The process of selling a property can, understandably, seem quite complex. These 9 informative steps aim to help guide you through the process.
1. Choose an Agent
Real estate agents trade on their reputation, so referrals can be a good place to start the search. If a seller can’t get a referral, or doesn’t feel as though the recommended agent is the best fit for their needs, they should meet with a few different salespeople.
Remember, selling a home is a collaborative process, so having a good, open working relationship with the agent is a must.
2. Method of Sale
When selling a property, you have several methods of sale to choose from. The three predominant methods of sale are through exclusive listing, open listing, and auction.
We recommend the exclusive agency method, where the sale of a property is in the hands of only one agency, rather than an open listing.
An exclusive agency is advantageous to the seller as the appointed agent will be dedicated to selling the property. This saves the seller the confusion of having to liaise with more than one agent.
Furthermore, this method will save the seller the time and money involved in advertising and marketing costs when a number of agents are trying to sell the property.
Under the Property Agents and Motor Dealers Act 2000, a seller can only appoint an agent under this arrangement for up to 60 calendar days. During those 60 days, the seller may decide not to renew the appointment if the property has not sold. The seller can agree to make a further appointment up to 60 days, but the renewal cannot be made earlier than 14 days before the term expires.
Under any selling arrangement for residential property using a real estate agent, the seller and agent must sign a PAMD Form 22a – Appointment of Real Estate Agent (Sales and Purchases) in order to legally set the terms of the selling agreement.
An open listing is when the seller has the ability to list their property with a number of agents in the local area. Under an open listing agreement, each agent can sell the property individually or work with another agent to sell the property.
Only the agent that introduces the buyer to the property will be entitled to receive commission from the seller.
The advantages of selling by auction can include:
- The seller has the opportunity to sell their property before auction, on the day of auction, or (in the event the property is passed in) directly after auction;
- The reserve price and a settlement date are set to suit the seller;
- As the reserve price is not disclosed to potential buyers, it gives the seller a chance to test the market;
- A written marketing plan with pre-agreed appointment times enables the seller to organise their lives during the lead-up period;
- The auction is conducted under the seller’s terms and conditions and is not subject to finance, building and pest clauses or a cooling-off period;
- The auction process creates a sense of urgency – buyers have a definite time frame in which they must act. Buyers see other interested parties as their competition rather than the seller.
3. Marketing and Advertising
It is no secret that the greater the exposure a property has to the market, the greater the number of buyers who are aware of the listing. Agents should create a marketing and advertising campaign designed to achieve the highest possible price for the seller. This can involve marketing and advertising through:
- Open Houses
- Local and Interstate Newspapers
- Property Websites
- Dedicated Property Magazines
- Social Media
The seller must be given an itemised marketing and advertising campaign (commonly attached to the PAMD Form 22a – Appointment of Agent) and agree to the campaign prior to any marketing commencing.
Consideration should be taken when designing a marketing and advertising campaign. What are the most effective marketing methods for the particular property and its attributes? What is the suburb and general location? Are the open houses planned at the most appropriate time? Are buyers going to be targeted effectively?
4. Decide on a Listing Price
COMPARATIVE MARKET ANALYSIS
Under the Property Agents and Motor Dealers Act 2000, if a seller asks an agent for an opinion of the current market price of a property, the agent must provide the seller with a Comparative Market Analysis (CMA).
The minimum CMA criterion an agent must meet is to provide information on three properties, of a similar nature and style, that have sold within five kilometres of the subject property within the last six months. If a CMA cannot be produced (due to factors such as no recent sales), the agent must provide a written explanation outlining how they arrived at the suggested market price for the property.
BEWARE OF OVERPRICING
Setting a realistic price can assist with generating greater buyer interest and achieving a sale more promptly than if a property is overpriced. Sellers who set too high a price on their properties can damage their prospects of a quicker sale and risk the property becoming ‘stale’ in the marketplace.
Once a seller has decided on an appropriate listing price, this is included in the Appointment of Agent document, the PAMD Form 22a. An agent must market the property at the listing price set by the seller.
ADJUSTING YOUR PRICE
At any stage through the marketing of a property, the seller can choose to amend the listing price of a property; however, this instruction should be clearly given to the agent in writing. An agent cannot change any marketing or advertising of a property until they have received clear written instruction from a seller.
5. Prepare the Property
It is important to spend a little time freshening up the look of your property, inside and out. The results may not only add to the sale price, but encourage more buyer interest.
