I’m a Vendor

Ever wondered why some properties realise a sale price higher than others that seemingly appear to be comparable? Whether it is completing some low cost home improvements, understanding the legal process or being aware of the local market, arming yourself with knowledge is crucial.

What is the authority to sell?

Once you choose an agent, you will be asked to sign an authority to sell, appointing that agent. This is a legally binding contract, which fully sets out the details of your agreement with the agent, including:

• whether the property is to be sold by private sale or auction (and the auction date)

• the negotiated commission and marketing expenses with GST set out separately

• the circumstances under which commission is payable; this will depend upon the type of authority signed, whether it is an ‘exclusive’ or ‘general’ authority

• the agent’s estimation of the likely selling price or selling range

• the authority period or amount of time given to the agency to sell the property.

The authority must include two statements:

• a rebate statement indicating whether or not the agent is to receive a rebate from advertising or other expenses

• a statement explaining that you can lodge a complaint with Consumer Affairs Victoria should a dispute over commission or outgoings arise.

Source: CAV

What different types of authorities are there?

The most common type of sales authority is the exclusive authority which means you appoint a single agency to exclusively market your property. Under an exclusive authority the agent is entitled to commission when the property is sold or when the agent receives a binding offer at the vendor’s reserve or asking price.

You should not sign more than one exclusive authority, as in certain circumstances you may have to pay more than one commission.

Although it is less common, you can use a general authority. This allows you to list with more than one agency but only pay commission to the agency that sells your property.

Source: CAV

Can I cancel the authority I gave to my agent to sell my property?

Not during the exclusive authority period unless your agent agrees, if you have signed an exclusive auction or private sale authority. If the exclusive authority also has a non-exclusive period you can cancel that at any time, by giving your agent written notice.

If you engage the services of another agent on an exclusive basis while you have a current exclusive authority, you may have to pay each a commission on the sale of your property.

If you gave your agent a general sale authority, you can cancel it at any time by giving your agent written notice.

Source: REIV

I have just signed an authority for an agent to sell my property. Do I have cooling off rights?

No. The authority you have signed does not provide you with the right to cool off.

Source: REIV

What is the role of the real estate agent?

If you list a property for sale with an agent, you are engaging that agent to help sell your property. The agent must act in your best interests, including following your lawful instructions and engaging in good estate agency practice.

The agent will charge you a fee for this service, usually in the form of a commission. The commission is negotiable and can either be a percentage of the sale price, a fixed fee or a combination of both. You can also expect to pay an additional cost for advertising associated with marketing your property.

You can expect the agent to:

• advise you about a method of sale
• provide you with a marketing plan and market your property
• give you an estimated selling price or price range based on their experience and skill
• advertise an up-to-date price for the property reflecting rejected offers or changed market conditions (although it is not compulsory for a price to be advertised)
• communicate all verbal and written offers from prospective buyers to you, unless you instruct the agent in writing not to do so
• organise and attend open house and other inspections
• organise and conduct an auction if applicable
• arrange the signing of the contract
• receive and hold the full deposit.

Laws govern the licensing and conduct of agents. These laws prohibit unethical practices such as misrepresentations about property including the price, location, size and dummy bidding at auctions.

Source: CAV

What is a private sale?

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 help of an agent.

Common features of a private sale:

• the seller and buyer negotiate a sale price
• the contract may be conditional – with the seller’s approval, the buyer can make the sale subject to finance (obtaining a loan), a satisfactory building inspection report, or other conditions
• there is a three business day cooling-off period (with exceptions) for residential properties.

Source: CAV

What is a public auction?

An auction is a public sale, usually conducted by an agent acting as auctioneer. The auction is advertised for a specific place, time and date. Prospective buyers bid and, if the property is declared ‘on the market’, it is offered to the highest bidder.

Common features of an auction:

• the price is determined by competitive bidding between prospective buyers
• the contract is unconditional
• you have no cooling-off rights if you buy at auction.

Source: CAV

Deciding on a method of sale?

The agent will recommend a method of sale for your property based on its type and location, the nature of the market and your available time frame and personal preference. They should also back up their recommendation with recent sales data. You should understand all the advantages and disadvantages before deciding on a method of sale. The agent’s commission is generally the same whether the property is sold privately or at auction.

