at settlement. How this is calculated can be a question for the settlement agent, who should be able to break it down for the buyer.

For example, if you purchase a home for $300,000 in WA, the stamp duty would cost $8,835.00. Here is the link to calculate the stamp duty for the sale.
https://reiwa.com.au/advice/calculator-tools/stamp-duty-calculator-wa/

Anticipate surprises

The buyer should be ready and prepared for any surprises that may occur up until settlement. Generally the first category a ‘surprise’ will fall under is a financial block and the other category is a failure to remove a condition.

If either buyer or seller is unable to go forward on the date of settlement, an extension or grace period can be implemented to ensure the contract remains sound. On some occasions, the seller’s problem may be a tenant that fails or refuses to vacate. However, this can be avoided if the contract is written correctly.

Get the keys

Once settlement has been confirmed and processed, the conveyancer will notify all parties. Then it’s the buyer’s responsibility to collect the keys. In some cases, it’s important to make sure the buyer received all the codes for security devices and remote for garages etc.

Once you’ve undertaken these steps as part of settlement, congratulations the property is yours.