Selling real estate

Before you sell

Research carefully. To get the best price for your property select an effective and ethical agent. Ask people who you know and seek out who is active in your area by checking local newspapers and internet sites, and visiting houses open for inspection.

Shop around. Many consumers engage the first agent they visit and are then stuck with a sole or exclusive agency for 60 days with someone they are unhappy with later. Visit a number of agents to find the one you like and who can do it for a price you are prepared to pay, as fees are negotiable up to the maximum set by the legislation. You should be careful that if you engage an agent for a sole or exclusive agency and then engage other agents you may be liable for two or more commissions.

If you are not sure who to appoint, ask two or three agents to inspect your property and provide you with a listing presentation. This will include an indication of the current market price, an overview of market conditions, and a plan on how the agent will market the property. Don't be sucked in by an agent who simply says they can get the best price. Look at what they can do for you.

Don't have unrealistic ideas about the price for your property. If you overprice your property you may never sell it.

Check prices. Look at several real estate agents' listings, the internet, or newspapers to find out the average market price for a property similar to yours.

Follow market changes or downturns that may influence the price you want.

Do not be influenced by an agent who says they can get you the highest price. Some unethical agents use this tactic to lock you into a sole or exclusive agency and then can't deliver on their appraisal. Ask the agent how they arrived at the price and ask them to show you recent sales and statistics to verify their opinion.

Ask the agent for testimonials from other customers. Contact people to confirm their comments. Also consider whether they are a member of the REIQ.

Find out the different processes and options involved in selling through a real estate agent, auctioneer or as a private seller.

If you have an investment property, talk to an accountant. Ask about any taxation implications to verify claims made by agents seeking to sell your property.

If you consider making improvements to your home before putting it on the market, make sure you engage a suitably licensed electrical contractor to carry out any electrical installation or repair work.

If your home does not already have a safety switch, you may also consider installing one. A safety switch will cost around $200 to purchase and have a licensed electrical contractor install. A safety switch is another small incentive for buyers to purchase your home over another without one, because if a residential property does not have a safety switch the buyer must install one within three months of settlement.

Selling Privately

If you wish to sell your own home rather than engage a licensed real estate agent, do some homework so you're clear about what is involved.

You still have to meet legislative requirements set out in the Property Agents and Motor Dealers Act 2000 and Fair Trading Act 1989, when you market your property to potential buyers.

It's not as simple as putting a sign in the front yard and advertising in the media or on the internet.

Seek legal advice about the form of the Contract of Sale for your property - the Office of Fair Trading does not have a standard contract for the sale of house/land.

You can buy a REIQ Standard House and Land Contract which has been prepared in accordance with relevant legislation and in conjunction with the Queensland Law Society, as part of a full conveyancing kit, or from law stationer.

Another standard contract, which is different to the REIQ contract but also legal, is available free to eligible applicants (who are not members of the real estate industry) from ADL software by calling (07) 3367 1982 or emailing sales@adlsoftware.com. A sample can be viewed in pdf format from their website www.adlsoftware.com however it is strongly recommended you use the services of a solicitor, even if using a standard contract, to draft your contract. For assistance in selecting an appropriate lawyer, visit the Queensland Law Society's website at www.qls.com.au.

The contract must include the Warning Statement PAMD Form 30c which has to be attached to the front page (see Forms Page). This statement must be signed and read by the buyer before he or she enters into the contract. The form is available on www.fairtrading.qld.gov.au (search 30c).

You must also ensure you provide the legally required five-day cooling-off period to the Contract of Sale.

In the end, the choice between using a real estate agent or selling your home yourself should be a decision informed by the real costs and your ability to generate buyers within the necessary time.

If the main reason you want to sell your home privately is to avoid agent commission costs, consider that it is only the maximum commission that is set by law. You can negotiate the rate of commission with an agent and shop around for the best deal.

For those who want to do it themselves, there are a number of businesses that do provide sales advice and marketing support, usually for a fee (usually much lower than agency commission). Search the keywords "private sale" on the internet as a starting point.

