Dealing with an estate agent

Dealing with an estate agent

Although you can buy and sell property directly, most people will deal with an agent.
Laws govern the licensing and conduct of agents. These laws prohibit unethical practices such as misrepresentations about property including the price, location, size and dummy bidding at auctions.
Licensed estate agents and agents’ representatives
A person or company acting as an estate agent, advertising that they are carrying on the business of an estate agent or who holds themselves out as being ready to act as an estate agent for payment must be licensed as an estate agent in Victoria.
An agent’s representative must meet prescribed eligibility requirements and be employed by a licensed estate agent who is responsible for the conduct of the agent’s representative.
Only deal with a licensed agent or an authorised agent’s representative. To check whether someone is a licensed agent or an agent’s representative, contact the Business Licensing Authority on 1300 135 452 or search the public register of licensed agents on the Business Licensing Authority website.
Take your time
Never rush or be pressured into making hasty decisions. There is a lot of money at stake and you will be paying your mortgage off over many years. Make sure you are committing to the right property for you.
Thorough research can save you time and money – for example, you can avoid pitfalls like costly and time consuming building and planning issues.
Consider a building inspection
Before signing a contract of sale, consider engaging an independent qualified building inspector, surveyor or architect to provide a building inspection report.
The fee for a professional inspection service is small compared with the cost of buying a property that needs unforeseen repairs. A qualified inspector will know what to look for and will see through any cosmetic improvements that cover up faults.
The inspector will provide a written report listing:
•    faults in the property
•    whether they can be repaired
•    how much these repairs are likely to cost.

You may be able to use the report to:

•    negotiate the price and contract conditions with the seller
•    develop a maintenance program if you decide to buy.
Use an inspection service with full professional indemnity insurance. This will protect you if the inspection misses a problem that must be fixed.
Read before you sign
While buying or selling you will come across different types of contracts such as loan contracts, authorities to sell and contracts of sale.
Ensure you understand all terms, conditions and fine print. Make sure anything agreed to verbally is put in writing so you know exactly what you are committing yourself to.
Make sure you read and fully understand what you are signing, before you sign it.
If something is unclear, ask for an explanation. If you are still uncertain, it is better to wait and seek professional advice before signing. You should keep a copy of all documents you have signed as a record.
Foreign investors
If you are enquiring about buying property in Australia and you are not an Australian citizen or permanent resident, contact the Foreign Investment Review Board – visit the Foreign Investment Review Board website for more information.
Definitions
For the purposes of this guide, the:
•    vendor or owner of the property being sold is referred to as the seller
•    mortgagee is referred to as the lender
•    mortgagor is referred to as the borrower
•    purchaser is referred to as the buyer.
You can find further definitions in the Glossary, later in this document.
Finance
Buying a property is a significant and ongoing financial commitment. As a buyer, you should spend time working out exactly what you need and can afford.
Get your finances in order before you start looking for a property. For help to make smart choices about your personal finance, visit the Australian Securities and Investments Commission MoneySmart website.
Choosing a lender
Choosing the right home loan is as important as choosing the right home. Researching and understanding the home loan market will help you to choose the most appropriate loan for you.

The main types of lenders are:

•    Banks
•    Building societies
•    Credit unions.
Mortgage brokers act on behalf of lenders.
There is intense competition amongst lenders who offer a variety of packages, options and methods of payment. The loan that appears to be the cheapest because it has the lowest interest rate may not necessarily be the cheapest in the long term when fees, ongoing charges and penalties are included.
The cheapest loan may also be less flexible and have fewer extras than other loans.
Speak with several lenders about your circumstances to work out the best type of loan. You can ask them to justify the rate, fees and method of repayment. Take into account what each lender is offering when making your decision.

Most lenders will approve a loan in principle (‘pre-approval’), allowing you to be confident of your spending limit. Pre-approval is only valid for a limited period and needs to be renewed after this period.

Pre-approval does not guarantee loan approval. The lender still needs to make additional enquiries into your financial standing before approving the loan.
You should speak to your lender about what pre-approval means.
Typically there are three areas that lending providers look at when approving your loan:
•    how you will service the loan
•    what equity you will have in the property
•    your credit rating.