How long does it actually take to buy a property? Here’s a timeline from getting finance to finalising settlement:

It would be great if we could just “click and collect” a new home as easily as we buy most other things today. But when you combine saving for the deposit, applying for finance and actually finding the right place, the whole process can take literally years.

So, how long will it take to buy a home? We’ve broken down the timeline into the minutes, days and months you should be scheduling for each step:

How long to: Save for a deposit? Sorry – it depends

Do you already have savings put aside, or are you starting from scratch? Can you make regular contributions, or just lump sum injections when the time is right?

Depending on your individual circumstances (and eligibility for government schemes such as the First Home Loan Deposit Scheme) you could get into a home loan with as little as 5 per cent of the purchase price, meaning the time it takes to save a deposit is considerably less than it used to be.

To buy a $500,000 property you would need between $25,000 (5 per cent deposit) and $50,000 (10 per cent deposit) to realistically get into a mortgage. In this scenario, if you started today with $1000 in a 2.35 per cent savings account and contributed $1000 a month you could have a 5 per cent deposit in just two years. To save a 10 per cent deposit it would take about four years under the same conditions. By adding an extra $250 a month (just over $60 a week) then you could reach your goal even faster and have 10 per cent in less than three years.

It is worth noting that a first-home buyer with a deposit of less than 20 per cent may need to take out Lender’s Mortgage Insurance which can add up to thousands of dollars. Also, depending on your state or territory and the purchase amount, you may be required to pay transfer duty (or stamp duty).

For a personalised timeframe and to determine your eligibility for government assistance meet with a trusted mortgage broker, or lender. For a quick snapshot of savings timeframes, use an online savings calculator and visit www.firsthome.gov.au to find out if you’re exempt from paying transfer duty.

 

How long to: Perform a credit check? About 10 days

Finding out your credit score is usually straightforward and can be done free online in as little as 15 minutes. Obtaining a comprehensive credit report from one of the main credit reporting agencies (Equifax, Dun&Bradstreet, or Experian) can take up to 10 days. Because your credit score is calculated by combining all your financial information, an agency must crosscheck any loans, insurance policies, mobile phone plans, or interest-free credit you may have (or did have).

Timeframes and results may vary depending on the agency and it’s worth checking with more than one to get a consistent and reliable measure.

Take the time to carefully review the report and if you believe there are discrepancies in your financial history you might need extra time before applying for a home loan to sort out the inconsistencies. A poor credit rating could affect your ability to borrow and even how much interest you will pay for the life of the loan.

 

How long to: Get pre-approved for a home loan? 3 to 7 days

Applicants with permanent employment and their group certificate on hand can expect to be approved in about three business days. If you have a more complicated story, are self-employed or buying with a guarantor, then the paperwork could take longer.

Note that a pre-approval, or conditional approval as it is sometimes known, often only has a shelf life of 90 days, however most lenders will extend it (as long as your circumstances don’t change too much) until you find your dream home.

 

How long to: Hunt for a home? Nine months on average

Some pragmatic purchasers who have curated a list of “must haves” and a whittled down shortlist (here’s how to shortlist properties) might find their ideal property quickly. And those who have engaged a buyer’s agent also typically get into a home sooner than those who don’t. However, buyers who aren’t sure of what they want, or are looking in a hot market could have a drawn out house hunting process.

According to research by property portal realestate.com.au, Australians spend an average of nine months searching for the right real estate, view more than 300 homes online and go to 11 open for inspections before buying.

The data also showed that investors took the least amount of time, and unsurprisingly first-home buyers took the most.

 

How long to: Decide it’s THE ONE? 30 seconds to months

If you’re the gut-feeling type one day you’ll walk through the door of the right place and just know.

If you’re more into making lists you’ll be carefully comparing and tracking along the way. Use the digital dashboard at TheOneSpot to easily compare properties.

 

Ready to start looking at houses? Start your property shortlist at TheOneSpot

How long to: Order a building and pest or strata report? Less than a week

Many inspectors will need about two to three days’ notice to do a physical building and pest report, or it could take longer if you are getting separate organisations to do the building and pest inspections. The inspection itself usually takes one to two hours and some businesses advertise a 24-hour turnaround.

Strata reports are slightly different to building and pest inspections as they do not require a physical inspection of the property. They involve a comprehensive online search of an apartment building’s finances and management history which can take as little as 24 hours, or as much as several days.

 

How long to: Wait for a valuation? Up to a week

Professional valuation can take between one day and one week from request to report. In some cases the valuer will only be required to do a “kerbside valuation” just to confirm a property exists at the address. In other instances a lender might ask a valuer to do a comprehensive valuation inside and out. The process could also be stretched out if the valuer has trouble getting access to the property.

