The Selling Process
What usually happens is –
1. SELECTION OF REAL ESTATE AGENT
The process begins with your choice of Real Estate Agent.
There should be full discussion as to the entire Selling Process:
The “selling price” (see below).
What will commission be?
A Purple Bricks approach?
Who will be attending the Open Houses? – see below.
2. AGREEMENT WITH YOUR AGENT AS TO THE “SELLING PRICE” – FOUNDATION OF THE MARKETING PROGRAM
Fundamental to the success of attendance at your forthcoming Open Houses is the price at which your property is advertised. Some “silly Agents” exaggerate a property’s worth in order to obtain your signature on the Agency Agreement.
This, particularly in difficult times, can be “fatal” to the attendance at Open Houses.
You, as a Vendor, are relegated to the category of “Unrealistic Vendor” by potential buyers.
The potential buyers simply wait for the price to drop.
Your Agent may seek a “price reduction” with an apology for “getting it wrong”.
The solution is to obtain (and in my case at my expense) a proper formal Valuation – a banking-style Valuation.
Your property doesn’t have to be marketed at that “bank-style Valuation” but is the basis of proper discussion.
You are allowed a price range of up to 10% under current Advertising Law.
The temptation to advertise a high price with a view to negotiating down can also be “fatal” for similar reasons – a very delicate discussion.
3. FOUR THINGS AFFECT WHAT MONEY YOU END UP WITH:-
- The percentage (%) commission you pay (“GFI”);
- The $ amount of advertising you contribute (“VPA”);
- The accuracy of your Internet Marketing Program;
- The quality of the salesman at your Open Houses.
Points 1 and 2 are negotiable with me.
4. AGENT SELECTION OF CONVEYANCER/SOLICITOR
A personal choice, of course, but what are your agent’s thoughts – and why! Prompt communication and expertise can be very important.
Your Conveyancer/Solicitor now prepares the “Marketing Contract for Sale of Land” which is required by law.
A property cannot be marketed without a “Marketing Contract” being in existence.
It must contain the “compulsory documents” including the Section 149 BMCC Certificate, now called Section 10.
5. THE “AGENCY AGREEMENT”
This is the legal contract, and care should be taken to understand the major elements of it.
This Agency Agreement must be accompanied by a Government brochure about Agents.
The Agency Agreement sets out exactly who you are dealing with, the Agent’s proper name, and if appropriate, Corporation name.
The Agency Agreement also includes details of the marketing program, such as price, method of sale, advertising, your $ contribution and when you pay it.
Open House arrangements – and who will be there is very important.
6. DECISIONS AS TO YOUR “MARKETING PROGRAM”
On decisions as to the marketing program, again your Agent will have advice- but does it include the very key elements?
Full and proper discussion should take place as to the placement, quality, photographs and floor plan, that will appear on major internet sites.
These elements should be properly set out in the Agency Agreement referred to above.
7. PLANNING FOR THE FIRST OPEN HOUSE
A “Critical Dates” sheet outlines the workload heading towards the first Open House.
8. THE FIRST OPEN HOUSE, AND THEREAFTER
Preparation and presentation? The time of the day, AM or PM? Wet weather?
9. THE FIRST OFFER
Remember “the first offer may be your best offer”!
10. A $ PRICE “OBTAINED” AND “AGREED”
A verbal non-binding price may be “Offered”, through your Agent, and “Accepted” by you.
11. PRICE AGREED, VERBALLY
The buyer’s $ Offer is almost always conditional upon at least –
- A Pest & Building Report.
- The Buyer’s Conveyancer/ Solicitor reviews the Contract for Sale of Land.
- The obtaining of a letter confirming that the buyer’s “finance is available for this particular purchase” – not just a general approval. The buyer’s Financier may wish to value the property and consider more details.
- Any other condition the buyer may nominate.
This is unenforceable until Exchange.
Note: No Solicitor/Conveyancer in NSW will allow their purchaser (in the absence of written instructions to the contrary) to Exchange contracts (see below) without having the capacity to not only pay the deposit but also to complete the payment at Settlement (see below). Otherwise the deposit might be lost!
12. The “SALES ADVICE” – A DOCUMENT SENT BY THE AGENT TO THE SOLICITOR/ CONVEYANCERS FOR BOTH VENDOR AND PURCHASER
Upon this verbal (unenforceable) conditional $ price offer being accepted by you, your Real Estate Agent prepares a “Sales Advice” – with all the names, $’s, and contact details.
13. THE “FINAL VERSION” OF THE CONTRACT
The Purchaser’s Solicitor/Conveyancer then receives that “final version” of the Contract for Sale of Land from the Vendor’s Solicitor/Conveyancer, triggered by that Sales Advice.
You, and the Purchaser, then sign your copies of the Contract and may leave it, signed, with the Solicitor/Conveyancers pending instructions to Exchange.
14. VERIFICATION OF IDENTIFICATION (VOI)
Now Verification of Identification (VOI) is required.
That means you must have photo ID and other documents, because the whole transfer and Settlement process is now done by the “Lands Titles Office” (LPI) electronically.
15. BEFORE EXCHANGE
A discussion and decision should be made with your Advisors and the Real Estate Agent as to whether Exchange is going to be by way of a “Cooling Off Period”, or by way of Section 66W Certificate (which means the Purchaser is completely ready).
The S 66W is preferred as the “Cooling Off” type only binds the Vendor.
Both Vendor and Purchaser have signed the “Contract for Sale of Land” and those documents are now swapped.
The $ deposit paid and S 66W Certificate presented –“EXCHANGED”!
17. AFTER EXCHANGE
After Exchange and before Settlement, the Purchasers Conveyancer/Solicitor then checks things such as the validity of the Title and any other formal matters that might go to Title.
Assuming that is all clear the matter then proceeds to Settlement.
The Conveyancer/Solicitor’s for the Purchaser/Vendor agree to meet electronically.
Now, the former owner, the Vendor, has their money $!
THE PURCHASER has become the new registered Owner.
None of this can be “triggered” until there is verbal agreement on price.