A residential property cannot be advertised for sale until a Contract of Sale has been prepared.
The contract must include essential documents such as the title documents, drainage diagram, and the Zoning Certificate (s 149) issued by the local council. It should also specify property exclusions and attach a statement of the buyer’s cooling-off rights. It’s crucial to consult a solicitor or conveyancer to ensure the contract is properly prepared.
There are two primary methods of selling a residential property: private treaty and auction.
When selling your home through a private treaty, you set a price and list the property for sale at that price. Typically, the price is negotiable, with the seller often setting a higher amount than the expected selling price, and the buyer making an initial offer lower than the asking price.
The private treaty sale process offers the following advantages:
However, selling privately also comes with risks that should be considered:
It’s important to note that when a property is sold privately, the buyer has a five-day cooling-off period during which they can withdraw from the sale.
In an auction, the desired price for the property is generally not disclosed to potential buyers. Instead, they are encouraged to attend the auction and bid against each other.
Auctions have become increasingly popular for selling residential properties, with over 90% of properties sold by auction. However, before choosing this method, it’s essential to understand the process and its implications. Discuss the benefits and how auctions work to your advantage with your agent.
Setting a reserve price:
The reserve price is the minimum amount you are willing to accept for your property. This amount is not usually disclosed to potential buyers before bidding begins.
If the highest bid is below the reserve price, the property will be “passed in.” You can then negotiate with interested bidders or put the property back on the market.
If bidding continues beyond the reserve price, the property is sold at the auctioneer’s hammer fall.
The successful bidder must sign the sale contract and pay a deposit on the spot, typically 10% of the purchase price. There is no cooling-off period for buyers who purchase a property at auction. Even if the property is passed in at auction, but contracts are exchanged on the same day, the cooling-off period does not apply.
The exchange of sale contracts is a crucial legal step in selling a home, regardless of whether it’s sold by private treaty or auction.
Two copies of the sale contract will be prepared, with one for the seller and one for the buyer. Both parties sign their respective copies, and they are exchanged, usually arranged by a solicitor, conveyancer, or agent. At the time of exchange, the buyer pays a deposit, usually 10% of the purchase price, unless otherwise agreed upon in writing.
Contract exchange is a critical point in the sale process: