Property Selling Guide

 

A Guide to Sale Essentials

 

For many of us investment in property is the most important financial decision we will make, so it’s important to deal with a real estate agent you know you can trust.

 

In New South Wales, agents must be licensed by the NSW Office of Fair Trading under the Property, Stock and Business Agents Act 2002.

 

The roles of agent and seller

When a seller signs an agreement with an agent, the agent undertakes to try to sell the property for the highest price possible within a specified time frame, and to act as the seller’s representative in managing all aspects of the sale. This commences with the initial appraisal of the property, including advice on possible sale price and marketing and promotional strategies.

 

As the seller, you are represented by the agent, who co-ordinates the marketing and promotion of your property, generates interest from prospective buyers and handles negotiations, which at times can be sensitive.

 

The agent is the intermediary, who can relieve some of the stress that you may otherwise feel. They have experience in facilitating the sale process from the start through to inspections, price agreement, exchanging of contracts and settlement.

 

When to sell

Many home owners believe spring is the best time to sell. After the cold winter months, the warmth and greenery of spring bring a new vibe of optimism. There is a perception that properties look better in spring and therefore will have a better chance of selling.

 

However, properties can be sold in any season and with more properties coming onto the market in spring, the competition can actually make it more difficult to sell.

 

How to Sell – Private Treaty or Public Auction?

 

Sale by private treaty

When you sell your home by private treaty, you set a price and the property is listed for sale at that price. In general however, the price is negotiable, with the seller often asking a higher amount than they expect to sell the property for and the buyer making an initial offer lower than the asking price. This is normal practice, with the agreed price usually being somewhere between the two.

 

The process of a sale by private treaty offers the following benefits:

  • Greater control over the sale;
  • Time to consider offers by potential purchasers;
  • The easy ability to extend the time for which your home is for sale; and
  • The fact that potential purchasers must make offers for your property ‘blind’, without knowing what other buyers think it is worth.

 

Selling by private treaty can be just as intense as selling by auction, and you will be faced with important decisions if you are presented with offers lower than you hoped for.

 

There are risks with selling by private treaty which also should be considered:

  • If the price you set is too high, your property may not sell; and
  • If the price you set is too low, you may miss out on maximising the selling price.

 

You should also be aware that when a property is sold by private treaty, the buyer has a five day cooling-off period during which they may withdraw from the sale.

 

Sale by auction

To sell through an auction process, the amount you want for the property is generally not revealed to potential buyers who are encouraged to attend the auction and bid for the property against other potential buyers.

 

Auctions have become an increasingly popular way to sell or buy residential property, but before you decide to go down this path, do your homework and familiarise yourself with the process and what it involves.

 

Auctions offer the following benefits:

  • You do not have to disclose the selling price upfront;
  • You have a set timetable, with an auction-day deadline to plan by;
  • You can dictate the terms of sale;
  • Bidders are cash buyers—they must enter into a contract upon the fall of the hammer and there is no cooling-off period;
  • Auctions create buyer competition and can thereby achieve the highest possible price;
  • They are highly suitable for genuinely different or special properties, especially those of high worth;  and
  • You can sell beforehand, on the day or afterwards—the choice is up to you, guided by the expert advice of the agent.

 

Setting a reserve price

The reserve price is the lowest amount you are willing to accept for your property, and it is normally set, after consultation between agent and vendor (seller) just before the auction. The reserve price is not revealed to prospective buyers before the auction (and possibly not after it).

 

If the highest bid is below the reserve price, you, the vendor, have the option to accept it or not. If you do not accept this highest bid (and there is no obligation to do so), the property will be ‘passed in’. You can then either try and negotiate a price with interested bidders or put the property back on the market, at a specified price.

 

If the bidding continues beyond the reserve price, the property is sold at the fall of the auctioneer’s hammer to the highest bidder.

 

Successful bids

The successful bidder must sign the sale contract and pay you a deposit on the spot (usually 10%). There is no cooling-off period for anyone who buys a property at auction. Note too that if the property is passed in at auction but contracts are exchanged afterwards on that same day, the cooling-off period still does not apply.

 

Contract exchange

Exchanging sale contracts is the legal part of selling a home and happens regardless of whether you sell your property by private treaty or auction.

 

There will be two copies of the sale contract: one for you and one for the buyer. You each sign one copy before they are swapped or ‘exchanged’. This can be done by hand or post and is usually arranged by your solicitor, conveyancer or the agent. At the time of the exchange, the buyer will be required to pay a deposit, usually 10% of the purchase price.

 

The contract exchange is a critical point in the sale process:

  • The buyer or seller is not legally bound until signed copies of the contract are exchanged;
  • If the agent arranges exchange of contacts, the agent must give copies of the signed contract to each party or their solicitor or conveyancer within two business days;
  • Buyers of residential property in NSW through private treaty usually have a cooling-off period of five working days following the exchange of contracts, during which they can withdraw from the sale;
  • The cooling-off period can be waived, reduced or extended by negotiation;
  • There is no cooling-off period for sellers. Once contracts have been exchanged, sellers are generally bound to complete the agreement; and
  • There is no cooling-off period when purchasing at auction.

 

Settlement

Settlement is the conclusion of the sale transaction and usually takes place about six weeks after contracts are exchanged.

 

For more information

Real Estate Institute of NSW: Call 02 9264 2343 or visit www.reinsw.com.au
NSW Office of Fair Trading: Call 13 32 20 or visit www.fairtrading.nsw.gov.au.

Contact us »