The Process of Selling A Home in Queensland
Entering into an “appointment agreement” with your real estate agent
Once you have decided to sell your property and have made a decision on the agent you wish to use to sell your home, you will be required to enter into an agreement with your agent in order to authorize them to market and sell your home. This document, known as a Form 6, will specify the length of time the agent will be appointed for (maximum of 90 days allowed), the marketing method and price, the type of agency, the commission the agent will be charging for their service, and the marketing budget that will be used to promote your property.
Length of Agreement
The maximum length of time of the agreement allowed by law is for 90 days, however, the agreement can be terminated by giving written notice of 30 days, but the appointment must run for a minimum of 60 days, or earlier by mutual agreement in writing.
Type of Agency Agreement
There are three types of agency agreements you can enter into.
Open Listing – You appoint the agent to sell your property, but retain the right to appoint other agents simultaneously to sell your property. The appointment can be terminated at any time by giving written notice and no end date is required for an open listing. The agent is entitled to the agreed commission if the agent is the effective cause of sale.
Sole Agency – You appoint a single agent to sell your property and retain the right to sell the property privately and should you sell the property privately and the agent was not the effective cause of sale, you do not need to pay the agent any commission.
Exclusive Agency – You appoint a single agent to sell your property and the agent is paid commission whether they or anyone else sells the property during the term of the appointment.
There are two common methods for selling a home in Queensland, that is, by Private Treaty or Auction Sale. I personally favour the Private Treaty method for most cases and thus will focus on this method here.
Private Treaty is where the property is advertised for sale and is sold by private negotiation with prospective buyers. This method of sale still allows for a multitude of marketing approaches, a few of which are as follows.
Marketing with a fixed advertised price
Marketing with a price range, for example: $850,000 - $900,000
Marketing with an offers over price, for example: Offers Over $850,000, or $850,000 +
Marketing without a price at all, for example: Contact Agent or Immediate Sale
Preparing your home for sale
Once you have appointed your real estate agent, you will need to plan and prepare your house for sale. Presentation is key with regards to obtaining the highest possible price for your home and it's extremely important to create the best first impression for any buyer. There are different lengths one can go to improving presentation, but there are a few basic things one can do to make the most of what your home has to offer. My “101 Tips” book can certainly assist you in this regard. Click here to receive a copy of our “101 Tips” booklet.
Property Inspections – Open Home vs Private Inspections
Once your property is advertised, there are essentially two options with regards to buyer inspections.
1. The first is the traditional “Open Home”. This is a time that is advertised for any person who is interested in viewing your property to come view. This is traditionally done on a Saturday with a half hour to one hour window. The agent will record details of all parties that enter the property.
2. The second is to arrange private inspections for buyers who may not be able to attend the open home or for buyers with whom it will be more beneficial to have more intimate communication with.
There are advantages to both methods of inspection and this can be tailored to meet your preferences and circumstances. The advantage of the open home is that it allows for more buyers to view your home at one time and thus creates a more competitive environment. The advantage of the private inspection is that it allows the agent to develop a more meaningful relationship with the buyer and thus be in a position to understand their position and negotiate more effectively for a higher price.
It is always advisable for the owner not to be present during inspections. Buyers are often intimidated by the presence of the owner and are very reluctant to engage in meaningful conversation with regards to opinion of the property and price.
Negotiating with a buyer
Once a buyer has expressed an interest in your property, it is the agents’ job to negotiate and achieve the highest price the buyer is willing and able to pay for your property. This is often a process of back and forth negotiation and can be a stressful time for the owner. It is best to trust in the skill of the agent and understand that it is a process to get to the final highest price that the buyer is willing to pay.
Entering into a sale contract: The Conditional Contract – The Unconditional Contract
Once a price and other details have been agreed upon and the contract is signed by both parties, the agent will date the contract. This date will become the effective starting date of the contract and all conditions relating to time on the contract will be calculated from this date.
The Conditional Contract – this is a contract in which there are still conditions to be met before the contract becomes irrevocable. Most contracts will be subject to a 5 business day statutory cooling-off period, during which time the buyer can terminate the contract and pay a termination penalty of 0.25% of the purchase price.
The most common conditions to be met before a contract becomes unconditional are “Finance” and “Building & Pest Inspections”.
The condition of “Finance” allows for a length of time, usually between 14 to 21 days, for the buyer to obtain finance from a financial institution. If the buyer fails to obtain finance, the contract will be cancelled with no penalties to the buyer.
The condition of “Building & Pest Inspection” allows for a length of time, usually between 7 to 14 days, for the buyer to arrange for a inspection of the property by experts to assess the building condition and if the property has been effected by termites. Depending on the outcome of these inspections, the buyer may accept the property as is, or negotiate for rectification of any problems or reduction in the price, or the buyer may cancel the contract without any penalty.
The process of building and pest inspection can prove to be a crucial element to the selling process and a good agent will always be present during the inspections and will suggest for the buyer to be present as well. This allows for any issues that may arise to be dealt with immediately and discussed face to face with the person conducting the inspections.
If you suspect there may be issues that will arise during these inspections, it can be advantageous to arrange for inspections to be conducted before going to market as it is much easier to deal with known issues than to have them come up as a surprise and damage ones negotiating position down the line.
The Unconditional Contract – this is a contract where all conditions have been met. The buyer and seller now do not have any option to cancel the contract and the sale of the property will proceed to settlement. A contract entered into without any conditions specified can be unconditional on signing.
The rights and obligations of the buyer and seller
Once a contract has been entered into, it is the buyers’ responsibility to insure the property.
Once unconditional, the buyer has a legal right to view the property one more time prior to settlement, this is called the pre-settlement inspection. This is usually done a couple of days prior to settlement by choice of the buyer. A lot of buyers do, however, ask to view the property a couple of times prior to settlement, and this can be arranged by mutual consent via the agent. The agent will be present at all inspections.
Property Settlement Day
On settlement day ownership of the property will pass from the seller to the buyer. This will be at an appointed time on the day and notification will be given to all parties by the solicitors once this has occurred. The agent will collect keys from the owner and will hand the keys over to the buyer only once settlement has occurred. The seller is obligated to have vacated and cleaned the property prior to settlement.
Should you wish to understand the process in more detail, please feel free to call me or make an appointment for me to visit you.