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These notes are not intended to be an exhaustive guide to selling a home and particular properties or circumstances may demand alternative or additional considerations.
Please read the disclaimer.
In some jurisdictions agents and brokerage firms are able to legally represent both buyer and seller in any given transaction. However, they generally have a duty to disclose all the information they possess to the buyer. There may also be statutory requirements requiring the vendor to provide all relevant information concerning the property to the buyer. In any case, it is important that the vendor disclose all relevant information that may affect the decision of a potential buyer to purchase the property.
On 21 November 2016, the Supreme Court of California held1 that the Agent had a duty to learn and disclose all facts materially affecting the value or desirability of the subject property.
1. Hiroshi Horiike v. Coldwell Banker Residential Brokerage Company, et al. No. S218734 157.20kb 21 NOV 16. [ Also available on GayLawNet(R)(TM) here]
There are two principal methods of buying or selling real property - the auction system and by private treaty.
The auction system is the most popular in Victoria however the private treaty system is more usual in other States of Australia and in the United Kingdom. You can of course employ an estate agent to sell the property privately (by private treaty).
The main difference between selling by private treaty and the auction system is that in a sale by private treaty an asking price must be set when the property is advertised, (even if only by stating "Offers in excess of $[amount] invited". This method does require that the estimate of the value of the property be gauged more carefully and accurately than perhaps the auction system may require.
Most importantly, the real estate agent has traditionally (though not always) paid for all advertising costs; under the auction system the seller pays the advertising costs. What sometimes happens now is that the seller pays a portion of the advertising costs. Advertising budgets are normally smaller in private treaty sales than in auctions but sellers still stand to save money.
If the agent has paid all advertising costs and the house remains unsold at the end of the sole agency agreement, the seller has not lost their advertising money, unlike the under the auction system.
Sellers avoid the tension of auction day where they not only have to endure the agony of waiting to see if the auction is successful but may watch their impeccably presented house over-run by neighbours, auction buffs and children.
Provided the seller has named a sensible asking price - and this is an important proviso - then the house is usually and readily saleable. Here, the estate agent's expertise and local knowledge may be valuable (but see "savvy seller" below).
It is advisable to obtain a sworn valuation, which usually includes details of recent sales of comparable properties in the area. This will ensure that sellers have a good idea of the value of your property.
If they choose, sellers can enjoy the benefits of the multiple listing system.
Most estate agents (in Victoria) are members of a multiple listing bureau. Under the multiple listing system the seller pays only one commission but their agent circulates details of the property to other agents in the region who also work to sell the house. The vendor's agent receives the full commission if s/he sells the property but usually only about 40% of the commission if one of the other agents sells the house. In that case the agent who sold the house receives the remaining 60%.
Multiple listing is not popular with agents for obvious reasons.
Commissions are de-regulated and whilst the normal lowest rate is usually about 2–3% of the selling price, it is possible to negotiate the commission payable with the agent. For example, a reduction to 1.5% commission would represent a A$2,500 saving on a house selling for A$500,000.
Of course a "savvy seller" who is comfortable with deciding the asking price, can sell the property themselves and save paying any commission at all. Also, expert valuers can be retained (in Australia through the Australian Institute of Valuers) to provide an independent sworn valuation (for sellers or buyers) that usually include recent sales results and advice on important features of the property and other properties in the area, all for a fee of between A$500 to A$1,000.
In this instance you have to arrange for listing the property in print media and on the Internet. However, you then get to meet prospective buyers and can be sure that they are shown all the attractive attributes of your property.
See: Doing It Yourself
The main stumbling block is arriving at a realistic price to be advertised. This is where a sworn valuation is well worthwhile. Realty agents have been known to inflate their valuations in order to persuade you to list the property with the agency. You may then find that some Agents persistently talk you down in an effort to lower your expectations.
Sellers should remember that unlike other professions, where a fee is charged for service, the estate agent receives a commission only if the house is sold. This may result in considerable pressuring to sell being experienced.
In Victoria, there is a cooling off period of three business days for buyers (except within 3-days of a public auction).
When agents schedule open for inspection days and a prospective buyer is not enthusiastic about the property, they have been known to take the prospective buyer to other properties they have listed.
The major plus is that the asking price for the house is clearly stated.
The buyer need not be rushed into making a decision whereas under the auction system the buyer must arrange finance in four to six weeks and then in a matter of minutes make crucial decisions under often intense competitive pressure.
There is usually room for negotiation or "horse trading" whereas on auction day the buyer must put up or shut up.
The major problem for buyers is the unfortunate practice of gazumping, that is, even when a buyer has paid a deposit and signed a contract at the asking price s/he can lose the property to another person offering more than the asking price. The document is as yet only an offer to purchase.
Legally, the contract must be signed by both parties to close the sale; that is, until the seller signs the contract s/he is free to negotiate with any other parties.
Because of the popularity of the auction system (in Victoria) there is simply not the same range of houses offered for sale by private treaty. This may however, change with the growing use of the Internet for marketing properties both nation and world-wide.
(Acknowledgement: Most of this material was originally written by Matthew Ricketson "The Age" 9 September 1985).
Most home buyers consider very similar factors when they decide to buy a house. The most important factors influencing 1st, 2nd, 3rd and subsequent homebuyers are (in order) price, suburb (locality), number of bedrooms, condition of kitchen and bathroom, quality of street.
After those factors, of varying importance between homebuyers come public transport, style of house, proximity to shops, closeness to city and availability of a garage.
The time you spend in preparing the property will be handsomely rewarded. Planning and preparation are fundamental. Do some research, gather information.
It is recommended that you retain a lawyer to handle the legal aspects and preparation of necessary documentation. You can do it yourself but you will save your time and the stress of having to learn what to do or not to do as there are some serious traps to avoid.
In Victoria, you must deliver a current "Vendors Statement" to the purchaser before an enforceable contract of sale can be entered into.
This statement sets out any matters that may affect a purchaser's decision whether or not to buy, such as Restrictions (easements, covenants or similar restrictions), Planning & Road Access, Outgoings and Statutory Charges including Body Corporate charges where appropriate), Services (which utilites are connected or not), Building Approvals (during the past 7 years), Notices (from any public authority or government department) and Title (copy of the title and other details, including the plan of subdivision and proof of the seller's right to sell, if necessary).
Get a sworn valuation and compare it to values provided by agents to determine your "rock bottom" but realistic price. Valuers will often include recommendations on any work that will enhance the selling potential of your property. You can then play with adding 5% or 10% to gauge what the market will bear. If your asking too much, prospective purchasers will soon let you know (but you may lose a buyer).
You can market your house as lavishly or inexpensively as you like and the advertising media you choose will often help you in wording your advertisement and making it more professional. Think also about non-traditional advertising avenues - anywhere that people gather.
You will need "Open for Inspection" and "For Sale" signs. There are property sale billboard sign-makers who will undertake this work for you
Clean up and present your house well.
Prepare a list to keep by the telephone detailing various aspects about the house - age, construction, size, room specifications, chattels included (or excluded), proximity to local facilities such as schools, shops and public transport. Consider producing a flyer to hand to those who come to inspect the house.
If you decide to use an agent, take the time to interview and select a real estate agent who is best suited to your needs and is experienced in selling your particular type of property. You may find that the price achieved for your property easily meets or exceeds your expectations. Be very wary of agents who quote the highest value for you property.
In a deregulated market base commisions of around 2% or even lower may be negotiated however, you might also consider providing an incentive if a result above a certain level is achieved and this may be built into the agreed fee structure.
For further information and resources visit: Land Channel, Victoria.