As the buyer of real estate you may incur costs including the sale price of the property itself, stamp duty payable to the State Government, conveyancing costs and other legal fees, building and pest inspection reports, a valuation report, and costs payable to a financial institution. As a buyer who terminates a Contract under the 5-business day cooling off provision, you may have to pay a cost to the seller. The REIQ suggests the following as the main costs of buying real estate.
Price of the Property
You are able to put in an offer on a property under the advertised price - the real estate agent then presents the offer to the seller and they will either accept or reject the offer. The price that the buyer and seller agree upon is countersigned on the contract of sale.
Stamp Duty
Stamp duty is a tax imposed on written documents that record or affect certain types of financial or legal transactions.
Stamp duty is chargeable on documents or statements if they are either:
- Signed or executed in Queensland; or
- Signed or executed outside Queensland but relating to property situated in Queensland or to some act, matter or thing to be done in Queensland.
State Government's charge the buyer stamp duty when they purchase property - the percentage scale will vary according to the amount of the sale price and whether or not the buyer intends to live in the property or rent it out to tenants as an investment. Depending on the nature of the transaction, certain concessions and exemptions are available.
Your solicitor will obtain the appropriate rate. The buyer pays the solicitor the amount payable who then arranges payment to the Government authority.
Click here for the rates set by the Queensland State Government.
Legal Costs and Searches
The REIQ strongly encourages buyers seek independent legal advice before signing a Contract for Sale. The Queensland State Government's new Property Agents and Motor Dealers Amendment Act 2001 has resulted in the introduction of a raft of new forms that affect both the buyer and the seller.
Issues that need to be understood by the buyer are: the appropriateness of accepting or waiving the 5-business day cooling off period, seeking assistance with understanding the new State Government forms, the Selling Agent's Disclosure to the Buyer Statement (Form 27c) and the REIQ Contract of Sale. The buyer seeking legal advice relating to these forms is recommended.
After a buyer has signed the appropriate forms and the Contract of Sale, they are advised to undertake certain searches - these include a Title search verifying the ownership of the property, a local government building report on the legality of existing structures on the property, a local government search on the zoning of the property indicating any restrictions on the property, and encumbrances on the property easements.
Solicitor's fees are negotiable - it is advisable to compare the fees being charges by a few different solicitors. Good referrals and past experience is valuable when choosing your legal representative. It is possible for a buyer to undertake these activities on their own, however, the REIQ strongly recommends using qualified solicitors for conveyancing. Contact the Queensland Law Society for further details about how to contact a qualified solicitor: www.qls.com.au
Valuation Report
An independent valuation report on a property can be valuable to the buyer to indicate a property's true worth. Sometimes the seller will obtain this for the buyer at his or her own cost. In Queensland, contact the Australian Property Institute on Ph. 07 3832 3139 for the names of licensed valuers.
Pest and Building Inspection Reports
Buyers can make their Contract of Sale conditional on the basis of a satisfactory building and pest inspection report from a licensed professional (see the Building Services Authority website www.bsa.qld.gov.au for more information).
The cost of these can vary but it is now required under Queensland law that the Inspector must be licensed by the Building Services Authority.
Termination of a Contract under the 5-business day cooling-off provision:
If a buyer terminates a Contract of Sale at any time during the stipulated 5-business day period, they will have to pay the seller 0.25% of the property price on the Contract. There is no additional GST payable on this amount.
If the buyer has elected to waive the cooling off period provision they will not incur any cost and consequently cannot terminate a Contract.