A residential property cannot be advertised for sale until a Contract of Sale has been prepared.
The contract must contain a copy of the title documents, drainage diagram and the Zoning Certificate (s 149) issued by the local council. Property exclusions must also be included and a statement of the buyer’s cooling off rights must be attached. The draft contract must be available for inspection at the agent’s office. It is important that you consult your solicitor or conveyancer about preparing the contract to make sure that everything is in order.
There are two main ways of selling a residential property, by Private Treaty and by Auction.
When you sell your home by private treaty, you set a price and the property is listed for sale at that price. It is important to understand that the agents are there to advise you on their opinion of price in the current market, but it is ultimately your decision. In general, the price is negotiable and quite often the buyer making an initial offer will offer lower than the asking price.
The process of a sale by private treaty offers the following benefits:
Selling privately is often just as tense as a public auction, and you will be faced with important decisions when you are presented with offers which are lower than your asking price.
There are risks with selling by private treaty which also should be considered:
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 and over 90% of the properties we sell are auctioned, but before you decide to go down that path, do your homework and familiarise yourself with the process and what it involves. You should discuss the benefits and how auction works to your advantage with your agent.
Setting a reserve price
The reserve price is the lowest amount you are willing to accept for your property, and is set usually only a few days prior to Auction, or before bidding begins. Once again, it is important to understand that the agents are there to advise you on their opinion of price in the current market, but it is ultimately your decision. You will need to advise your agent what you nominate as the reserve price. This is not told to the prospective buyers.
If the highest bid is below the reserve price, the property will be ‘passed in’. You will then either try and negotiate a price with interested bidders or put the property back on the market.
If the bidding continues beyond the reserve price, the property is sold at the fall of the auctioneer’s hammer. For a detailed guide on bidding at Auction, see our ‘How to bid at Auction’ guide: http://raywhitegerringong.com.au/buy/how-to-bid-at-auction/
The successful bidder must sign the sale contract and pay a 10% deposit (unless otherwise agreed to a different amount prior to auction) on the spot. This deposit is usually kept in the real estate agent’s company trust account, unless otherwise instructed from the vendors’ solicitor, where it will remain until settlement. There is no cooling-off period for anyone who buys a property at auction. If the property is passed in at auction but contracts are exchanged on that same day, the cooling-off period still does not apply.
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 unless otherwise agreed in writing by both vendor and prospective purchaser often facilitate through a solicitor.
The contract exchange is a critical point in the sale process because the buyer or seller is not legally bound until signed copies of the contract are exchanged.
Settlement is the conclusion of the sale transaction and usually takes place about 42 days (six weeks) after contracts are exchanged however is determined by what is agreed within the contract for sale that has been exchanged. Once settlement has taken place, the purchasers have legally taken possession of the property and the sellers are required to hand over all keys to the property. The deposit held in trust by the agents is then to be released to the seller, or as per instructions from the vendors’ solicitor.
For further information, visit www.fairtrading.nsw.gov.au