COMMON TERMS
These are the people who are selling their property.
Many people choose to sell their house by auction. This is where the property is sold at a public sale to the highest bidder, provided that the seller’s reserve price has been reached or exceeded. There is no cooling off period and contracts are exchanged immediately, unconditionally. The purchaser pays a deposit of (in most cases) 10% of the total sale price; this is stipulated in the Contract for Sale.
Exchange of contracts.
Both the buyer and the seller sign the contract of sale and give each other a copy. This is when the buyer usually pays 10% of the sale price as a deposit. The exchange of contracts commits both buyer and seller to the transaction.
Prior to an exchange of contracts any verbal agreement you have reached is not binding on either party.
Private treaty
Private treaty is another way that people sell their property in NSW. It’s where the property has an asking price and is sold by negotiation.
Settlement is where the buyer pays the balance of the purchase price and becomes the legal owner of the property. The settlement period is usually around six weeks after exchange. However, this can be changed to meet individual situations.
Step 1: Finding an agent.
Choose an agent who shows a good understanding of the market and prices.
Be careful of agents who suggest a price that maybe unusually higher than what you believe to be the market indications. They maybe trying to use the price aspect as the driving influence for you to appoint them as your agent.
Questions to ask prospective agents.
Prepare a list of questions to ask the agent you talk to. The list might include some of these questions:
· Are you the person I will be dealing with?
· What selling price should I ask for the property?
· What is your fee for selling, including GST? They should provide a copy of the fee structure.
· What other costs are involved? Eg. Advertising, photography, boards.
· How do you suggest we sell? Eg. Private treaty offers or auction. Why?
· What is the period of the selling agency agreement? Usually 90 days.
· Can I terminate the agreement if I am not satisfied with your services, immediately?
· How do you conduct inspections? Eg. Open for inspection or inspections by appointment
· What should I do to prepare the property for sale?
· How will you advertise the property? If advertising money is paid then you should receive a detailed schedule outlining each week’s progressive campaign.
· How will you keep me in touch with the progress of the sale?
· Can you give me names of people who would recommend your services or can you provide me with testimonials?
How much do agents charge to sell your property?
The fees charged by agents are deregulated. So, the amount they charge can vary and are, or should be, negotiable. Fees and charges vary considerably depending on such things, as the level of service the client wants, the location of the property, the experience of the agent, and the state of the market. Remember be prepared to negotiate. Agents are required to provide a written copy of their standard fees. Deciding who will sell your property should not be based on the lowest fee. You should also consider who will provide the most professional service and be best able to sell your property.
Step 2: Setting the sale price
Real estate agents will give you an obligation free appraisal and estimate of the price range they think your property may sell for. This is not a valuation. An appraisal is an agent’s opinion based on a review of similar properties that have sold recently in the area and their understanding of the market. Be aware as stated previously, some agents will give a higher price so you appoint them to handle your sale. Remember your property could sell for a higher or lower price than the anticipated price range depending on the state of the current market.
Step 3: Preparing contracts and agreements
Agency agreement
Your agent will prepare an agency agreement specifying the selling price, the selling fees charged, details of the marketing and advertising costs and the circumstances under which the agent is to be paid. The agreement should also specify the length of the agreement and how it can be terminated. An agent cannot act on your behalf unless you have both completed a written agency agreement.
Contract for Sale
A Contract for Sale of a residential property is a written contract detailing the terms and conditions of the sale of the property. The contract will also specify the time for settlement and the deposit required. You must have a proposed contract for sale prepared before you put your property up for sale. A solicitor or conveyancer usually prepares this. The contract may have a number of details, such as easements and covenants. It should specify a list of inclusions such as blinds, curtains, light fittings, dishwasher, pool equipment and any other items you intend to leave. It should also state any specific exclusions. You should also consult your solicitor regarding any possible benefit in providing an up to date survey and approvals of any changes to the property.