Source: CAV

How much commission will I pay?

In Victoria, there is no amount set by law regarding the amount of commission a real estate agent can charge you. You are free to negotiate with the real estate agent regarding their sales commission, marketing fees or any other expenses that you may be required to pay.

As a guide, real estate commissions in Victoria generally range from 1.5% to 2.5% in metropolitan areas, and between 2.5% to 3% in regional and rural Victoria.

What is the estimated selling price?

Before you sign an authority to sell, the agent must provide you with an estimate of the selling price of your property. This is the price the agent estimates your property is likely to attract, based on their experience, skill and knowledge of the market. It must be recorded in the authority to sell as either a single amount or a price range.

If estimate is recorded as a range, the difference between the top and the bottom figures must not exceed 10 per cent of the bottom figure. For example, a quoted range of $400,000 to $440,000 is $400,000 plus 10 per cent.

This price is not a sworn valuation or a guaranteed selling price and it does not have to be the same as the seller’s asking price or auction reserve price.

Source: CAV

What is a Section 32?

Before a property is sold, the seller must provide the buyer with a vendor’s statement or section 32.

This is usually prepared by the seller’s legal practitioner or conveyancer. It is then signed by the seller and made available to prospective buyers, usually by the agent before the sale or auction. The buyer may then have the statement checked by his or her own legal practitioner or conveyancer prior to purchase.

The vendor’s statement contains information about the property’s title, including mortgages, covenants, easements, zoning and outgoings such as rates. It does not include any information about the condition of buildings, whether they comply with building regulations or if measurements on the certificate of title (or similar documents evidencing title) are accurate. It is the buyer’s responsibility to find out about anything not covered in the vendor’s statement.

The information that must be included in the vendor’s statement is outlined in section 32 of the Sale of Land Act 1962. This can be viewed online at the Victorian legislation and parliamentary documents website.

The vendor’s statement is a legal document and must be factually accurate and complete. If the vendor’s statement contains false, incorrect or insufficient information, a buyer may be able to withdraw from the sale or take legal action.

Source: CAV

How long will it take to sell my house?

The time it takes to sell your home will depend on a number of factors. The price you are after, the location, buyer demand for your style of property and even events locally and nationally can play a part. An experienced Brad Teal selling agent will understand your local market and be able to assess how the current circumstances will apply to you and selling your home. A good rule of thumb is to look at comparable sales for properties similar to yours and ascertain how long these properties have taken to sell.

What is the role of a real estate agent at an open house?

When selling your home, the key to success is to get buyers through the door. At an open for inspection, this is an opportunity for your real estate agent to engage potential buyers in conversation to ascertain their true level of interest in your home.

The aim of any conversation with a potential buyer is to find out each buyer’s specific circumstances and requirements. The agent will then be able to highlight to each buyer particular aspects about your home that they feel will appeal and be relevant to them.

A potential buyer will attend an open house to view a home to decide if it fits their requirements. Whilst an agent needs to be attentive to answer any questions that arise, they also need to be respectful of a buyer’s need to feel at ease in a home and not feel pressured. A good agent is adept at knowing when to engage in conversation with a potential buyer and when to discretely provide them with space.

Why should I not be present during an open house?

Anyone considering purchasing a home will want to take their time to wander through and start to feel at ease. Once a buyer starts to picture themselves living in a property, they are more likely to seriously consider buying your home.

If a buyer feels that they are intruding on a current owner’s space, they may feel uncomfortable and choose to leave early. When a buyer knows they can take their time, they will feel relaxed, unhurried and wander through your property, giving due consideration as to whether it suits their needs.

Why is it important to declutter my home when selling?

First and foremost, you want any potential buyer to picture themselves living in a property. If your home is scattered with personal items such as family photos, or cluttered with oversized or excess furniture, this can negatively impact a buyer’s first impression.

A buyer will want to know that their furniture will fit into the home they buy. Many people cannot visualise a space, so decluttering will open up each room and help your home appear larger and lighter. If you’re unsure about what you need to do, speak to a Brad Teal team member who can guide you on presenting your home for sale in the best possible way.

