If you’re a first-time buyer in Tasmania, it’s important to understand that the process involved in buying a house can be quite different from other states of Australia. However, with the right guidance, you can avoid common pitfalls and make the experience much smoother.
That’s why we’ve put together a guide on how to purchase property in Tasmania, which includes valuable insights on the buying process and useful tips and advice on purchasing property in Hobart, Tasmania.
Want more information? Feel free to call us for a chat and we’d be happy to talk you through the most important things to consider before you start on your property journey – Contact Us.
How Property is Sold In Tasmania
There are two main ways to buy a property in Tasmania – via Auction or Private Treaty.
Private Treaty – Private Treaty is by far the most common sale method in Tasmania. Properties are usually listed with an asking price or a guide price (e.g. “best offer over $x”). Depending on the level of competition amongst buyers the property may achieve a sale price well above the guide and this was often seen in the peak of the market in 2021-2022. Now that the market has cooled, eventual sales prices are more inline with the price guide being provided.
There are other variations of the Private Treaty method including a set tender or expressions of interest campaign which often have a deadline for offer submissions. These are less common in Tasmania, and usually reserved for more unique properties.
Auction – Although not overly popular in Tasmania, auction sales are slowly increasing. The benefit to purchasing at auction is that it is a very transparent process, and it is easy to establish the interest levels from other buyers. With the contract for sale being exchanged (signed) on the day of the auction it is very important to have done all the necessary checks on the property prior to bidding (contract and title review by a conveyancer, finance approval, building inspection etc.)
Process for buying property in Tasmania
Preparation – before you start the search
Before you start the search ensure that you have spoken with your broker or bank and obtained finance preapproval. This will ensure that you are focussing your search at the right price point.
Also be very clear on your requirements, including location, condition, size, style etc.
searching
Most properties for sale in Tasmania will be advertised on www.realestate.com.au and www.domain.com.au. It is also a good idea to find out who are the key agents selling in your search areas and follow them on social media. They will often list previews of properties before they are listed on the key real estate portals.
Inspecting Property
In a fast-paced market, rather than waiting for the scheduled open home, it can be a good idea to contact the agent and try to inspect the property prior. This way, if you like it, you will have more time to get yourself ready to submit an offer.
Pre-offer Due Diligence
In Hobart, it is usual practise to make an offer via a signed contract, so it is very important that you understand the document you are In Hobart, it is usual practise to make an offer via a signed contract, so it is very important that you understand the document you are signing. The property title should be reviewed by a conveyancer or solicitor so that you can be aware of any burdening easements or covenants. They are also able to do further checks on the property to see if any red flags are raised and assist you in adding clauses to the contract that can provide you further protection.
In Tasmania, a vendor is not required to provide any warranty against the property, so it is important that you discuss possible implications with your conveyancer and ways to minimise your risk.
You can also consider having a building inspector view the property prior to offer submission, to assess the condition of the property and any current or potential issues. Alternatively, you can make your offer subject to a building inspection by using the standard condition in the contract and selecting a defect limit.
This means, if the building inspector finds defects that will likely cost more than the defect limit to remedy, you can rescind from the contract without penalty.
Most agents in Hobart will suggest 2% is a reasonable defect limit, however others will encourage a far higher limit. This is your choice, and you must feel comfortable with the defect limit you choose.
Price Guides & how much to offer
There has been a lot of talk in the market in Tasmania about agents using “bait advertising” and low-price guides to generate additional interest in a property. New guidelines were included in the industry Code of Conduct in January 2022 to try and prevent this behaviour. Ultimately, the selling agent (in conjunction with the vendor) will decide their pricing strategy and there is a lot of variation between agents. Some agents will guide far more “fairly” and display the guide price at a level that the vendor will consider selling. Others may still set price guides low to draw in more buyers and generate competition.
To try and prevent you from wasting your time on properties that have been underquoted, be sure to ask the selling agent questions about what the vendor is expecting. Having a good knowledge of the market, and what comparable properties have been selling for will help identify those properties that are likely being “underquoted”. Remember, if it sounds too good to be true, it probably is.
Deposit
Wondering how much deposit you need to have to purchase a property in Tasmania? The standard deposit amount when buying a property in Tasmania is 5-10% of the purchase price. It is possible to offer less than this but if your chosen amount is too low, it may detract from your offer. A higher amount signals to the selling agent and vendor that you are a genuine and qualified buyer. The deposit amount is usually due 3 business days after signing the contract and is held in the agents trust account until settlement.
Offer Submission
How do you submit an offer on a property in Tasmania? Most agents with have slightly different ways of managing this process and it is important that you ask questions and understand how they will handle things. Is there other interest in the property? Will they put a time deadline on offer submission? Will you only be given one chance to submit an offer, or will you have a chance to increase your offer? In Tasmania, agents generally do not share information about other offers, so it can be difficult to know how much to offer to secure the property (if there is interest from multiple buyers). Education is key and understanding how much comparable properties have sold for will help you decide what is a fair price for the property.
As mentioned above, most agents will request your offer on a signed contract for sale. This document needs to outline the below information
- Purchasers’ details (full name and address)
- Offer Amount
- Deposit amount – standard amount is 10% but less can be negotiated
- Proposed settlement date
- Conditions of your offer – the most common conditions are finance approval and a building inspection
Cool-Off Period
The Standard Form Contract for Sale of Real Estate in Tasmania (2023) allows for a cooling off period of 3 business days. Note, that this can be waived by the purchaser and quite often the selling agent will prepopulate this field to select to waive the buyers right to the cool off period. In a “seller’s market” there will certainly be a tendency for vendors and selling agents to lean towards accepting an offer that has waived the cool off period. This is because there is less risk of the buyer pulling out of the contact. Ultimately, it is up to be buyer to decide whether to include the cool-off period in the contract, but important to remember that it may detract from your overall offer.
After Your Offer is Accepted
You will be required to pay the deposit which is generally held in the agents Trust Account until settlement. The contract will outline when the deposit is to be paid, the standard is usually 3 business days after the contract date.
At this point you will need to work on having the conditions of your contract met. Commonly these are, a building inspection and finance approval. The quality of building inspectors in Tasmania does vary, so do your research. If your offer was subject to finance, your bank will generally want to conduct a valuation of the property.
Once all conditions of the contract are met, the contract becomes “unconditional”.
Settlement
The settlement process is managed by your conveyancer or solicitor. They will conduct necessary council checks and will usually work with your broker/lender to ensure that the finance is ready for settlement. They will advise anything that you need to do during this period.
It is prudent to conduct a pre settlement inspection prior to settlement. Contact the selling agent in the days leading up to settlement to request access to the property. The purpose of the inspection is to ensure that the chattels (inclusions) that were listed on the contract remain at the property and are in working order, and that they property is in the same condition as when the contract was signed (e.g. no damage has been done to the property whilst the vendors were moving out and no rubbish has been left behind). Once the property settles, you have no recourse to sort these issues. Hence, the pre settlement inspection is very important. If you are not able to do one, you can nominate a friend or family member to inspect on your behalf.
On the day of settlement, you do not need to be present. Once settlement takes place the selling agent will be authorised to release keys to you.
If you have any questions on the process of buying a property in Hobart or Tasmania or you are looking for help to secure your new home, please contact Angie Roberts at My Hobart Home – Buyers Agents or 0448 694537.