Step 4: Preparing your property for sale and inspections
Think ahead to prepare your property for sale. If your property needs repairs and maintenance, try to do these as soon as you can. Take a critical look at your property. Identify all those items that should be fixed. Ask your agent for suggestions about hoe to make your property look more attractive in the buyer’s eyes.
Here a some point that may be of benefit,
· Make sure your house is tidy and clean
· If you have excess furniture, consider storing this so the house is uncluttered
· Clear the cupboards so they appear spacious
· Clean the windows
· Fix small but annoying things like dripping taps, loose knobs and sticking doors
· Open the curtains and blinds to let natural light in
· Keep pets out of the property during inspections
· If you have a garden, remove any weeds, mow the lawn and tidy the garden beds
· Create a welcoming atmosphere – fresh flowers and calm music paying in the background
Spending a small amount of money can often make a big difference. For instance, changing the colour of a room by painting can affect the saleability of the property. The difference between a freshly painted property in good repair and an untidy and poorly maintained property can be significant.
Your agent can also recommend some people such as tradesmen that can assist in small improvements to help your property to sell.
Step 5: Inspections
“Open for Inspection” times can be arranged where potential buyers can go through and inspect your property. There are set times for inspections, usually once or twice a week for up to an hour. The agent guides people through and answers questions about the property. They will normally collect names for follow up contact. Open for Inspection periods are popular with potential buyers. Some buyers do not like to make an appointment to view a property. As a seller, having set periods of time for inspections helps you to present your property well in a controlled situation.
Be conscious of making sure your house is safe for people to enter and that your possessions are secure. Remove small and valuable items. It is always a good idea for you to go out while your property is open for inspection. Staying home can be a distraction for potential buyers and your agent. However, discuss this with your agent.
Some properties are put on the Internet and have Virtual Tours of the property. An increasing number of buyers are using the Internet as a way to take an initial look at properties.
Step 6: Preliminary Deposit
In some cases, someone interested in purchasing a property may pay a deposit as a first step in the buying process. It is not binding. This does represent a holding deposit. While the seller can accept more than one deposit, they must inform the other potential buyers who have lodged a deposit, that they have done so. A buyer does not secure the property until contracts have been signed and exchanged.
Step 7: Exchange of contracts
When your agent has negotiated an agreed sale price for your property, you and the buyer will sign and exchange the Contract for Sale and each party will have a copy. The buyer pays a deposit of 10% of the purchase price. Under a sale through Private Treaty, the buyer may have five business days as a “cooling of period” from exchange where they can withdraw their offer to buy. If they do not proceed with the sale, they must pay to the vendor 0.25% of the purchase price. This amount is usually paid when both parties have signed contracts before the cooling off period begins, commonly known as a holding deposit.
When contracts become “unconditionally exchanged”, usually 5.00pm on the last cooling off day, the remainder of the deposit is paid to the agent which is held in their trust account on behalf of the buyer. In certain circumstances, this money maybe released to the vendor to purchase other property. You need to contact your solicitor or conveyancer in regards to this.
On settlement, the full purchase price is then paid.
Step 8: Settlement
At settlement, the buyer pays the balance of the purchase price and adjustments are made for such things as water and council rates, strata levies for units, adjustments in rental income for investment properties, any outstanding mortgages are paid out and the buyer becomes the legal owner of the property.
Settlement usually takes place around six weeks following exchange of contracts and is specified in the contract. However, settlement dates vary so be sure to allow sufficient time to deal with moving to a new home.
Costs when you sell
There a number of costs you should consider when you sell. They include:
· Agents fee, including GST
· Advertising fees – normally you will pay or contribute for advertising costs. This will be specified in your agency agreement
· Discuss with your solicitor or conveyancer whether you need to provide any searches or specific property information
· The legal and conveyancing fees (including searches) in the conveyancing process from the preparation of the contract through to settlement
· Maintenance and repairs e.g. cleaning and painting
· Moving costs when you leave the property and set up costs for your new home
· Stamp duty if you are purchasing another home
If we can be of any further help or assistance in your decision-making, please do not hesitate to contact us at any time.
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