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. In general, 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 much 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. Before bidding begins, advise your agent what you nominate as the reserve price. This is usually 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.
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. 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:
Settlement is the conclusion of the sale transaction and usually takes place about six weeks after contracts are exchanged however is determined by what is agreed within the contract for sale that has been exchanged.
Auctions – The process explained
Feeling under the hammer? Auctions – The process explained
The thought of buying or selling a property at auction may well seem intimidating if its something you’ve never done before. TV images of an auctioneer waving a hammer around and calling out excitedly, taking bids from people you didnt even see move dont necessarily make it look easy. But as with many things in life, its likely you have a fear of the unknown, rather than a specific fear of the auction process.
Auction sceptical vendors may cite the pressure of auction day or a fear of not getting the best price as reasons to avoid selling via auction. Auction -averse buyers may be intimidated by the process, fearing the bidding will be too fast or that they may pay too much. But the real key to a successful auction outcome whether you’re a buyer or a seller is to understand the process.
Download Auctions 101 in the sidebar to the left to read more.