What does 'overcapitalised' mean?

If you have spent more money on your property than you will likely recoup from the selling price, this is referred to as having ‘overcapitalised’.

Whilst works undertaken by you, such as landscaping or a renovation to a kitchen or bathroom, will likely add value to the property, there is no guarantee that you will recoup the full amount spent on these improvements from the price you achieve when you sell your home.

My property is currently leased - can I still sell my property?

Yes, you can. However, you will need to follow specific protocols.

You must respect the terms of any lease you have signed with your tenant. Unless both parties agree to terminate early, your tenant has the right to occupy the premises until the end of the lease term. Your tenant is also required to be given 24 hours written notice prior to every open for inspection.

Details of a current lease must be outlined in the contract of sale paperwork and potential purchasers must be advised there is a current lease on the property.

Having a tenant in place can be appealing to some buyers, particularly investors who are looking to purchase your property as an investment. Buying with a solid lease in place will give them peace of mind.

Speak to a Brad Teal team member, as they will be able to advise you on the steps you need to follow and also liaise on your behalf with your tenant or rental manager.

Do I pay a commission if I sell the property myself?

The nature of the agreement you signed with your real estate agent will determine whether or not you have to pay your agent a commission if you sell your property yourself.

If your agent actively marketed the property and this resulted in exposing your property to the buyer, then you may still need to pay the commission. Other circumstances may also mean you still need to pay the commission, so it is best that you seek the advice of your solicitor or conveyancer or speak to your agent directly.

What is the difference between an assessment and a valuation?

A real estate agent can provide you with an assessment of your property. An assessment by an agent will be based on the real estate agent’s local knowledge and expertise, coupled with comparable past sales and current market trends. Whilst an assessment provided by an agent can be used as a price guide, it has no formal standing.

A formal property valuation, also known as a sworn valuation, can only be carried out by a licensed valuer, who will charge you a fee. The valuer will provide you with a detailed property report. This report can then be used to support any formal finance applications made by a buyer or seller.

Can I sell my house myself?

Yes. Some people do choose to bypass using the expertise of a qualified real estate agent and undertake the task of selling their house themselves. But choosing to sell your own home will not suit everyone.

Fielding buyer enquiries and negotiating with potential buyers can be both confronting and an inconvenience for many people. Additionally, where a buyer knows you are not paying a real estate agent to broker your sale, they may have an expectation that you will be willing to reduce the price of your home accordingly.

This is why an experienced real estate agent is often a wise choice to make, in order to sell your home quickly and for the best price. Your local real estate agent will be active in your area. Therefore they are best placed to advise on how to market your home and offer advice on the price your house will sell for.

Brad Teal sales agents are local area experts and bring to the table a wealth of knowledge and expertise in dealing with buyers and are well placed to successfully negotiate the sale of your home.

What marketing costs should I budget for?

There are many different methods a real estate agent can choose to raise the profile of a home they are selling. Marketing methods can include: advertising on the internet, using social media, property signage, letterbox drops, holding open for inspections, promotional flyers, newspaper advertising and more.

A marketing campaign will be agreed between the agent and the property owner. Your Brad Teal real estate agent will tailor your marketing specifically to meet your needs.

Any marketing costs are payable by the vendor and constitute a separate expense to any sales commission that is payable to the agent. Marketing costs are payable by the vendor irrespective of whether or not the property is sold.

What does going unconditional mean?

When a buyer makes an offer to purchase a property under terms to which the seller agrees, as soon as the contract becomes legally binding, this is referred to as “going unconditional”. At this point both the buyer and the seller are legally obligated to complete the transaction for the sale of the property on the terms agreed.

For example, a buyer may agree to purchase a home subject to obtaining finance to do so. As soon as the buyer has secured formal approval to finance the purchase, the contract will be deemed unconditional and the sale is binding on both parties.

What is a Vendor bid?

A vendor bid is a bid made by an auctioneer on behalf of the vendor, when conducting an auction of a property.

Only the auctioneer can make a vendor bid and only when the auction rules allow it. On auction day, the auctioneer will include this statement in his or her preamble before asking for an opening bid from the crowd.

