Selling or purchasing a property is one of the most significant decisions and investments in your life, so you want to ensure it is done correctly.
One of the benefits of Catron Simmons Lawyers is that you know exactly who is handling your matter, and we are just a phone call away for any questions you may have. We can also be wholly electronic, meaning there is no requirement to attend our office in Bella Vista in The Hills.
There are two main ways of selling a residential property: by private treaty and by auction.
Private treaty
When you sell your home by private treaty, you set a price, and the property is listed for sale at that price.
Benefits of a private treaty sale:
- greater control over the sale
- time to consider offers by potential purchasers
- the ability to extend the time for which your home is for sale indefinitely
- potential purchasers must make offers for your property ‘blind’, without knowing what other buyers think it is worth.
Risks of a private treaty sale that should be considered:
- If the price you set is too high, your property may not sell
- If the price you set is too low, you may miss out on maximising the selling price.
You should also be aware that when a property is sold by private treaty, the buyer has a five-day cooling-off period during which they can withdraw from the sale.
Auction
To sell through an auction process, the amount you want for the property is generally not disclosed to potential buyers, who are encouraged to attend the auction and bid against other potential buyers for the property.
Auctions have become an increasingly popular way to sell or buy residential property, but before you decide to go down that path, do your homework and familiarise yourself with the process and what it involves.
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 of the reserve price you have nominated. 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 attempt to negotiate a price with interested bidders or re-list the property on the market.
If the bidding continues beyond the reserve price, the property is sold at the fall of the auctioneer’s hammer.
Successful bids
The successful bidder must sign the sale contract and pay you a deposit on the spot (usually 10 per cent). 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.
Stages of Selling Your Property
Before the Property goes on the market
Often, as the Seller, you will hire a real estate agent to take care of the “Selling” of the property. The estate agent takes care of advertising the property, arranging open inspections, and handling potential buyers. Before the property enters the ‘market’, a contract for sale needs to be prepared along with the required legal documents. This is commonly referred to as a draft sale contract, as the contract can be subject to negotiation.
The contract contains all the terms and conditions of the sale, including items that may be included or excluded from the sale.
The Contract / Exchange
Following an offer by a potential purchaser, once the contract is accepted, it is signed by both the purchaser and the vendor.
With Cooling Off
The purchaser is required to pay 0.25% of the contract price to the agent with a 5-business-day cooling-off period. This means that the purchaser can withdraw from the contract during the cooling-off period for any reason, but they will forfeit the 0.25% deposit, and the property can be returned to the market.
Auction Conditions: No Cooling Off
When the property is sold subject to auction conditions (s66W), it is without a cooling-off period, and the contract is binding. Upon signing the agreement, the purchaser is required to pay the full deposit, which is 10% (or the agreed-upon amount), to your real estate agent/solicitor.
This money is paid to the real estate agent and held until settlement, unless otherwise specified or agreed upon in writing.
Contract to Settlement
Typically, 42 days following the signing of the contract or by negotiation, you will need to inform your bank to organise the discharge of the mortgage. The solicitor will also be required to attend the settlement conference involving the banks, real estate agents and other parties’ solicitors. This is where the title for the property and keys will be handed over in exchange for the money.
At Catron Simmons Lawyers, we can help assist and take away the what often feels like a confusing and stressful time. We are here to guide you through the process and ensure it is as smooth as possible.
Do I need a contract before the real estate puts the property up for sale?
Yes, by law there must be a valid contract in place before the property is able to be marketed.
If I am selling a house do I have to have a contract ready?
Yes, you or your agent cannot advertise a property to be sold without a contract.
What is included in the sale of my property?
Typically, a property is sold ‘as is’, which means that any fixtures are included in the price.
A fixture is anything that can not easily be taken away without doing damage to the property.
A fixture can be excluded from the contract of sale and it is common practice that fixtures are expressly included in the contract to avoid legal disputes.