It is also a good idea to complete minor repairs before listing the property and maintain the presentation of the property throughout the marketing campaign. A few ideal renovation tips such as a fresh coat of paint, sanding wooden floors or replacing worn carpet, will freshen up the look of any room. Paying attention to decorating the interior rooms by adding soft furnishings, a couple of paintings or fresh flowers can make all the difference to the look and feel of a property.
Remove any unnecessary furniture and personal items before marketing photos are taken to ensure each room is shown at its best. A cluttered room is a turn off for most buyers. All this can be done either by hiring a professional tradesman or doing it yourself at a fairly minimal cost.
The garden and outside of a property should not be neglected. Keeping the lawns and gardens mown and weed free helps to improve a buyer’s first impression of a property.
The following identifies what buyers would respond to with respect to the property presentation:
- Clean, bright and airy residences
- Neutral colours
- Well-landscaped gardens
- Plenty of outdoor living space such as decks and covered patios
- Soft music; and a
- Pleasant fragrance.
- Dark, dingy residences
- Unpleasant smells, especially cigarette smoke and animal odours
- Filth and clutter
- Loud noise (e.g. television or radio).
- Clean out cupboards to give an impression of space
- Take away all unnecessary furniture to leave rooms uncluttered
- Fix all obvious faults
- Tidy up yards
- Steam clean and deodorise carpets professionally
- A coat of paint over marked walls will brighten up a room quickly
- Replace brightly coloured curtains and wall colours with neutral tones.
Pre-planning open houses and the inspection times of a property enables the seller to arrange their lives during the marketing campaign and helps ensure the property is presented in its best light at all times.
SETTING INSPECTION TIMES
Many factors need to be taken into consideration when setting times and days, such as the location of the property (for example, inspections of a property next door to a school most likely wouldn’t be too favourable at 3pm on a school day) and whether any views from the property are best seen at a certain time of the day.
DON’T PLAY HOST
Agents will often encourage sellers to not be present during inspections in order to allow prospective buyers the freedom of inspecting the property, without feeling like they are ‘intruding’ in someone else’s home.
TAKE THE PETS FOR A WALK
If pets are kept on the property, perhaps consider taking them away when open houses or inspections take place.
7. Offers and Reserve Prices
Real estate agents have an obligation under the Property Agents and Motor Dealers Act 2000 to submit all offers in accordance with the seller’s instructions. Exceptions may occur when, for example, the seller instructs their agent not to submit offers under a certain dollar value.
DON’T STATE YOUR REAL PRICE!
Sellers should not tell their agent a figure they are willing to accept (if it is lower than the list price) as agents have a legal obligation to attempt to get the highest possible price for a seller. An important thing to remember is that an offer should not be considered solely on the purchase price offered.
Some sellers may consider accepting a lower price if the offer is unconditional or has minimal conditions, rather than take the risk on a higher priced offer with more conditions that may not proceed to settlement.
In the case of an auction, it is the seller’s right to set the reserve price (if any) prior to the auction. The seller should consult with their agent and auctioneer when setting the reserve, as they will be familiar with recent sales in the area which are comparable to the subject property. The agent should also provide the seller with regular feedback from prospective buyers through the entire marketing campaign.
8. Sign the Contract of Sale
Most often, it will be the buyer who makes the initial offer by signing contract documentation, which is then presented to the seller by the agent. If the seller wants to make a counter offer and change the terms or offered price, the changes are made on this contract of sale, initialled by the seller and presented back to the buyer by the agent for further negotiation.
BIND THE CONTRACT
When both parties agree on the offered price and the terms of the offer, all parties must sign and initial any changes that have been made to the document and a binding contract is then created.
There are key steps that must be taken to ensure a contract is legally binding on all parties including:
- All initials and signatures of the buyer and seller are on the contract, and the contract is then dated; and
- Acceptance has been relayed to all parties.
- Agents should ensure that all parties to a contract receive a fully signed copy of the contract as soon as the above steps have been taken.
9. Paying the Agent
The Queensland Government sets out the maximum commission payable for a residential sale under the provisions of the Property Agents and Motor Dealers Regulation.
The maximum commission an agent can receive for the service of selling a residential property in Queensland is 5 per cent of the first $18,000 and 2.5 per cent of the balance of sale price plus GST.
The commission is generally paid on settlement from the proceeds of the sale. It is advisable for sellers to instruct their solicitors to pay this commission from the proceeds of the sale on settlement.