As or before each vendor bid is made, the auctioneer will state that he or she is making a vendor bid, then state the amount of that vendor bid.

What does ‘Passed in’ mean

If bidding does not reach the seller’s reserve price, then the property may be ‘passed in’.

The highest bidder then has the first right to negotiate with the seller.

What happens to the deposit?

The deposit is generally paid by the buyer to the seller’s agent. This happens either when the buyer makes their offer or by the date stated in the contract of sale. The deposit is held by the seller’s agent, conveyancer or legal practitioner, in a trust account, until settlement.

A seller who does not have an agent and who receives a deposit must pay it to their legal practitioner or conveyancer, or bank it in a special purpose account in an authorised Victorian deposit-taking institution. The account must be in both the seller’s and the buyer’s name.

In certain circumstances, the buyer may release the deposit money to the seller before settlement. In this case, the contract must have become unconditional and the buyer must be satisfied with the proof of debts information – that is, a statement by a seller detailing any mortgage or any other loans relating to the property. When this occurs, the deposit can be released no earlier than 28 days after the date the contract was signed.

Source: CAV

Making an offer - how does it work?

In order for an offer to be legally binding, the offer for the purchase of a property should be made on a formal contract document, irrespective of whether the offer is via a real estate agent or directly with a seller (the vendor). A verbal offer is not legally binding and should not be relied upon by either party.

When an offer is submitted to the vendor, they have several options. A vendor can agree to the offer price and terms and sign the contract. If the offer is not acceptable to the vendor, the vendor can amend the price and/or terms and return it to the buyer for further consideration. This is known as a counter offer. This back and forth process may continue until both parties are happy and agree to the terms of the sale. Where both parties cannot reach agreement on the offer price and/or terms, the parties will walk away from the deal.

What is settlement date?

The settlement date is the date on which the balance of the purchase price is paid to the seller in exchange for the property title.

This is an official process conducted between legal and financial representatives of the buyer and seller. The settlement date is also the date on which the buyer can take possession of the property, unless otherwise arranged.

At settlement all outgoings such as rates and other charges will be adjusted between the seller and the buyer. The seller is responsible for rates up to and including the day of settlement. The buyer is liable from the day after settlement.

Source: CAV

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At Brad Teal Commercial, we take a holistic approach to managing commercial properties.

Firstly, we ensure short-term issues such as collection of rent and outgoings, negotiation of lease terms, tenant liaison and management of building maintenance are all conducted quickly and professionally.
Secondly, we manage your investment. We understand that long term investment growth (both in capital growth and rental return), must be managed proactively by considering economic and local market trends, ensuring your property realizes its maximum potential.

As a separate division of Brad Teal Real Estate, Brad Teal Commercial is a team of commercial experts whose sole focus is on the sales and leasing of office, retail and industrial property Contact us for a free, no obligation market opinion of the value of your property or total portfolio.

What is commercial real estate?

Commercial real estate refers to property used solely for business purposes. It generally consists of offices, restaurants, petrol stations or retail shops. The term “commercial real estate” may also be used to refer to industrial real estate.

What is industrial real estate?

Industrial real estate generally refers to property used for manufacturing and production and usually consists of factories and warehouses. The term “commercial real estate” may also be used to refer to industrial real estate.

How are sale assessments of industrial and commercial buildings calculated?

Similarly to how a commercial rental is calculated, factors such as location, size and quality of the building are considered. The potential sale price of the property is then calculated using a number of conventions. These may include analysis of comparable sales and replacement costs or, where a property is leased, an analysis of the Capitalisation of Net Return.

What does a special condition mean in a commercial real estate contract?

When a commercial or industrial property is being sold, a buyer can make the purchase subject to certain conditions. Any special condition must be met before the buyer is legally bound to complete the sale. Failure to meet a special condition allows the buyer the option to exit the contract without penalty. Examples include a sale being subject to a building or pest inspection, a buyer successfully securing finance

How much commission will I pay?

In Victoria, there is no amount set by law regarding the amount of commission a real estate agent can charge you. You are free to negotiate with the real estate agent regarding their sales commission, marketing fees or any other expenses that you may be required to pay

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