How buying works

The sequence, and the two moments that are irreversible.

Most of a property purchase is reversible right up until it isn't. Knowing which moments those are, and what protections exist around them, is the difference between a considered purchase and a fast one.

Victorian process. Contract law and buyer protections are set by state legislation, so the rules described here do not carry across to other states.

The usual sequence

  1. Work out your position

    Establish what you can borrow, what you hold, and what the upfront costs will be for the price range you are looking at. This is also the point at which scheme eligibility gets checked, because it changes what is possible. A First Home Owner Grant, for example, only exists if you are buying new.

  2. Pre-approval

    A lender indicates it is prepared to lend up to an amount, subject to conditions. It is not a guarantee and it is not final approval. It remains conditional on a satisfactory valuation of the specific property, on your circumstances not changing, and on final verification. Pre-approvals expire, and a lender may re-verify income and expenses before final approval.

  3. Search and inspect

    Once you find something, request the section 32 vendor statement and the contract of sale. Both should be reviewed by your conveyancer or solicitor before you sign anything, not after.

  4. Offer or auction

    A private sale offer can carry conditions. An auction cannot. This distinction is set out in detail further down and it is the single biggest structural difference in the Victorian market.

  5. Signing the contract

    You pay the contract deposit and the property becomes legally committed, subject to any cooling off right and any conditions written into the contract. The date your insurance risk begins is usually specified here.

  6. Final loan approval

    The lender orders a valuation of the property, completes its assessment of the application and issues formal approval, then loan documents are prepared and signed. Where a government scheme applies, the lender submits that application as part of the process.

  7. Pre-settlement inspection

    A final walkthrough shortly before settlement to confirm the property is in the condition the contract requires and that the agreed inclusions are still there.

  8. Settlement

    Victoria settles electronically. Your conveyancer, the seller's representative and both lenders complete the transfer through an electronic lodgement network, funds move, duty is paid and the title is transferred. The keys are released once settlement is confirmed.

The section 32 vendor statement

Under the Sale of Land Act 1962 (Vic), a seller must give the buyer a vendor statement, universally called a section 32, before the contract is signed. It is a disclosure document, not a contract, and its job is to put facts about the land in front of you while you can still walk away.

What it typically covers:

  • Title particulars, and any easements, covenants or restrictions on the land
  • Planning and zoning information
  • Rates, taxes and other outgoings
  • Which services are connected
  • Owners corporation details and charges, where the property is in a strata scheme
  • Building permit information for recent works

The certificates inside a section 32 are dated. If a property has been on the market for a while, some of them may be old enough to warrant an updated version, which is something a conveyancer will identify.

A defective or incomplete vendor statement can give a buyer rights, which is another reason the review needs to happen before signing rather than afterwards.

Cooling off

Section 31 of the Sale of Land Act 1962 (Vic) gives buyers in most private sales of residential and small rural property a right to end the contract within three clear business days of signing. "Clear" means the day you sign is not counted, and business days exclude weekends and public holidays.

The right is exercised by written notice given to the seller or the seller's agent before the period expires. It cannot be done verbally, and it cannot be revived once the period has passed. A penalty applies where the right is used, set by the Act at the greater of $100 or 0.2% of the purchase price. The balance of the deposit is refunded.

Cooling off does not apply to auctions

There is no cooling off period where you buy at a publicly advertised auction, or where the sale happens within three clear business days before or after that auction. On the fall of the hammer the contract is binding immediately.

Other exceptions also exist under the Act. Consumer Affairs Victoria sets out the full list, and your conveyancer can confirm whether a cooling off right applies to a specific contract before you sign it.

Cooling off is not the same as a finance condition

These get confused constantly. Cooling off is a statutory right that lasts three clear business days and requires no reason. A "subject to finance" clause is a term you negotiate into the contract, it can run for longer, and it operates on its own terms.

Once the cooling off period has ended, it cannot be used later, including in the situation where finance is subsequently declined. That risk is managed through contract conditions, not through cooling off.

Auction and private sale, side by side

Private saleAuction
Cooling offGenerally three clear business days, with exceptionsNone
Conditions in the contractCan be negotiated, for example subject to finance or subject to a building inspectionNot available. The contract is unconditional on the fall of the hammer
When you are committedOn signing, subject to cooling off and any conditionsImmediately when the hammer falls
DepositPaid on signingPaid on the day, in the manner set out in the contract
Inspections and legal reviewCan happen before signing, or during cooling offMust be completed before you bid
Practical implicationSome room to verify after committingAll due diligence, including finance certainty, sits before auction day

This is why the preparation for an auction purchase looks different. Everything a private sale buyer can do inside a cooling off window has to be done in advance, including the contract review, the inspections and the loan position.

Settlement

The seller sets the settlement date in the contract. Consumer Affairs Victoria describes a usual range of 30 to 90 days, and notes that a buyer may be able to negotiate a different settlement period with the seller before signing.

In the lead up, your conveyancer conducts searches, prepares the transfer, calculates the adjustments for rates and other outgoings, and confirms the amount you need available. The lender arranges the loan funds. On the day, the transfer is completed electronically and the balance of the purchase price is paid.

Where settlement is delayed by one party, the contract generally provides for default interest and other remedies. The terms of the specific contract govern this.

Conveyancing, contract terms and property law are the domain of your conveyancer or solicitor. This page describes the process so the vocabulary is familiar. It is not legal advice, and Finseek does not provide legal advice.