Finding and assessing a property

Key takeaways

• There are four things to understand about any property: its physical condition, the financial picture, the contract and title, and any environmental, planning or neighbourhood factors that affect how you can use it.
• Line up your search with what fits your overall purchase budget, including your available funds, buying costs and what you can afford to repay.
• Get the contract professionally reviewed before you offer or bid, and leave realistic lead time so important issues aren't being assessed under pressure.

Once you find a property you like, the question changes from “Could I buy this?” to “Do I understand what I'm actually buying?” That means looking beyond the house itself: what condition it's in, what comes with it, what the contract says, and whether anything about the property could affect how you use or own it.

This is where good due diligence matters. The aim isn't to find a reason not to buy. It's to understand the property well enough to make an informed decision before you commit.

What is property due diligence?

Property due diligence is the process of checking the physical condition, financial position, legal documents and other factors that could affect a property before you commit to buying it. The checks you need depend on the property, transaction and state.

What should you check before buying a property?

Before buying a property, consider its physical condition, whether the price fits your budget, the contract and title, relevant searches and restrictions, what is included in the sale, and any environmental, planning, strata or neighbourhood factors that could affect how you use the property.

It helps to look at a property through four lenses rather than trying to hold all of that in your head at once. Start with its physical condition: the structure, and what a building and pest inspection might turn up. Then consider the financial side: whether the asking price fits your budget and how it compares with relevant market information and comparable properties. Next comes the legal picture: the title, contract and anything affecting the property, such as easements, restrictions or other interests recorded against it. Finally, consider environmental and neighbourhood factors such as flood, bushfire, heritage, zoning or other planning restrictions that could affect how you use or develop the property. Which of these matter most, and which apply at all, varies by location and by property.

What order should you tackle it in?

There isn't one perfect order for every property. The important thing is to understand which checks you need, which ones have deadlines, and which need to happen before you make an offer or bid. For many buyers, that means getting their finances organised first, inspecting the property, understanding its condition and market position, checking relevant reports and searches, and having the contract reviewed before committing.

Two of those are worth starting earlier than most buyers expect. Get a clear understanding of your borrowing position and overall purchase budget before you search seriously, so you know which properties are financially realistic for you. And a professional contract review can help identify important terms, restrictions, conditions or missing information while you still have time to understand them and decide whether you want to proceed.

Build in enough time for the relevant inspections and contract review before an offer deadline or auction. Rushing these checks can leave you making an important decision without having all the information you need. Auction rules and cooling-off rights vary by state. In circumstances where cooling-off does not apply, important checks need to be completed before you commit, so make sure you understand the rules that apply to the property and sale.

You don't need to become an expert in every aspect of a property. What matters is knowing what questions to ask, which checks matter for the property in front of you, and when you need someone with specialist knowledge to explain what you've found. This is where careful checking helps you understand the risks before you commit.

It's also why good conveyancing shouldn't start once you have already committed. The most useful time to understand the property and the contract is while you still have choices.

The guides below go deeper on each check, from what's included in the sale and who carries the risk before settlement, to dealing with adverse search results, doing your due diligence, and buying into a strata scheme.