George Morison is the General Manager for AB Morison Conveyancing. AB Morison Conveyancing is one of the largest conveyancing firms in Victoria and their goal is to make the property buying process as seamless as possible for everyone involved.
In this episode, George explains what a conveyancer is, why you need one, and why you should look at hiring a conveyancer much earlier in the home-buying process than you think. He also breaks down why cheaper isn’t always better when it comes to conveyancers and how spending more on their services could save you money in the long run.
The information contained in this podcast is general in nature and is not to be taken as financial or personal advice.
It does not consider your objectives, financial situation or needs.
You should consider whether this information is suitable for you and your personal circumstances before acting on it.
Hi and welcome to the home, run your guide to buying your first home in Australia on the show, I’ll walk you through the home buying process from every angle.
We cover steps to take the pitfalls to avoid and the answers to all your questions you’ve been dying to ask no matter what stage you’re at, you’ll learn everything you need to know about buying your first home.
I’m your host, Michael Nasser and I’m a mortgage broker at Lendstreet and I really love helping people buy their first home.
George Morrison is the general manager of AB Morrison, a conveyancing firm based in Victoria, which he runs with his wife Mandy.
Since starting the business in 2001.
George and his team have been passionate about high-quality personalised service for all of their clients.
In this episode, George breaks down the process of settlement and explains the role of a conveyancer.
During this time, he shares his tips on when to begin engaging with a conveyancer and how to find the right conveyancer for you.
He also explores the biggest mistakes he’s seen first-home buyers make in the settlement process and shares what you can do to avoid them.
Let’s jump in. George, thanks for joining me on the show today.
Thank you, Michael. Good to be here.
Just to start off.
Are you able to share some information about who you are, where you work and what your role is?
My name’s George Morrison and I’m the general manager of A B Morrison conveyancing.
We be, if not Victoria’s largest, I’m one of Victoria’s largest conveyancing firms and we’ve been running since the year 2000.
It’s an easy one to work out.
How long you’ve been around for 23 years.
How did you get into conveyancing?
Well, as you can tell by the name, it’s a family business, a partner and I got started in the year 2000.
And really the business has really grown with the property market.
So over that time, since the year 2000, the property market has seen extraordinary growth.
And so it was a good time really to start in this industry.
Over that time, we’ve had significant changes with the mining boom and then there was the China boom and there’s been significant ups and downs with the GFC and, and COVID but really over that period of time, it’s been a remarkable period in the property market and the business has really grown with that.
So it has developed into a large operation that caters for all aspects really of property conveyance and for first home buyers that we’ll be talking about today, property developers and investors related party transfers.
We call them where mums and dads are taking names on and off title.
So it’s really grown into a large operation that caters for all sorts of needs within the conveyance space.
Definitely big appetite in this country for property.
It seems to be one of the cornerstone principles of I guess wealth generation and as you’ve mentioned, and as our listeners know, and we very much focus on people at the beginning part of that journey and you know, looking to purchase their first home, whether it is as an investment or as an owner occupier more often than not, it is as the owner occupier.
But conveyancing obviously is such a critical part of that and probably not something we speak about very often.
We focus more obviously on the asset and the finance side of things, but the conveyancing is a critical component of it all.
So I guess today we’re gonna talk about some of the basics of conveyancing and and what people should be thinking about with certain aspects of it.
So what’s the role of the conveyancer in the first home buyer process?
And if we speak about settlement in particular, what is the settlement process and how does that all work?
Well, conveyancing differs from state to state.
So there are different state legislations that will and I know this is a national podcast.
So depending on which state you’re in you, the answer to this question would vary but broadly, a conveyance’s role is to get a name on or off a title.
And that can sound relatively straightforward, but you’d be amazed at what’s involved in achieving that task, but often particularly first home buyers are unaware what a conveyancer is or that they need a conveyancer until they’re already quite far down the track.
They’ve spoken to the mortgage broker or the banker and they have spoken to the real estate agents and they get to a certain point down the track and they’re asked, who’s your conveyancer?
That’s at that point that they need to find out what a conveyer is and who the cremates it is going to be.
So, it’s a good idea for first home buyers if they can to do some research and look into potentially who they’re gonna use as a conveys before they get to that stage, so they can determine what the price points are gonna be and negotiate how that fee is gonna be charged.
