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Two of the more common questions REIWA agents get asked in relation to the buying and selling process are: what happens when there are multiple offers on a property and what is the 48 hour clause?

Let’s look at these separately.

First, when a seller finds themselves in the envious position of having more than one offer on their property for sale, there is no right or wrong procedure in terms of how they might respond to that.

There is no law around this and it’s up to the seller in consultation with their agent as to how to move forward.

In this context it is important to remember that it is always a seller’s right to assume that any offer received from a buyer is their best offer.

If the seller has several offers to consider then they will probably ask the agent to inform the potential buyers that there are multiple offers and that the buyers subsequently have until a specified time to reconsider and then present their best offer.

Alternatively, the seller might decide only to negotiate with one of the offers. That may not necessarily be the highest price as the decision by the seller might also be based upon the least complicated offer. For example, a higher offer that relies on the sale of another property may not interest a buyer who is keen to sell quickly.

The ‘48 hour clause’, now more properly known as the ‘two business day condition’ is a separate issue that buyers might come across.

This clause is normally inserted when the buyer wants to make an offer that is conditional upon the sale of the buyer’s existing property, but the seller wants to continue marketing their property in the hope of receiving an unconditional offer on better terms.

This clause gives the seller the right to continue advertising their property and to negotiate with a possible second buyer.

The second offer might be for a lesser amount but may provide greater certainty for the seller.

If the seller receives an alternative offer that they wish to accept, then they must serve a notice upon the first buyer.

From receipt of that notice the initial buyer then has two business days to secure an alternative source of finance or obtain a contract for the sale of their existing property.

If the first buyer does not waive the condition of selling their own home by the termination of two business days then the contract comes to an end and they get their deposit back.

The seller is then able to enter into the other contract with the alternative buyer.

REIWA provides a standard ‘two business day’ clause for its members to use, however, buyers and sellers are strongly encouraged to fully understand its terms and conditions before agreeing to it.

 

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David Airey is president of the <a href="https://reiwa.com.au/home/default.aspx" rel="nofollow" target="_blank">Real Estate Institute of Western Australia.</a>This article was originally published on <a href="https://reiwa.com.au/Faq/Pages/Feature.aspx" rel="nofollow" target="_blank">reiwa.com</a>.

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How do I deal with multiple offers and what is the 48 hour clause? David Airey

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The Real Estate Institute of Western Australia reported recently that housing affordability has improved over the last year and that median rents have climbed by 12%.

So, for many people renting a question they are asking themselves is: “would we be better off to buy?”
Current data shows that in Perth, the median purchase price for first-home buyers is around $420,000 while metropolitan rents are around $470 per week.
Not everyone is in a position to borrow and meet loan repayments, but for those singles and couples who can afford around $580 a week at current variable interest rates, a mortgage of $373,000 will buy a very suitable unit, villa or house with its own land.
(In this example I am assuming a deposit of $20,000 and eligibility for the $7,000 first-home owners grant, so the purchase price would be $400,000.
However, there are many cheaper properties throughout WA including the metropolitan area. Some house and land packages are accessible at $300,000 or less and fixed rates can be more affordable than variable rates).
In other words, by paying around $100 more each week on a mortgage as opposed to paying rent, many tenants could transition to home ownership if that suited them and banks approved the loan.
Naturally, the bigger the deposit the smaller the loan and it’s important to keep in mind that renters don’t pay council rates, annual utility charges, building insurance and maintenance which home owners do. Buyers need to factor in about $50 per week to cover this.
The real cost of renting is not the fortnightly payments, but the loss in savings compared to accumulating equity in a home.
There are also good financial reasons to support ownership, but two key factors illustrate its benefit.
First, home ownership can be a stepping stone to increased wealth and long term financial security. Property is highly regarded by financial institutions as security for borrowing to fund a property investment, a business venture or a holiday.
It’s more difficult to borrow against other assets.
Second, home ownership opens up lifestyle opportunities. With your own place you can design and mature the garden, paint and decorate as you wish, have pets (with some strata exceptions) and generally create a home with the liberty and security that can bring.
Households which experience financial difficulty in retirement years are more likely to be living in rental properties, so investing in a home can be a better way to secure your retirement circumstances.
The early decisions you make around real estate can affect your long term outlook, but it’s strongly advisable that you discuss your plans with competent financial advisers, banks and lenders before making a decision and then approaching an agent.
David Airey is president of the <a href="https://reiwa.com.au/home/default.aspx" rel="nofollow" target="_blank">Real Estate Institute of Western Australia.</a> This article was originally published on <a href="https://reiwa.com.au/Faq/Pages/Feature.aspx" rel="nofollow" target="_blank">reiwa.com</a>.
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Is it always better to buy than rent?

