If you’ve just signed a contract to buy or sell a new home or investment, it may feel like your bank account is bleeding cash. Buying – and ironically, selling – a property can be an expensive business. From paying stamp duty, bank fees and lenders mortgage insurance when you buy, to handing over thousands of dollars’ worth of real estate commission when you sell, the bills seem to pile up and up. When you’re contemplating how to manage the transaction from a legal perspective, then, it can be tempting to go down the path of DIY conveyancing to save paying yet another bill.
Arranging and executing your property sales contract yourself may appear to save you a few hundred dollars at the outset. After all, conveyancing seems to be a simple process of transferring title from the seller to the buyer – so why not attempt to do it yourself rather than hiring a professional? However, there are some serious risks you could be exposed to by opting for DIY conveyancing, including some that are potentially very costly:
Risk 1: Fines or breach of contract
A conveyancer is an integral part of a smooth and straightforward property transaction, because they have the training, skill and experience to manage the process from beginning to end – including any curveballs that get thrown along the way. By handling the transaction yourself, your lack of expertise could lead to expensive fines or breach of contract. For instance, a buyer in Queensland once purchased a home and negotiated a six-month rent-back period to the seller, as the buyer was interstate and wouldn’t be ready to move in immediately. This agreement was made verbally; no one put a written lease in place. The week before settlement, the vendor decided he wouldn’t stay on after all and without an agreement in writing, the buyer was stuck having to find a new tenant at the last minute.
Even worse, because the buyer was now renting the property out to a new tenant, it was considered in the eyes of the law to be an investment property, so they had to pay additional stamp duty of $6,000 plus interest. The buyers in this transaction were out of pocket more than $10,000 in total – all because they didn’t have an experienced conveyancer advising them along the way.
Risk 2: Spending more time on your property sale than expected
Many people look at a DIY transaction as being ‘free’, but they forget to factor in the time cost. Unless you’re retired or semi-retired, you need to earn an income. Furthermore, you only have a finite number of hours in the day to accomplish everything you need to do. Let’s say you earn an average of $50 per hour, and you spend 10 hours working on your property transaction, processing paperwork, chasing up documents and dealing with issues with the other party as they arise. That’s $500 worth of your time that you’ve dedicated to conveyancing – time that you could have spent earning money, spending time with family or enjoying some down-time.
Risk 3: Panicking when issues arise
Your conveyancer performs a number of tasks on your behalf, including reviewing the sale contract for potential errors and red flags, conducting relevant legal searches, and liaising with the other party in the transaction. Just as importantly, they offer advice and guidance when unexpected situations arise. If your transaction proceeds smoothly and no unexpected issues crop up, then DIY-conveyancing may save you a little money. But if all doesn’t go well, this is when having a conveyancer or solicitor on your side pays off. They have the experience and know-how to deal with challenging situations, and they also carry professional indemnity insurance to protect you if something goes really wrong.
These are just a few of the risks you need to take into account about DIY conveyancing. You should also consider the fact that legal conveyancing practitioners must hold a current certificate or licence (where relevant) to practice in your state or territory, which means we’re up to date on the latest legislation, trends and insurance. We can foresee and manage potential problems on your behalf, with minimum fuss and expense.
This article is provided for general information purposes only. Its content is current at the date of publication. It is not legal advice and is not tailored to meet your individual needs. You should obtain specialist advice based on your specific circumstances before taking any action concerning the matters discussed in this article.