But also the report that they have with them and, and the sort of service standards that they have and all those sorts of things as Well, a conveyancer’s role is acting on your behalf throughout the transaction.
So once you’ve found the property, you’ve got the finance, you’ve signed the contract, the conveyancer is your person in the game dealing with the real estate agent, the bank or the mortgage broker, the vendors and the vendors solicitor and ensuring that there’s a successful transfer of that property from the current owner’s name into your name.
And you mentioned there, I guess the time at which first home buyers generally will engage a conveyancer.
And it’s probably a little bit further on down the track than maybe when they should.
At what point in the home-buying journey would you typically recommend getting a conveyancer on board?
It can vary from state to state.
Different states have different obligations that a vendor has to a prospective purchaser.
In Victoria, for example, in New South Wales is quite similar.
There are disclosure obligations that a vendor has to make to a purchaser.
The level of those disclosures varies, but really what you want to be doing is getting pre-purchase advice before you go in and sign a contract.
Now, that can be tricky to some degree because doing due diligence before signing a contract can involve not only getting a contract review as a conveyancer, but also getting a building inspection or a pest inspection and those things cost money so often where we would come in up, my recommendation would be if you found the property you’re interested in and you’ve made an offer and it looks like the Linda is gonna accept that deal and the price is realistic.
It’s at that point that I would suggest you bring in a conveyancer to give you some prep purchase advice on the contract.
The outcome of that review would typically assist you in showing that you understand everything that the contract contains, they would highlight any concerns that they have with it that you might want to make your offer conditional on having changed or amended or added to the contract.
But also if you’ve built a report with your conveyancer, not only would they give you advice on the property itself, but ideally, they would know a little bit about you and what you’re after and your story so that they can give you context for you in in terms of whether or not you’re looking to apply for any government grants or needing a particular property to be eligible for any kind of thresholds that your particular state government or federal government grants that might apply as well.
You’d mentioned building and pest inspections.
And I guess if you’re buying in units or apartments, a strata report, is that something that the conveyancer looks after and manages it or is it something that I guess it just varies from conveyancer to conveyancer?
And how do you guys treat that?
And how would you recommend, you know, a first home buyer treat?
That is it, something that they would speak to the conveyance are about to sort out or would they do it on their own and separately to the say that you know, the review of the contract.
Like I said, in different states, there are different disclosure obligations. So I’ve might need to disclose to you as a prospective purchaser in one state might differ to another.
But broadly, you would need to get your own building and pest inspection report before proceeding to make your offer.
And they can be expensive.
You know, they can be 2, 3 $400 and quite often a first home buyer will be out there looking at 456 different properties before they’re successful.
So the trap is that you might find yourself out there thinking you’re doing the right thing and buying these expensive reports when your offer is not being accepted.
So I guess that harks back to that point I was making before about you really want to get a good sense that you’re, you’re in the hunt and that your offer is likely to be accepted before you start incurring those costs with strata properties.
Typically, there’d be a you know, we call them owner, owners, corporations in Victoria, but typically there’d be a certificate provided in that disclosure document and that certificate should be a good indication of what’s going on in that building.
You know, have they got building defects if it’s within the timeframe?
Are they making claims on their builders’ warranty insurance.
A special levy is being struck or is it evident that it’s likely that special levies are gonna be struck in the near future?
So you think you’re budgeting around a certain owners’, corporation fee or body corporate fee and then discover shortly after that there’s a, a special levy raised to fix the roof or fix the lift or what have you.
So it’s those sorts of things that a comb is looking out for and they’re giving you prep purchase advice on that contract so that you’re conscious of not just what’s happening now, but what might be evident around the corner with the property.
When it comes to first home buyers and more often than not as a first home buyer, it’s the first time you’re engaging with a conveyancer.
Are there any tips that you have for first-home buyers who are looking for a conveyancer or a good conveyancer?
What sort of pointers could we be giving or guiding first-time buyers to make sure that they can find a good conveyancer?
I know you’ve mentioned obviously state operations that can dictate where you can select this conveyancer from.
But what other things should we be looking for?