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The delay in changes to the first-home owners grant (FHOG) is good news for many buyers.
Legislative changes to the distribution of the FHOG were anticipated to take effect last Sunday, however, the Western Australian parliament has not yet passed the necessary bill.
The state government announced changes to the FHOG in the August budget and was aiming for 15 September as the change-over date, but parliament has not yet fully processed this legislation so the change now looks like happening in October.
This is good news for the 70% of first-home buyers who preferred to purchase existing, older homes rather than building new.
Currently first-home buyers are eligible for a grant of $7,000 whether they buy an established home or build a new one. However, once the FHOG change takes effect the grant will drop to $3,000 for established homes and lift to $10,000 for new-builds.
The current delay in the change means that first-home buyers looking for an established property have a few more weeks to access the higher grant and, conversely, those who want to buy a block and build will be likely tohold back until the grant lifts to $10,000.

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David Airey is president of the <a href="https://reiwa.com.au/home/default.aspx" target="_blank" rel="nofollow">Real Estate Institute of Western Australia.</a> This article was originally published on <a href="https://reiwa.com.au/Faq/Pages/Feature.aspx" rel="nofollow" target="_blank">reiwa.com</a>.
 
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Good news comes in the shape of delays to FHOG changes: David Airey

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The Real Estate Institute of Western Australia has urged the state government not to consider ending the universal application of the first-home owners' grant in its upcoming midyear budget review.
Currently, the state distributes the $7,000 grant to first-home buyers irrespective of whether they are purchasing an established property or building a new one.
Some premiers in the eastern states have changed the rules for eligibility and will now only provide funds to first-home buyers who build a home or purchase a newly built one.
The New South Wales and Queensland governments recently scrapped the first-home buyers' grant for people who buy a previously lived-in property as a means to stimulate their flagging construction industry.
However, that stimulus is not needed in WA, especially when 75% of first-home buyers in this state purchase a second-hand home, not a new one.
WA is presently experiencing the strongest non-stimulatory growth in first home buyer activity in both the established and new housing sectors since FHOG was introduced in July 2000.
Now is not the time to distort the healthy recovery in the WA housing market.
First home buyer activity  is currently very strong in WA, constituting up to 30 per cent of all turnover around the state.
We are also starting to see a healthy recovery in new building activity, which has partly been led by first-home buyers now representing 25% of this new activity.
Meddling with the application of the first-home owners' grant now would greatly distort this healthy sector of the market and disadvantage three-quarters of people trying to own their first homes.
The Commonwealth introduced this grant with the purpose of it having universal application to all first-home buyers. This universality must continue in WA to keep this section of the market stable and to ensure fairness for all new buyers.
REIWA is also encouraging the state government to maintain its transfer duty exemption for first home buyers in the forthcoming midyear budget review.
David Airey is president of the <a href="https://reiwa.com.au/home/default.aspx" target="_blank">Real Estate Institute of Western Australia.</a> This article was originally published on <a href="https://reiwa.com.au/Faq/Pages/Feature.aspx">reiwa.com</a>. 
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The WA government should leave the first-home owners' grant as it is: David Airey