Common Fixtures include but are not limited to:-
- air conditioning
- ovens
- fixed floor coverings
- above-ground pool
- curtains
Importance of Disclosure
In New South Wales (NSW), disclosure plays a critical role in the property selling process. A seller must disclose any material facts such as major defects, hazardous materials and potentially history of the property. Failing to disclose things can lead to serious legal difficulties and financial loses.
Do I need to obtain a Foreign Resident Capital Gains Withholding (FRCGW) Certificate?
Foreign Resident Capital Gains Withholding (FRCGW) applies to all vendors disposing or selling of property under contracts entered into from 1 July 2016.
FRCGW is different to the foreign person surcharge when purchasing a property but is often confused.
The withholding obligation applies to both Australian resident and foreign resident purchasers.
The FRCGW tax rate is currently set at 12.5% and applies to any real property disposals where the contract price is $750,000 or more.
The application is completed through the Australian Taxation Office.
What is the difference between a private treaty or sale and an auction?
A private treaty occurs when a property is listed for sale, the purchaser makes an offer and it is accepted by the vendor. The contract is then signed and contracts are exchanged. There is typically then a cooling off period of five business days.
An auction is where prospective purchasers gather following a sale period and bidding is conducted on the property. Once the property is placed on the market is is a case of the highest bidder wins the property. Typically the purchaser signs a waiver of their cooling off rights.
What does the Cooling Off period mean?
The cooling off period is a period of time, typically 5 business days where the purchaser can change their minds and pull out of the contract.
If the purchaser does decide to pull out of the contract, they will lose their holding deposit which is typically 0.25% of the total purchase price paid on signing the contract.
There is typically no cooling off period on auctions, when the purchaser signs a s66W Certificate is signed waiving a cooling off right.
Do I need to include anything in respect to our pool?
If the property for sale has a swimming or spa pool, one of the following must also be attached to the contract from 29 April 2016:
- a copy of a valid certificate of compliance, or
- a valid occupation certificate (issued in the past 3 years) and evidence that the pool has been registered, or
- a valid certificate of non-compliance.
This requirement does not apply:
- to a lot in strata or community schemes that have more than two lots, or
- for any off-the-plan contract.
To check if your pool has been registered look at the NSW Swimming Pool Register here.
What is a deposit bond?
A deposit bond is essentially an insurance policy, the bond is a policy document that tells the vendor that the insurance company will pay the 10% of default of the contract.
Come settlement the deposit bond, the purchase price is paid in full and the bond simply lapses.
What is PEXA?
PEXA is an acronym for Property Exchange Australia. PEXA is a platform or multi-level digital workspace that allows settlements to occur in the digital world in real time.
What is the difference between a Solicitor and/or Conveyancer?
Whether you hire a conveyancer or solicitor, it is critical to hire them at the outset of your transaction.
The advantage of hiring a solicitor is a greater level of knowledge in various areas of law, meaning that any legal issues that potentially arise can be quickly dealt with.
Solicitors are typically more expensive, however, if there is an issue that arises while using a conveyancer often you are required to pay double the amount as you are then forced to hire a solicitor.
A solicitor generally able to provide a more focused client-based approach to the transaction.
Should I use a local conveyancer / Solicitor?
You do not need to use a local conveyancer and/or solicitor, they must however, be registered within NSW.
At Catron Simmons Lawyers we can operate wholly electronically so there is no need to come into the office. Alternatively if you prefer however, we do of course accept in house appointments at no extra charge.
Frequently used terms in Property
Caveat – A notice on the title proclaiming an ‘interest’ over the property (other than the owner)
Certificate of Title – A document that shows the ownership and interest in the land/property under the Torrens System of title.
Easement – Right to use the land of another or a right to prevent the owner from using the land in a particular way. Common easements are drainage and electricity.
Lien – A charge, security or encumbrance on a property for the payment of debt.
Reserve Price – The lowest acceptable price fixed by the vendor.
Vendor – The person/unity selling the property.
Zoning – a local planning tool, controlling the current and future prospects of the land.