In summary the main tips for selling your own home privately are:

  • research the local market and seek out advice on the process;
  • consider getting an independent valuation to set a realistic price;
  • be prepared to invest plenty of time for open houses and inspections;
  • check you meet all legal requirements;
  • have your conveyancing solicitor prepare the Contract for Sale and make a note of all inclusions such as light fittings, curtains and blinds;
  • obtain a building and pest inspection report to allow you to do necessary repair work before the sale. A clear report is a selling feature.

Appointing an agent to sell your property

There are normally three types of appointment:

  • open listing appointment;
  • sole agency appointment; and
  • exclusive agency appointment.

Agents with an open listing appointment only get a commission if they actually sell the property. You can open list your property with several agents and cancel the appointment at any time by giving written notice to the agent.

An agent with an exclusive agency appointment is entitled to receive an agreed commission upon sale, whether or not they actually sell the house. Therefore if you sell the property yourself, you must still pay the agent's commission. If another agent sells your property (and you property appointed them), you may also have to pay them a commission - potentially you could be obliged to pay two commissions.

A sole agency appointment is very similar to an exclusive agency, but your agent is not entitled to commission if you make the sale yourself and the agent played no part in attracting or introducing the buyer. Be careful of the distinction between a sole and an exclusive agency.

The appointment form outlines the difference between open listings, sole and exclusive agencies (see Forms Page).

Open listing appointments give you the flexibility to use a number of agents to compete for the commission on the sale of your house while sole and exclusive agencies allow for more personalised and targeted marketing.

Details on the appointment form must include:

  • the proposed term of the appointment;
  • the type of service the agent is providing;
  • how it is to be performed;
  • the fees, charges and any commission payable for the service;
  • the expenses, including advertising and marketing expenses, the agent is authorised to incur;
  • the source of and estimated amount of any rebate, discount, commission or benefit that the agent may receive in relation to any expenses that the agent may incur;
  • any condition, limitation or restriction on the performance of the service;
  • when the fees, charges and any commission for the service become payable;
  • that where the commission is based on a percentage of the sale price, it is worked out only on the actual selling price (not listing price); and
  • if the appointment is for a sole or exclusive agency, the date the appointment ends (which can be no more than a maximum of 60 days).

Note: You can negotiate the commission - only the maximum is set by law.

The maximum commission for residential property sales is 5% of the first $18,000 of the purchase price + 2.5% of the balance of the purchase price.

Appointment Length

The length of sole or exclusive agency appointment is set by you up to a maximum of 60 days. Most agents will want 60 days. Open listings can be continuous but you have an absolute right to terminate an open listing immediately at any time by giving written notice.

You may reappoint an agent for a sole or exclusive agency for more than one term if you are satisfied with their services (see Forms Page). However, the agent cannot be reappointed for more than 60 days at a time or earlier than 14 days before the expiry of the previous appointment.

If you enter into a continuing appointment for the agent to provide a number of services (eg. selling all the units in a building complex or property management for an extended period), the appointment form must state:

  • the date and continuing appointment ends; and
  • the appointment may be revoked on giving 90 days notice or some lesser period (not less than 30 days) agreed by the parties.

The notice revoking a continuing appointment must be signed and given to the agent. Stopping a continuing appointment does not affect existing contracts the agent may have entered into on your behalf.

Make sure the appointment form is signed and dated by you and the agent or their representative and you receive a signed copy of the form.

Choosing a method of sale

The decision to sell by auction or private sale will depend on many factors including the type of property and location, as well as the seller's available timeframe and personal preference.