And what questions perhaps should we be asking a conveyancer when we’re seeking their services?
My suggestion would be cheapest is not always best.
A conveyancer is completing a very critical role for you in dealing with your finance and making sure that everything is done correctly for you.
And a quality conveyancer can ensure that you have a much more stress-free and enjoyable process.
So I would be looking at the reviews of the conveyancer to get a sense of what sort of customer satisfaction they have their size.
Do they have resource if you call them?
Are they gonna answer the phone or are you gonna get an answering machine?
Are you gonna be able to get through to people and also being clear on what the costs are going to be at the beginning?
So, you know, you want to get an all-inclusive fee or you want to get a sense of a fairly accurate sense of how much you’re up for at settlement for the conveyancing cost and all costs in the whole property transaction.
One of the key important things for a first home buyer is ensuring they know what their budget is and how much they’re gonna need at the end at settlement.
So not just conveyancing but all property transaction costs.
You want to have a really confident sense of how much you’re gonna be needing at the end of that transaction process.
The reference you made there is settlement and I guess for a lot of people that don’t know what does settlement mean.
So settlements the day that you pay the money and become the owner of the property.
So if I go back a step, you found the property you’re interested in.
You’ve had your pre-purchase advice, you’ve gotten your finance approved, if necessary, you’ve got your building your pest inspection report, the contract is signed and in that contract it’s agreed how much you’re paying and when you’re gonna settle and any other terms that you’ve agreed to.
And then from there, we would notify all parties that we’ve been appointed to act and we would begin the conveyance.
We’d provide your lender all the documents and the information they needed from our side to get your finance ready for draw down.
And then we would liaise with all the regulatory bodies that are involved in the transfer.
So the land Titles Office or equivalent of the State and the State Revenue Office and the Australian Taxation Office, there are a range of different bodies that we need to liaise with and ensure that all the appropriate paperwork’s been completed.
And then we need to work out how much you’re gonna pay for the property, which is typically the purchase price you’ve agreed to less the deposit you would have already paid at the beginning.
Plus what we call adjustments, which is a reimbursement to the current owner for bills they will have paid that you’re gonna get the benefit from.
So things like council rates, water rates, owners’ corporation fees, we’d make enquiries to ensure that the current owner has paid all their bills.
But then you’d be chipping in for the portion of those bills that you’ll get the benefit from.
So, depending on the property and when you’re settling in the billing cycle, probably wanna be budgeting maybe 1 to $3000 for adjustments.
But at the end of that, you’ve paid your rates, you’ve paid your water rates, you’ve paid your owners corporation fees for that period.
So we’ll work all that out.
And then at that stage, we’d also work out how much money is available for a drawdown of your new mortgage, which would be the loan amount you’re applying for less stamp duty, if any less land titles, office fees and less any bank charges.
So whatever’s left over from that amount is how much we’d have to pay with at settlement.
And any shortfall would be the amount you’d be chipping in, out of your own savings towards the purchase.
So we’d go through all of that with you a good, you know, 10 days before settlement to make sure that you understand it and you agree with it.
So that on the day of settlement, you know exactly what money’s moving around where and why and then on the day of settlement, that’s the day that all the involved parties.
So the vendor, the vendor, solicitor or conveyancer, the vendors lender discharging bank and then the purchasers conveyancer, purchasers bank would all attend settlement and everyone provides and takes what they need to satisfy their particular needs in that transaction.
And at the end of that, it’s settled and it’s at that point, you’d receive a phone call from your conveyance that you would be free to go to the real estate agent’s office and pick up the keys.
When you purchase a property, there are certain mandatory costs that are gonna be associated with that property.
So council rates are not optional.
If you own a property, you’ve gotta pay council rates, water rates, part or all of water rates are not optional.
You have to pay water rates when you buy a property.
If it’s a strata, then owners’, corporation fees have to be paid.
So depending on when we settle in any one of those different billing cycles, you the vendor and I the purchaser, you may or may not have paid your bills.
So if you’ve paid your bills and we settle, it’s not fair that I’ve owned the property proportion of the billing cycle that you’ve paid the bills for.
So I should pay you back and vice versa.
It’s not fair that you haven’t paid your bills and then I buy the property and then I’m stuck with those bills that you enjoyed the benefit from.
