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Contract danger: First home buyers face risky pitfalls amid investor exodus
As investors step back following the budget’s tax reforms, first home buyers may be more exposed to hidden contract hazards as sellers try to deliberately shift risk onto inexperienced purchasers.
First home buyers have been warned to keep their guard up when signing contracts, with sellers now more likely to include hidden risks related to settlement, penalties, or due diligence.
Despite renewed confidence among first home buyers as investors started to withdraw from the market, BuySecure founder, Ian Perkins, said a lack of experienced buyers may leave first-time purchasers vulnerable.
He said the risks could include contracts with missing finance clauses, vague settlement terms, penalty structures that favour the seller, and special conditions that restrict due diligence.
“For a first home buyer, these documents are intimidating because they’re written in dense legal language and presented as if they’re standard, but there is no such thing as a standard contract in Australia,” he said.
Perkins said that while daunting, reading the contract was essential, with first home buyers able to turn to artificial intelligence (AI) to help them put difficult language into layman’s terms.
According to Perkins, BuySecure used AI to rapidly analyse a contract and highlight the clauses that may be of concern, with their Bella chatbot also available to talk inexperienced buyers through the document.
“They can ask her all the questions, even the ones they might be too embarrassed to ask a lawyer – such as the basics, the jargon, the ‘silly’ things – and Bella explains it in plain English,” Perkins said.
Perkins said while Bella didn’t replace legal advice, she gave buyers the confidence and foundational understanding they needed before committing to anything.
He said that a property contract was the most expensive document a young Australian would ever sign, warning about the need to understand it in detail.
“Put simply, if you don’t understand the contract, you shouldn’t sign it, but now, with Bella, there’s finally a secure place for young buyers to start asking questions without the delays – and costs – associated with a traditional contract review,” Perkins concluded.
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