Q1: How does making an offer work?
When making an offer to purchase a property, it must be done using a formal contract document, whether through a real estate agent or a private sale. A verbal offer is not legally binding and should not be relied upon by either party. Once the offer is presented to the property owner (vendor), they can either accept the price, sign the contract, or counter with a different price. This negotiation process may continue back and forth until both parties reach an agreement to finalize the sale.
Q2: What about offers that are 'subject to finance'?
Offers can be made with various conditions, the most common being "subject to finance." This means that the sale is dependent on the buyer securing the necessary financing to proceed. Another common condition is "subject to the sale of the buyer's existing property." If the buyer’s property is not sold within the agreed timeframe, the offer can be cancelled. Similarly, if the buyer fails to obtain finance after making a genuine attempt, the vendor may choose to cancel the contract and seek another buyer.
Q3: What’s the difference between an assessment/appraisal and a valuation?
An assessment/appraisal, typically provided by a property representative, is a guide to the market value of a property based on current market trends, researching past sales and understanding the current financial climate. A valuation, on the other hand, is carried out by a licensed valuer (for a fee) and provides a detailed report on the property’s value. This formal valuation can be used when applying for financing from a lender.
Q4: What does "going unconditional" mean?
"Going unconditional" refers to a stage in the property contract process where all conditions (such as finance approval or sale of a current property) have been met, making the contract legally binding. For example, once the buyer has sold their property and secured finance, the only remaining step is to wait for the settlement date. At this point, there is no turning back, and the sale is final for both parties.
Q5: What is the First Home Owner’s Grant?
The First Home Owner’s Grant is a federal initiative aimed at helping first-time buyers purchase their first home. In Tasmania, eligible applicants who purchase or build a new home from July 1, 2016, onward may qualify for the grant. A "new home" is one that has never been occupied or sold as a residence, including kit homes.
For transactions starting from July 1, 2024, the grant amount is $10,000.
Q6: What is First Home Buyers of Established Homes Duty Relief?
First home buyers in Tasmania may be eligible for 100% duty relief on the purchase of an established home with a dutiable value of $750,000 or less. This applies to property purchases made between February 18, 2024, and June 30, 2026, inclusive.
Q14: What is the First Home Guarantee?
Under the expanded Home Guarantee Scheme, the Australian Government is offering 35,000 First Home Guarantee places each year to assist eligible first home buyers, or those who haven’t owned a property in the past 10 years. The First Home Guarantee allows buyers to purchase a new or existing home with as little as a 5% deposit through a participating lender, helping them avoid the cost of Lenders Mortgage Insurance (LMI).
Buyers can also combine the First Home Guarantee with other government programs such as the First Home Super Saver Scheme (FHSS) or state and territory first home owner grants and stamp duty concessions.
The First Home Guarantee is available for homes valued up to $600,000 in capital and regional centres, and $450,000 in rural areas.
Further information can be found: https://www.housingaustralia.gov.au/support-buy-home/first-home-guarantee
MyHome Program in Tasmania
The MyHome Program in Tasmania offers a range of options designed to assist eligible first-time homebuyers in entering the property market. Depending on your personal circumstances and the type of property you're looking to purchase or build, there are different pathways available under this program.
Co-Ownership with Homes Tasmania
Under the MyHome Program, you will be a co-owner of the property with Homes Tasmania. Your percentage of ownership in the property will depend on factors like:
The type of property you purchase or build.
Your personal circumstances, including income and the size of the home loan you can afford.
Homes Tasmania’s contribution will vary based on the purchase price of the home or the cost to build. It also depends on how much you can borrow from Bank of us, in line with the program’s percentage ownership rules. Essentially, the program is designed to make homeownership more affordable by sharing the costs between you and Homes Tasmania.
Q7: What deposit is required?
A typical deposit is around 10% of the purchase price, paid once a sale agreement is reached. This deposit serves as a sign of good faith and is held in a trust account by the real estate agent until settlement. However, the deposit amount is negotiable between the buyer and seller.
Q8: What is stamp duty, and how much will I need to pay?
Stamp duty, now referred to as "duty," is a tax levied on property transactions. It is calculated based on the dutiable value of the property, and the purchaser is responsible for paying it within three months of signing the sale contract.
For properties valued between $375,000 and $725,000, the duty is $12,935 plus $4.25 for every $100 (or part thereof) above $375,000.
For properties valued above $725,000, the duty is $27,810 plus $4.50 for every $100 (or part thereof) above $725,000.
More information on duty rates is available from the State Revenue Office at www.sro.tas.gov.au.
Q9: What is the offer and acceptance process?
The offer and acceptance process is a negotiation between the buyer and the seller. The buyer may make an offer, but the seller can either accept it, counter it, or reject it. The seller has the right to sell the property to any buyer they choose, regardless of whether other potential buyers were willing to offer more. As a buyer, it’s important not to assume there will be multiple opportunities to negotiate and to make your best offer upfront.
Q10: What is land tax?
Land tax is an annual tax imposed on the ownership of land as of July 1 each year. The tax is based on the total value of taxable land owned by an individual or group. Principal residence land and primary production land are generally exempt from land tax. For all other types of land, the owner may be liable to pay land tax unless it is exempt.
Q11: What is the 48-hour clause?
A 48-hour clause is sometimes included in contracts to protect the vendor. It allows the vendor to continue marketing the property while a buyer is trying to sell their own home. If another buyer makes a better offer, the original buyer has 48 hours to waive the condition related to the sale of their property. If they don't, the vendor can accept the new offer.
Q12: What is the cooling-off period?
Tasmania does not have an automatic cooling-off period, however the Standard Form Contract for Sale of Real Estate (2023) includes a 3-business-day cooling-off period that can be chosen by the buyer. The cooling-off period can be waived, and agents may prepopulate this section to indicate that the cooling-off period is waived.
Q13: What happens when my offer has been accepted and the contract is signed by the seller?
Once your offer is accepted, you will need to pay the deposit, which is typically held in the agent’s trust account until settlement. You will then need to fulfil any conditions listed in the contract, such as obtaining finance approval and conducting a building inspection. If the contract was subject to finance, your lender will usually arrange a property valuation. Once all conditions are met, the contract becomes "unconditional."
Q13: Settlement: Your conveyancer or solicitor will manage the settlement process, including any necessary checks and coordinating with your lender. A pre-settlement inspection is recommended to ensure the property is in the same condition as when you made your offer. On the day of settlement, the selling agent will release the keys once the transaction is complete.