There are three main ways that real estate can be bought and sold:

  • Private sale treaty - In a private sale the property is advertised and offers are invited from prospective buyers. The sale is negotiated between the buyer and seller, usually with the assistance of an agent, and concluded with a written contract.
  • Public auction - An auction is a public sale conducted by an auctioneer either directly or engaged by a real estate agency. It is advertised for a specific place, time and date. Prospective buyers bid and the property is sold to the highest bidder, provided the reserve price has been reached or the seller accepts the bid. You can agree to receive offers before the auction occurs. If the property is "passed in" because it failed to reach reserve, usually the highest bidder has the right of first refusal to further offers on the property.
  • Sale by tender - A sale by tender invites competitive tenders from potential buyers where all the offers will be considered at a specified time. This method is becoming a growing marketing practice.

The agent will recommend a method of sale based on the type and location of the property, the nature of the market and the seller's available timeframe and personal reference. They should also back up their recommendation with recent sales data.

You should understand all the pros and cons before deciding on a method of sale. The agent's commission is generally the same whether the property is sold privately or at auction. However, there are usually additional costs involved in selling by auction (auction fees and marketing costs if the property is "passed in").

Although it is best not to be in a hurry to sell, sometimes there is no choice. If a property must be sold quickly, an auction may provide a better opportunity to sell by a specified date. However, there is no guarantee that by doing this the property will be sold, or that the best price will be achieved.

Not all properties are suited to the auction method. The properties most likely to succeed at auction are those with special features which may attract more competitive bidding.

Auctions also do not necessarily provide the best price as the person who wins only has to bid marginally above other bidders - you cannot be sure they have offered the most they were prepared to pay although some people at auction bid more than they wanted in a competitive urge to purchase.

Selling Costs

The law permits an agent to be reimbursed for costs and expenses incurred on your behalf while selling your property. Ensure you and your agent discuss the fees to be authorised, when they are to be paid, and ensure these details are on the listing authority. An agent can only seek reimbursement from you if they are authorised to incur the costs and provided a detailed statement of expenditure. The most common costs will be for searches, bank fees and charges, advertising, couriers, telephone and fax.

If you provide money to an agent in advance for any advertising, marketing, searches etc., it must be placed in the agent's trust account. While some agents will not negotiate on their commission amount, many will negotiate on the marketing costs.

You are strongly advised not to give an agent, auctioneer or developer money for advertising or marketing until you have seen a marketing plan with a schedule of how and when the money is to be spent. An agent must be fully accountable to you for how your money is used. The agent is not permitted to seek a general marketing levy where there is no accountability for the actual cost of the services provided.

Being clear with your agent

An agent must protect your confidentiality in a transaction. Discuss with the agent how the question of "reason for sale" should be disclosed when dealing with buyers. Also discuss how price should be dealt with.

If you advertise a price, make it clear to the agent whether the price can be quoted as negotiable or not.

This instruction should be in writing. Likewise, if you are advertising without price, discuss how buyers will be guided to what is a suitable offer. Many agents will often guide buyers with market research in the form of a Competitive Market Analysis (CMA). Ask to see a copy of this document and approve it in writing before it is given to buyers.

Be careful of agents using low lead-in (initial) and advertising prices. They can damage the price integrity of your property and may breach the Property Agents and Motor Dealers Act 2000 and the Fair Trading Act 1989 for engaging in false or misleading conduct.

Ask the agent to guide you on what items in the property are standard inclusions in a sale. If there are items you wish to retain, make sure the agent excludes them from the sale.

An agent will require a great deal of information from you when listing a property for sale. Provide a copy of your rates notice, a title reference certificate, or some other documentation to verify you own the property and confirm its description details.

If you are listing a tenanted property for sale, ensure your tenant and managing agent have been given the appropriate notices notifying them of the pending sale.

If you're selling a property with vacant possession, you must ensure vacant possession at settlement.

If you're selling a property with tenants, you must ensure the contract specifies this and all parties involved are clear on their obligations.

You must ensure all inspections are conducted according to guidelines set out in the Residential Tenancies Act 1994. Your appointed agent must also respect your tenant's right to "peaceful enjoyement" of the property. Sellers often appoint just one agent as a sole or exclusive agency when marketing rented property.

