Licenced Conveyancer (NSW) Rachel Godden looks at some common things you can do when you are selling your property to maximise your return and stay on the right side of the law:
It is usually a big decision to sell a property, particularly if it is our home. Most people have a lot of memories and hard work that they have contributed to the properties that they own. Not only is moving house one of the most stressful things to go through in our lives, there is also the emotional element of putting a price tag on your home.
You are also entering the legal arena in the sense that every property that sells must have a written contract for sale entered into between the parties. In both QLD and NSW there are standard REIQ/Law Society approved contracts which most parties utilise when they are attending to the sale of their property. The procedures for selling properties in QLD and NSW are quite different and we will deal with those issues below. Further, apart from the legal aspects, there are some things that you can do to maximise the return on the sale of your property and make sure that it is as stress free as possible.
ENGAGING A REAL ESTATE AGENT
Putting your property on the market is not as easy as it sounds. Most people sell through a real estate agent but it is becoming increasingly popular for people to attempt to sell the property themselves either through the Internet or their own signage or by some other method. The vast majority of people select a real estate agent to sell their properties for them and here lies an immediate issue about which agent to use. In our view, the best procedure is to select a reputable agent in your area who has a proven track record for selling properties close to where you want to sell. You should ensure that whoever you select has the staff and resources to provide an effective advertising campaign and has a good database of buyers. Like most areas of business, real estate agents are very competitive and there are many options out there in the general market. There have been cut price real estate agents who have entered the market in recent years but, in our opinion, you are better off selecting a strong, reputable, large, local real estate company that has been operating for many years. Discounted commissions do not necessarily mean that you will get the best price for your property!
TIPS BEFORE YOU SELL
Once you have selected your real estate agent, you should discuss what needs to be done in order to maximise your return for the sale of the property but here are some tips that we have picked up from our years of acting on behalf of people in the property market:-
1. Do your homework on local sales in your area and get a feel for what you think your property is worth. This is a very important step to make that you are being realistic about the value of your home. Most agents will tell you that if you do not list your property within about 5% of what the local buyers think it is worth, it will be difficult to sell the property quickly. Everyone who sells their home seems to have an inflated opinion of what it is worth. In some cases people are completely unrealistic. Be careful of appraisals that are done by real estate agents as some of them will provide you with higher appraisals in order to get your business. If you are in any doubt get a formal valuation done but it is important that you have a realistic figure in mind when you are selling;
2. Consider your Inclusions and Exclusions…. If there are items fixed on the property that you do not want to sell with the property, it may be best to remove prior to inspections. Otherwise, may need to be noted in the Contract;
3. If you have tenants in the property, you will need arrange for the listing agent or yourself to contact the managing agent/tenant to inform them of the intention to sell and if inspections are to be conducted as weekly Open Homes or by Appointment Only. Please refer to the Tenancy Tribunal for further details;
4. Make up a list of any issues which you may feel could affect the sale. This includes any compliance issues which may affect the legality of the sale contract. Some of the things that can affect a property are:-
(a) Any fencing disputes with neighbours;
(b) Pool fence compliance certificates;
(c) Smoke alarms and safety switches (QLD);
(d) Possible encroachments on the land from adjoining properties or buildings;
(e) Disclosure of any notices received from Government departments (e.g. Main Roads Department, Railways, Electricity, Local Council, Heritage listings etc.);
(f) Local Council building approvals for modifications or additions (e.g. conversion of garages into granny flats, pergolas, additional rooms or storage to the house. Most of these building projects will require Council approval and this could cause issues if the purchaser does a search and finds building works weren’t submitted to Council;
(g) Body Corporate dispute issues (if you own a unit) and/or if you have received notice of an intension to impose a large special levy;
(h) Changes to the zoning of your property which may impact on any future intention to build or continue to reside;
(i) Consideration of disclosure of any relevant events which may have occurred in the property (e.g. sudden deaths or crimes committed on the property);
(j) Consider that the buyers will obtain a pest and building inspection for the property. It may assist to have a pest and building company prepare a report in advance of you selling so that you know of any issues which may need to be attended to before the sale. Quite often some of these minor maintenance items can be easily and quite cheaply attended to so that any future searches or reports that are obtained will not reflect adversely on the property;
(k) If you have tenants in the property, check their lease and it’s expiry date and make sure you can get them out of the property if it sells.
