Buying Real Estate in Tasmania
Whether it is rural farming land or inner-city apartments, here is all you need to know about buying a home in Tasmania.
It might not have the population of places like Victoria or New South Wales, but Tasmania still has a property market that is appealing to a wide range of buyers. But what are the specifics of the southernmost state's property landscape? Let's take a look at what you need to buy Tasmanian real estate.
Ways to buy Tasmanian property
There are a few different ways to buy Tasmanian property, and it is crucial that you understand each of them before you commit to a particular process.
Private treaty is a negotiating process. The vendor and their agent set the listed price, and you negotiate with them to find a figure that suits both of you. This kind of sale comes with conditions (such as finance approval or subjecting the home to a building inspection), and you pay a 10 per cent deposit once the price is settled and contracts are exchanged.
In Tasmania, there is no cooling-off period for buying property - so make sure you are prepared to commit.
An auction is where bidders compete to put down the highest offer on a home. A reserve price is set, which is the least the home can sell for. Once this is reached, the highest bidder at the close of the auction wins the property.
This can be an unconditional sale, and having your deposit and finance ready on the day is recommended. If bids do not reach the reserve, you may get to negotiate with the vendor.
There is no listed price of reserve in tender sales - you submit an offer with a deposit, and the vendor or their agent accepts or rejects it.
If you are unsure which process will be most advantageous for you, get in touch with a local LJ Hooker real estate agent to talk through each style of buying Tasmanian property. The Tas Law Handbook
also has more information on these.
Financing a property purchase in Tasmania - how much can you afford?
While the deposit given to a vendor is normally 10 per cent of the purchase price, you also have to put up your own funds to secure a home loan - normally 20 per cent. This can be less (or more), but stricter conditions may be imposed on your contract (such as Lenders Mortgage Insurance). Tasmanian property tends to be cheaper than on the mainland, so these deposits can be appealing to people with less borrowing power.
This is a good point in the Tasmanian buying process to speak to LJ Hooker Home loans. They can help you work out a budget, and give you a clearer idea of how much you can borrow. You may also wish to get pre-approval, which will give you a concrete figure on how much you can spend. This is vital in situations where cooling-off periods do not apply.
The Australian Securities and Investments Commission's MoneySmart website
or perhaps even this University of Tasmania planner
will also be useful for plotting your finances.
Hidden costs of buying Tasmanian property
Just like anywhere else, there are many hidden costs to contend with as you look to buy Tasmanian property:
- Transfer duty ($13,997.50 on a home costing $400,000, but this scales with price);
- Land tax ($2587.50 on land valued at $400,000 but this scales with price as well);
- Legal and conveyancing fees (between $1,500 and $3,000 depending on how much work is done);
- Mortgage setup fees (allow for $1,000 but these can be waived in some circumstances);
- Pest and building inspections ($400 to $600);
- Council rates (9.19 cents per dollar of your Assessed Annual Value in Hobart);
- Waste management charges ($238 in Hobart);
- Landfill rehabilitation charges ($50 in Hobart);
- Moving costs ($500 to $3,500 depending on distance); and,
- Building and contents insurance costs.
All told, the hidden costs can add tens of thousands of dollars to the Tasmanian buying process. Check with your LJ Hooker agent to make sure everything is covered.
Finding Tasmanian property to buy
As you begin your search, you might have a very broad idea of what kind of Tasmanian property you want to buy. Use the internet and all other resources available to you in order to narrow down this search:
- Domain.com.au, realestate.com.au and ljhooker.com.au provide up to date market listings and a general idea of entry price points for specific markets;
- Australian Property Monitors, Residex, SQM Research and CoreLogic RP Data are useful for up-to-date market information on values, capital growth, land supply and rents;
- LJ Hooker Open Market report gives a regional snapshot of the property market, and your local LJ Hooker office can provide in-depth local market reports.
From there, you can better understand entry price points and the types of property available. You may have finally settled on a style of apartment or home, or even a specific part of the state you want to live in.
Where to look
From this point, you could benefit from the services of a buyers' agent - a real estate professional dedicated to working in the buyers' interests. LJ Hooker has people all over the country ready to bring you a shortlist of homes that suit your brief and budget.
The importance of inspections
This is a crucial point in the Tasmanian buying process. A qualified surveyor, architect or builder should inspect the property for any faults or defects. This gives you a clear picture of the true value of the home, and allows you to place conditions on the sale or even negotiate for a better price.
Without an inspection, you may find expensive structural faults when it is already too late.
The Tasmanian buying process
As you negotiate with the vendor on a private treaty sale, you both try to find a price point that suits each party. Each of you can place conditions on the transaction, which are added to the contract of sale. Once terms are agreed upon, contracts are exchanged and signed, and you pay the 10 per cent deposit to be held in a trust until completion of settlement.
Remember, with no cooling-off period for any real estate transaction, it is recommended to have your finances organised beforehand.
Auctions tend to be unconditional, so getting a copy of the property contract and scouring the details before the auction is highly recommended. Having pre-approval and your deposit ready is also a wise move, as if you are the highest bidder the exchange happens on the day.
From there, settlement continues as normal. The Hobart Community Legal Service has more information on the buying process here
Contracts of sale
This document contains all the particulars of the sale. Your details and those of the buyer, any agents or conveyancers in the process, how much you are paying, what the deposit is, where it will be held, the condition of the property and anything specific to the sale or settlement process is included.
As the most important piece of paper in the Tas buying process, it is vital to get a solicitor or conveyancer to go over the contract of sale
and ensure title details and legal fine print is all correct. This is the binding contract you sign to fulfil the property purchase.
Settlement of Tasmanian property
Once contracts of sale are signed and exchanged, settlement begins. This is where finance is processed, title details are prepared, documentation is cleared, and the purchase is finalised. This usually takes between 30 and 90 days, depending on how much work needs to be done.
The final date of this process is the settlement date. Titles are transferred, keys are handed over, the remainder of the money is paid and you can move in - congratulations, you have successfully bought Tasmanian property!