 

How long to: Make an offer? The market will guide you

All you need to do is call the agent and give them a figure or make an offer in writing, if via private treaty sale or prior to auction, but knowing when to make an offer is a subtle art. The market defines the urgency – if you had to jostle with 100 other people at the first open inspection you’ll need to get in quick, but if the property has been on the market for months you probably don’t have to rush.

Experts suggest not lingering if the property feels right for you. The longer you take to make a move, the longer you give other buyers a chance to reconsider their position or to finalise their finance. There are situations, such as an unreasonably high asking price, when holding off has its merits. It’s important to do your homework on comparable sales to understand when to hold and when to move.

 

For private treaty sale, how long to: Negotiate a sale price? A couple of days to a couple of weeks

Unlike buying at auction, when the process can be over in just minutes, purchasing via private treaty takes time. If the vendor gets an offer they can’t refuse then you could seal the deal quickly, but negotiating the price down could push the timeframe out.

After making an official offer in writing, you could get a “yes” or “no” straight away but don’t be disillusioned if the decision takes two to three days. The seller could be thinking it over, there could be extenuating circumstances like a divorce holding things up, or they might be out of the country. If the seller doesn’t accept your offer and you’re ready to try again, then it’s back to the negotiating table. Don’t despair if it takes a while – negotiation has been known to take months.

 

How long to: Bid at auction? Less than an hour

It’s a long build up to auction day for both the seller and the buyer, but the actual time a home is under the hammer passes pretty quickly. An auction can be all over in less than 15 minutes, but there are some additional steps before and after the gavel falls. In Queensland, NSW, South Australia or Tasmania you will be required to show identification and formally register to bid.

You’ll also need to ensure your finances are in order before the day: in addition to getting pre-approval and organising inspection reports before the auction, you’ll need to organise a bank cheque. If you’re the winning bidder you will be required to pay between 5 and 10 per cent deposit on the spot.

 

How long to: Organise your deposit cheque? A few business days

Having your payment method figured out before auction day is the best plan of attack. While it would be baller to hand over a wad of cash, the safest option is to pay the deposit by personal cheque, bank cheque or deposit bond.

Personal cheque:

The plus side is a personal cheque can be made out to the exact amount required and takes no extra time if you already have a cheque book. If not, allow approximately five working days to order one from your banking institution.

Bank cheque:

The cheque needs to be made out for the exact amount (estimate 5 to 10 per cent of your maximum purchase price) by your financial institution prior to auction day. Given that most auctions are held on weekends or evenings, you’ll need to be prepared so give yourself one to two business days to organise a bank cheque. 

Deposit bond:

This is like a legally binding insurance policy for your deposit. The cost of a deposit bond is determined by the property value and the amount of time until settlement but is usually 1.2 to 1.3 per cent and can be issued in a couple of hours to two business days. You are effectively promising the seller you will pay your deposit (without handing over any money) but be sure the selling agent is willing to accept a deposit bond – not all do. While not all banks issue them, your lender or mortgage broker can help you find an insurer who does. ANZ, IMB, St George and Westpac are the main banks currently offering deposit bonds.

 

A selfie in front of the SOLD sign is the end of the home buying journey

How long is: Settlement? Between 30 and 90 days (or less, or more)

From the point both parties sign the contract of sale, the settlement period begins. During this time your lender will register a mortgage on the home and provide the funds to buy it. At the same time your conveyancer or solicitor will be conducting a number of legal checks on the property title. Meanwhile, as the buyer you’ll be organising all the necessary insurances on your new home and be taking the time to do your final or pre-settlement inspection.

While the typical time frame of a settlement lasts between 30 and 90 days, depending on the state or territory, that period is mutually agreed upon by the seller and the buyer and can be adjusted as part of the sale negotiations. A vendor may be willing to lower the price for a quick settlement, or vice versa.

 

How long to: Hold out for the cooling off period? Up to 5 days

After signing on the dotted line, there is a critical time after buying a property called a cooling off period. Depending on where the home is located, this stage is usually between three and five business days (Tasmania has a typical cooling off period of two working days). During this time the buyer can cancel the sale, but will have to pay a penalty fee of around 0.25 per cent of the purchase price.

Although typical practice in most markets, be sure to get clarity on cooling off before signing anything. Some agents and vendors have been known to forgo cooling off periods as they are not mandatory. It is also worth noting they do not apply when a property is sold at auction.

 

So, now you know how long it takes to buy a home. Share this with a house hunter who needs to get organised.