Remember, once you choose your agent, they are working for you and not the buyer. You must tell them about any problems there may be with your property so they can deal honestly with potential buyers and minimise the risk of a contract falling through.

Selling the property

Carefully read any advertising/promotional material prepared by your agent and approve it in writing before it is published or promoted. It is also useful to initial your approval on the copies in case it is altered.

While your property is listed for sale, ask for frequent written activity reports as often as you require (subject to negotiation), that outline who has been through the property, buyer feedback and general market updates.

Instruct the agent through the agency appointment form to inform you both orally and in writing of any offers from buyers for the property (see Forms Page).

Check all signs relating to the sale of your property are only placed by your agent.

Sometimes interested buyers will knock on your door and contact you directly. You should politely direct them to your agent to avoid being directly involved in the negotiation process.

When the buyer signs a sales contract

Some agents will prepare a draft contract on your property at the time of listing. This gives them an opportunity to conduct searches and ensure that the information it contains is correct before you and a buyer sign. Check the sales contract to make sure it is accurate and reflects your instructions and ask your solicitor to check the draft contract.

Do not accept a contract to sell your property unless:

  • it has been properly signed by the buyer;
  • the terms and conditions of the offer to purchase are acceptable to you;
  • you can fully comply with all contractual requirements (including the notices required under various Acts related to the transfer of the property);
  • you have made appropriate provision in the contract to pass on to the buyer any restrictive or building covenant or unregistered agreement in the sale contract; and
  • you check the address and description of the property are correct.

Check with the agent that they have received the deposit. Check the dates for payment of any additional deposits are stated in the contract and fall within a few days from when the contract is signed. Make sure the agent immediately advised you if these additional deposits are not received.

Make sure you receive every page of a contract, including all standard conditions before you sign it. Read and understand these. Ask if you don't know what they mean.

Remember the agent is not qualified to give legal advice on the contract or to modify or vary it. Discuss any changes with your solicitor.

Don't allow the agent to deter you from seeking legal advice before signing a contract or an agency appointment.

If you have a solicitor acting for you, make it clear the solicitor will be the one who communicates with the buyer or buyer's solicitor or agent on your behalf if that is what you want.

Be aware of it is common in Queensland to conduct negotiations on the sales contract. When a buyer makes an offer that is not acceptable to you, you have atleast three options.

  1. Accept the offer by signing the contract.
  2. Reject the offer by not signing the contract.
  3. Respond with a counter offer by altering and signing the contract to suit your terms of sale. If the buyer accepts the counter offer by initialling the changes, the contract becomes binding.

Make sure you understand the process. If either party alters a Contract of Sale in anyway, ensure all parties signing the contract initial the changes. Failure to do so may void your contract.

Settlement Day

Settlement usually takes place between 30 to 90 days from the signing of the contract, but this period can be negotiated.

On settlement day you, or the person authorised to receive payment on your behalf, are paid the balance of the purchase price in exchange for the title of the property, and the buyer can obtain the keys and take possession of the property, unless otherwise arranged.

It is your responsibility to ensure the house is left vacant (unless otherwise provided in the contract) and clean, and to provide the keys to your agent by the time specified on the settlement day or an earlier agreed time.

Beware that if the buyer is not happy with the condition the house is left in (after inspecting it just prior to settlement), they may seek legal advice regarding whether settlement can be withheld until the problem/s are fixed.

At settlement all outgoings such as rates and other charges will be adjusted between you and the buyer. You are responsible for rates up until and including the day of settlement.

The buyer is liable from the day after settlement.

Under Queensland's standard contract terms, the buyer carries the risk of the property from 5pm the next working day after signing, so it is their responsibility to take out an appropriate insurance cover note to legally protect the property.

Settling the contract

Usually, the agent will deduct their commission from the deposit held and forward the balance to you after settlement. The agent is accountable to you for the money received as well as the expenses paid on your behalf.

You may not be obliged to pay a commission to an unlicensed agent or to an agent who does not have a written and current agency appointment.

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