So part of our job is to ring up that different regulatory authority and check as at the date of settlement, has this previous owner paid their bills or not?
And how much are the bills and then work out how many days of that billing cycle you’ve had benefit of the property for how many I’ve had benefit for and then either you or I will pay each other back.
So we’d have to purchase price less the deposit plus a reimbursement to the current owner for the portion of those bills that I’m getting the benefit from.
We wouldn’t know exactly how much the adjustment would be until we get closer to settlement.
Exactly, because we want to check with all those regulatory authorities, but we can pretty accurately work it out at the beginning of the process.
If we’re well beforehand, ie you’re considering different properties and you’re wanting a general budget, then typically for properties that are in the price point for first-home buyers, you’re safe.
If you’re budgeting 1000 to all the way up to say $3000 for adjustments, it can vary widely.
And the key thing that does tend to vary in that is if you’re buying a strata apartment and there’s an owner corporation or a body corporate and it has multiple lifts, they tend to increase the outgoing significantly or a pool pools tend to increase the outgoings for owners, corporation fees as well.
That’s why we sort of indicate a broad range.
But also when you’re settling in the billing cycle, if you’re settling right at the end of a financial year, then, the adjustment would be far less than if you’re settling at the beginning of a new financial year.
So obviously that is a pretty long process.
And I’m sure there’s a lot more particulars that we can deep dive into.
However, the one thing that I wanted to pick up on that you had mentioned was the concept of adjustments, you did briefly explain it.
But if you could explain exactly what adjustments are and, and how they work and for a first-home buyer that’s never really experienced this before, what are adjustments and, and how they work out.
So if you’re selling and I’m buying and we get to settlement and you’ve paid all the bills, it’s not fair that when I buy the property, I’m gonna get the benefit of those bills without paying you back.
So we call those the adjustments.
So that’s the 1 to $3000 allowance will cover most of the general things, but that owner score could potentially be more, this might scare people off potentially.
But what’s the highest that you’ve seen?
And, and is there if you’re gonna be purchasing in an apartment complex, do you need to budget or factor in more for what potential adjustments could be?
Or is there any way of finding that out before you, you make an offer or sign a contract?
So, properties that first home buyers are considering typically wouldn’t be in that category the worst I’ve ever seen.
But there are some apartment blocks out there that have concierges and staggering kites.
But I guess that goes back to the importance of getting pre-purchase advice and getting that disclosure document reviewed so that you’re getting an interpretation of what the outgoings are as part of that review.
So in that review, we would be reading through in Victoria, what we would call the owners’ corporation certificate and having a look at the outgoings and, and making sure the grower they, they’re in line with what you’re expecting, I guess where there’s potential for that to get away from people is when they’re buying off the plan and off the plan differs quite a lot compared to buying an existing title property where it’s not known at that point what the actual owner, corporate fees are.
When we talk about settlement and the process that you’ve just explained. And I guess for the context of the listeners and knowing where you’re positioned within Australia being in very heavily Victorian based, we can use Victoria as the example here.
But how long is that period of settlement?
How long does that last?
So from signing that contract to the settlement occurring and, and having the the transaction completed?
How long does that typically take?
Well, technically, a settlement can take place very quickly, the mechanics of it can take place very quickly.
But the thing to remember is that when you commit in a contract to a settlement date, you must settle on that settlement date.
If you get to that date, you’re not ready and typically come the next working day, you become in breach of the contract.
And if you become in breach, you become liable for all sorts of unnecessary costs.
Typically the contracts I see penalty interest is calculated at 15% daily.
Plus you’d have to pay the vendor’s conveyance or a solicitor’s costs.
So you wanna do everything you can to make sure you settle on time and therefore you want to allow yourself enough time, enough time for a spelling mistake with the mortgage documents to be repre prepared or whatever it is.
So as a general rule of thumb, we would always recommend nothing shorter than a 45-day settle, you can always bring settlement forward if you and the vendor are ready to settle sooner and are agreeable.
But it’s a lot harder to push it out if you need more time.
So broadly, more time is better than less, but 45 days is a safe quick settlement period for a first-time buyer.
And in that settlement phase, I mean, obviously finance needs to be sorted.
