What are your rights as a first home buyer?
If you are ready to take the plunge into buying your first home, you may be wondering, after the last few years of increasing property prices, if now is the right or wrong time to get yourself on the property ladder.
Why not consider buying an apartment instead of a house? Perth offers many ready-to-move into apartments in great neighbourhoods close to public transport and amenities. These can be very attractive and sometimes affordable options for first home buyers.
Next, you need to research your rights. See below on what your rights are as a first home buyer.
1. First Home Owner Grant (FHOG)
As a first-time buyer, you may be eligible for the First Home Owner Grant (FHOG) of $10,000 to go towards the purchase of your new home. You may qualify for the grant if you are purchasing or building a new home. A home that has been substantially renovated may be considered a new home, however the grant is not available for the purchase of an established home or for renovations to an existing home.
2. First Home Buyer Assistant Account
You can also apply through the Department of Mines, Industry, Regulation and Safety (DMIRS) for the grant from the First Home Buyer Assistant Account which reimburses you for some incidental expense that come with the purchase of a new home, including mortgage registration fees, solicitor and/or conveyancing fees, valuation fees, inspection fees, establishment fees, mortgage insurance premiums and lending institution fees. If you meet the criteria, you may receive a grant of up to $2,000.
3. Make an offer
So, you have found a home you love that is within your budget, you can now make an offer! It is important to note that whilst you may make the initial first move by calling up the agent and making a verbal offer, a verbal offer is not binding until you present it in writing. The agent will help you prepare a written offer that will be presented to the seller. A binding contract will not come into place until both parties sign, and there will most likely be some back and forth before the final offer is accepted.
4. Withdrawing an offer
As a first home buyer, you have the right to redact your offer prior to the seller accepting.
5. Make a counteroffer
If your seller comes back with another offer, say they want to go higher, it is your right to reject their offer or present a counteroffer and meet somewhere in the middle. Using the skills of a REIWA buyer’s agent will give you a great advantage during the negotiation process, which can be the most stressful part for first home buyers. During this stage of the process, it is important to only make one offer on one property at any time.
6. Subject the offer to finance
Depending on your financial situation, you have the right to make the offer subject to finance approval. Prior to making an offer, it is wise to determine if you will qualify for a loan and how long a finance application will take to be processed. This date will need to be added by you to the contract as the latest date for finance approval. Alternatively, you also have the right to submit a cash offer if you have the money available.
7. Choosing the settlement date
As a first home buyer, you have the right to submit a settlement date that works for you. Of course, the seller can accept or deny this date. For example, if you are currently renting and need to stay in your rental until the agreed end of lease date, then you will need to keep this in mind when putting down a settlement date on the contract.
Normally, the settlement date is about 28 days after finance is approved, however be sure to check with your bank as to the period that should be allowed for.
If the seller puts down a settlement date that doesn’t quite work for you, you also have the right to negotiate this, however it may risk them pulling out of the offer if the date is not flexible.
8. Special conditions
You can add any special conditions to the contract if you wish to. For example, you may put down that the seller must provide building approvals or fix the broken door before the settlement date. The seller will need to accept these special conditions.
9. Final inspection prior to settlement
Remember you are buying the house in the state and condition it was in immediately prior to making the offer. This is the state and condition it should be in at settlement. The purpose of the final inspection is to ensure the property is in the same condition it was in when you made the offer. Make sure that you are thorough with the final inspection as it is your right to purchase the house in the same condition it was at purchase.