In our view, it is better to be upfront and disclose any of these issues to any prospective purchasers through your real estate agent. It is a much easier road to disclose this information and properly allow for this in your sale contract, rather than having purchasers finding out about this through other means and terminating the contract that they have entered into with you or seeking to reduce the purchase price based on these disclosures. Our experience is that failing to disclose these issues not only leaves you open to various damages claims for breach of contract, it is far better to be open about these issues and ensure that the prospective purchaser is well aware of what they are buying.
Differences in QLD & NSW Conveyancing
Selling in QLD and NSW are both completely different procedures. In QLD you list your property with a real estate agent and they normally prepare the contract when a buyer has made an offer which is accepted by the vendor. Although recent changes to the legislation requires agents to consult lawyers before inserting special conditions in the contract, sometimes this does not always occur and we believe it is in your best interest to speak to a solicitor before you list your property for sale so that you can ensure that the sale contract covers all issues which may affect your property. We recommend that you have the agent provide a draft of the contract to your lawyers so that all issues can be discussed and nutted out before you formally list the property for sale.
Some of the issues that can arise in QLD when you are selling are registered encumbrances on the property which must be disclosed as well as the usual issues such as smoke alarms, safety switches and pool fence compliance certificates. If there are any non-compliances which may affect the sale, these issues can be dealt with by way of special conditions inserted in the contract so that there is no problem in relation to proper disclosure.
In NSW the procedure is completely different. As a vendor, you must prepare a “soft copy” of the proposed sale contract and provide this to your real estate agent. This contract must have the minimum searches required which are as follows:-
(a) Title Search and Plan;
(b) A Zoning Certificate from the Local Council;
(c) A Drainage or Sewerage Diagram for the property;
(d) A Land Tax Certificate.
The real estate agent cannot legally market the property until they have received the soft copy of the contract. It normally takes 10-14 days to obtain the searches from the Local Council although these can be obtained sooner if you are prepared to pay an urgent fee.
In NSW if a buyer is found, the agent sends the sales advice to the solicitors who finalise the soft copy of the contract and include the purchaser’s details. This is then sent to the purchaser’s solicitors and when the parties have agreed on all of the terms and conditions, the contract is then “exchanged”. The vendor hands over the original copy signed by the sellers and the purchaser hands over the original copy signed by the buyers. The contracts are dated the date of exchange and settlement is usually 30 days from the date of exchange.
TIME OF THE ESSENCE
In NSW a very important difference is that the settlement date is not “time of the essence” like it is in QLD. This means that if the buyers are not ready to settle (or the sellers for that matter) on the due date for settlement, they can extend the date for settlement without any need to provide notice. Either party can then issue a “Notice to Complete” which provides the other party with 14 days to complete which then converts the contract into a time of the essence contract. Thankfully most of the contracts settle on their due date without the need to issue a Notice to Complete but it can get very interesting when you have a QLD sale which is time of the essence with people buying in NSW without the contract being time of the essence.
VACANT POSSESSION ON SETTLEMENT!
Another important thing to bear in mind is to understand that you need to give vacant possession on settlement. This means that you have to have all of your furniture and personal effects moved out of the property (or your tenants) on the date of settlement. This can be very difficult sometimes when you are doing a simultaneous settlement and you are subject to the whims of removalists. Most matters don’t usually settle until later in the afternoon so this can become problematical when you have a removal truck on its way to your new property but the matter has not settled yet! Despite all of these logistical problems, most matters seem to go through without too many problems.
Our recommendation is that you obtain legal advice before you list your property for sale and go through some of these issues with your lawyers. We may also be able to assist you with selection of your real estate agents because we deal with many agents on a day to day basis.
You are welcome to contact our office with any enquiries concerning property and commercial advice. Please contact our Property and Commercial Department Manager, Jess Kimpton on direct line 07 5506 8214, or email firstname.lastname@example.org