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Recently there has been some national media commentary about an apparent slump in the number of first home buyers, with commentators saying this is due to unaffordable prices and competition from investors.
It’s important to note that this speculation is very east coast based and bears little resemblance to what’s happening here in Western Australia. Let’s look at the facts.
When the First Home Owners Grant (FHOG) was introduced in July 2000, this mechanism became a good way to record this demographic in the market. There were 1,430 FHOG applications across WA in July 2000 and the median purchase price for established homes among entry level buyers back then was $122,000.
Thirteen years later in June 2013, there were 1,840 first home buyers paying a median price of $430,000 on established property.
After more than a decade the numbers are steadily growing despite the accompanying price growth for dwellings.
For the last couple of years first home buyers have benefited from historically low interest rates, a stable and recovering housing market and the ongoing exemption from stamp duty for homes under $500,000. They are also eligible for a $3,000 grant when buying an existing property or $10,000 if building a new one.
This combination of factors has prompted very strong first home activity, particularly through 2013.
In recent years the number of first home buyers each month has been fairly steady at around 1,500 each month. For the past year however, it was trending up with monthly figures closer to 1,600 and 1,700 applicants. In October last year there were 1,969 applicants seeking to enter the first home buyer market and in December there were 1,573.
Around 20,000 first home buyers made their move last year. The Office of State Revenue reports that the median purchase price on established dwellings for first home buyers across the state is currently $438,000. That’s up by $28,000 on the same time last year and by $43,000 on 2012.   Of course the median is only the middle price which means that half of all first home buyers are purchasing under $438,000 and there is plenty of stock under $400,000, including house and land packages.
The percentage of first home buyers as a proportion of the overall housing market has been above average for some time and last year was at times almost 30% of the whole market.
There is little evidence that first home buyers in WA are being frustrated by competition from investors, as they are weak in the current market due to soft rents. While home affordability itself has rarely been better and this is reflected in the significant numbers of FHOG applicants and swift turnover with homes under $450,000.
David Airey is president of the <a rel="nofollow" target="_blank" href="https://reiwa.com.au/home/default.aspx">Real Estate Institute of Western Australia.</a>
<a rel="nofollow" target="_blank" href="https://reiwa.com.au/home/default.aspx"></a>This article was originally published on <a target="_blank" rel="nofollow" href="https://reiwa.com.au/Faq/Pages/Feature.aspx">reiwa.com</a>.
     
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WA is booming for first home buyers, unlike the east coast

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When transferring property, stamp duty is or isn’t payable, depending on the transaction type and the family relationships of the people involved.

Conveyancing can be quite a complex area, so it’s important to keep up by checking the fact sheets at the Office of State Revenue (OSR) website.
This complexity also illustrates the benefits for people buying, selling and transferring property in using the professional services of a qualified settlement agent.
To be clear about when stamp duty is and isn’t payable, let’s look at the payment and exemption rules as they exist currently in Western Australia.
Most people are aware that eligible first home buyers pay no duty providing the sale price is under $500,000, but what about other types of transactions? What happens when ownership changes between family members even if no money changes hands?
In general, every change in ownership, with a handful of exceptions, and regardless of the consideration, will incur duty.
Not only do transfers to related parties incur duty they may also incur capital gains tax (CGT) if the property being transferred is an investment property, even if no consideration is paid.
This means that parents who add children to an existing title on the family home will incur duty.
The most common example of where stamp duty is not payable is with a family home and couples.
For example, a home may currently be owned in a husband’s name and he wishes to add his new wife as a joint tenant.
This ruling also applies to de facto couples, including same-sex couples. Stamp duty does not apply here.
If a property is owned by a family trust and it wishes to transfer the property to a beneficiary of the trust, providing certain requirements are met and all the OSR duty information requirements are satisfied, that may result in a nominal duty of just $20.
Some transfers between couples pursuant to Family Court Orders would also be exempt. The OSR fact sheet details this.
Transfers to remove persons from a title, e.g: where that person has died or as a result of a marital separation, do not necessarily incur additional duty.
If people are in the contract phase of buying property and they want to add or delete names on the title, providing the nominee is related to the original buyer this does not incur stamp duty. However, doing this after the property has settled will attract duty, so it’s important to get the timing right.
As you can see, there is almost no avoiding this payment, so it’s important to factor these costs into any property transactions you may be undertaking.
For more details go to: <a title="Office of State Revenue" href="https://www.finance.wa.gov.au/cms/section.aspx?id=209">www.osr.wa.gov.au</a>
David Airey is president of the <a target="_blank" href="https://reiwa.com.au/home/default.aspx">Real Estate Institute of Western Australia.</a> This article was originally published on <a href="https://reiwa.com.au/Faq/Pages/Feature.aspx">reiwa.com</a>.
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David Airey

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