But I guess from a legal perspective, is there anything else that can be done or any other perspective that your experience has, has taught you?
Is there anything else that a first home buyer should be doing in that settlement phase?
Or is it a matter of just sitting and waiting for settlement to take place.
Once you’ve signed the contract and paid the deposit from a conveyancing perspective, we’ll take it from there really in the new world of digital conveyancing.
Once you’ve given your conveyance for instructions to act, they have a lot of the answers.
They need to complete a lot of the rest of the process on your behalf.
There is typically one step that you’d physically need to participate in which is called verification of identity or VOI and that’s driven by the, the land titles office of the State.
And typically, they’ve said that, ok, if we’re gonna digitise conveyancing, then we want some assurance that the people we’re dealing with, either coming on or going off title are who they say they are.
So they have to introduce states have introduced this verification of a new process.
It’s like larger points with the bank, but it has to be done by licensed agents.
And typically you’d go to Australia Post or there are different companies that would come to your home or there are apps that can be used.
Typically, when you do that verification of identity, you sign another document called a client authorisation form that authorises your conveyancer to have signed other documents on your behalf based on the instructions you’ve given.
Once you’ve signed the contract, paid the deposit, assuming that there are no other conditions of the contract.
Like you need to get that, you know, building or pest inspection report done or what have you really, your focus should be on the bank.
They’re giving your lender anything they need from your side in terms of pay slips or anything else to get your finance proved and conditioned. in our experience.
In our experience that’s obviously something we do with on a day-to-day basis.
That’s at least 3 to 4 weeks that you know, need to allow for the valuation to take place for that to come in for the loan docs to be generated for the loan docs to be sent for them to be signed for them to be posted back.
And obviously, that all goes well and obviously with e-docs these days as well, that can speed the process up depending on the particular lender.
But from our point of view, it’s definitely a four-week timeframe is as minimum as we’d like to see it.
Otherwise, it does put a little bit of unneeded stress on the whole situation.
When it comes to the conveyancing process and the settlement process, what’s the biggest mistake that you’ve seen first-home buyers make?
And how can our listeners avoid that?
What I just touched on about not allowing enough time for settlement?
So they do it in a rush or they get emotionally attached to the property and get too close to the property itself and then find themselves committed to short settlement periods or other terms that they might not have otherwise agreed to.
So the importance of getting that pre-purchase advice to take a bit of the heat out of it and to have the conveyance between you and the agent to try and cool things down a little bit and slow things down and make sure that the terms that you’re agreeing to are realistic and are achievable for you and for off the plan purchases, there are other things to be conscious of like for example, making sure that the square meter age of the property is too small for what your lender will lend to you for your loan to value ratio threshold.
So that’s another key one for first home buyers who tend to be buying the smaller apartments, making sure that who you’re intending to borrow through is gonna be able to lend for that property and the size that it is.
Thank you so much for those tips and those insights into what could be sometimes seen as a not the most prettiest aspect of the property transaction, the the legal side.
It’s not one that excites most people, but in saying all of that is, it is one of if not the most important aspect of a property purchase is is the conveyancing process.
So thank you for all the tips that you provided today and thanks for joining us on the show.
Where can our listeners find you if they want to learn more?
Well, our website www.A for Alpha, B for Bravo Morison with one R and one s.com.au and our contact details are on there and I’d be very happy or any of our team would be very happy to provide anyone with more insights and advice.
And those details will be in our show notes as well.
Thanks so much for joining me on the show today.
It’s been an absolute pleasure.
This is terrific.
You’ve been listening to the home run your guide for buying your first home in Australia.
This podcast was produced by Lendstreet.
Lendstreet is a mortgage broker and home loan specialist that helps first-home buyers find the right loan to meet their needs.
We know applying for a loan can be overwhelming and complex.
So we help guide and support first home buyers through the process from start to finish to find out more.
Head to our website, Lendstreet.com.au.
We’ve also put a link in the show notes to make sure you don’t miss an episode of the Home Run.
Be sure to subscribe to or follow the show in your podcast app.
And while you’re there, please leave us a five-star review.
It really helps others find the show.
I’m Michael Nasser and we’ll be back next episode covering another step on the journey to owning your first home.