> Consumer advice  > Buying or selling a home  > Selling a home

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• Method of sale
• Dealing with an agent
• Agency Agreements
• Unfair contract terms
• The sale

Selling a home, like buying a home, is a big decision to make and it is important that you understand your rights and how to exercise them.

You can choose to sell your house yourself, or engage a registered real estate agency to help you with an owner sale. Or you can engage a registered real estate agent to sell the property on your behalf.

Method of sale

There are various ways to sell your home. You may wish to sell your property yourself rather than appoint an agent. You may hire an agent to negotiate a sale by private treaty or to assist you to auction your home. Research the market thoroughly and talk to other people about their experiences.

Private sale

If you choose to sell your property yourself rather than appoint an agent, it is possible to save money as you do not pay any agent's commission.

Inspect comparable properties, obtain sales figures for comparable properties in your area and find statistics on recent property sales in your area.

You will need to undertake the searches required under the Land and Business (Sale and Conveyancing) Act 1994 and complete the vendor statement yourself. You will also need to arrange and pay directly for your own advertising and make yourself available to answer calls from potential buyers and show them the property.

It is a good idea to request all offers to be in writing, including counter offers. Contracts for the sale of land must be in writing otherwise they have no legal validity.

It is recommended that you obtain legal advice about the contract of sale, Form 1 (vendor's statement) and any other legal documentation. You should obtain all quotes before proceeding

Auctions

Another method of selling your property is by auction.

Prior to the auction you will need to set a reserve price in writing, which authorises the auctioneer to sell the property to the highest bidder at that price, or greater. When setting the reserve, remember the price estimate the agent originally quoted you and don't be pressured into setting a reserve price lower than the price estimate.

The agent will need to keep written records of the reserve and any changes to it. The agent must keep a record of all bids made throughout the auction.

It is an offence for any person to ‘dummy bid'. This includes procuring a dummy bid and an auctioneer knowingly taking a dummy bid. While dummy bidding is prohibited, you are permitted to have up to three ‘vendor bids' at the auction. They must be announced by the auctioneer as vendor bids, and they must not be at or over the reserve price. The auctioneer must announce prior to the auction that the conditions of auction permit the making of vendor bids.

The auctioneer (or anyone else) must not make false or misleading representations for the purpose of inducing another person to purchase the property. Similarly if the auctioneer knows that a bid is a dummy bid they cannot legally accept it.

If the highest bid has not reached the reserve price the agent will usually ask for your instructions before passing the property in. At this point you could lower the reserve to the amount of the highest bid to ensure the property will be sold.

If the highest bid is less than the reserve price the property may be held over (perhaps allowing negotiations with bidders) or passed in. If it is passed in, it can be placed on the market for sale by private treaty.

Agents, auctioneers and sales representatives are required to be registered and carry a photographic registration card. If you are dealing with an agent, sales representative or auctioneer you can ask to see that person's registration card. They must show it to you immediately.

Real estate agents must not publish, or arrange to be published, advertising related to the sale of property unless the advertisement specifies the agent's registration number.

It is wise to attend a few auctions yourself so you get an understanding of how the process works.

Usually if the property is passed in at auction the agent will try to negotiate with the highest bidder or bidders after the auction. If a sale is achieved in this way on the day of the auction, the purchaser will not have the right to cool off.

Dealing with an agent

If you elect to appoint an agent to assist with the sale of your property it is important to understand the role they will play. You should also talk to several agents prior to selecting one.

The agent will charge a fee for service. This can be in the form of a commission, a set fee or a combination of both.

Role of an agent

When you engage or list with an agent you are employing them to help you to sell your property. The agent should always act in your best interests and engage in good business practices. The agent will charge a fee for his/her service. This can be in the form of a commission, set fee or a combination of both.

You can generally expect the agent to:

• give an estimated selling price for your property
• advise on a method of sale
• advertise and market the property, and provide a marketing plan
• organise and attend open house and other inspections
• attract prospective buyers
• communicate offers
• organise an auction if this is the preferred method of sale and in some cases conduct the auction or engage an auctioneer to do this on his/her behalf
• prepare and arrange the signing of the contract.

The agent will be required to disclose to you any actual or potential conflict of interest that they have in connection with the sale of your property.

Agents (and their sales representatives) who are authorised by a seller to sell a property are prohibited from obtaining, or being in any way concerned in obtaining, a beneficial interest in that property. This means that if you employ an agent to sell your house, they are not allowed to buy that house either personally or through an associate. There are, however, certain circumstances in which an agent or their associate may legitimately want to buy a house they are commissioned to sell. If that is the case, they must apply to the Commissioner for Consumer Affairs for an exemption. The Commissioner will carefully consider the merits of such an application before approving it.

Choosing and agent

Choosing the right real estate agent to negotiate on your behalf is essential. You should obtain advice from at least three agents. Don't be seduced by a high price estimate. Ask the agent how he or she arrived at their selling price estimate and to show you recent sales statistics for comparable properties in your area to verify their opinion.

Check whether the agent is registered. Agents, including companies that are agents, must be registered with the Commissioner for Consumer Affairs. You can check whether the land agent or the company is registered at Licensing Public Register. If the real estate agency is a registered land agent company, the business must be also managed by a person who is a registered land agent. However, they must be qualified and not be convicted of dishonesty offences. If you discover that the agent is not registered, or the sales representative is not qualified, please inform the Office of Consumer and Business Affairs on 8204 9686.

Agency Agreements

In this section you get an understanding of what to consider when preparing for sale.

Pricing

If an agent quotes a price range for your property, make sure it is not such that you would be unhappy with a sale price at the bottom of the range.

To help you decide on the lowest selling price for your home, you should:

• use an agent's estimated selling price as a guide
• research and get to know sale prices in your area
• consider paying for a valuation by an independent, qualified valuer.

You should be realistic and not allow emotion to cloud your judgment. This will help you avoid the risk of purchasing another property based on unrealistic expectations of the sales value of your own home.

Marketing and advertising

Check what an agent will charge for marketing your property. Some agents may charge a low commission rate but charge more for marketing and advertising your property. Make sure you understand how the agent intends to market your property and what this will cost you.

You may be charged the up-front cost of advertising with a particular publication, but agents commonly receive a rebate as a result of placing large numbers of advertisements. You may be asked to pay significantly more than the actual cost of the advertisement when the rebate is taken into account. Ask the agent questions about the amount of advertising rebate that they expect to receive. You are within your rights to negotiate to receive some benefit from those rebates.

You should ensure that any information provided to the agent about your property is factual and up-to-date. Property advertising must not be misleading or deceptive. It is illegal to misrepresent a property in any way when advertising or marketing that property, either orally, or in writing and photographs. If advertising is not accurate, and a buyer can show that a property has been misrepresented, the buyer may be able to take legal action.

Sales agency agreements
If you decide to engage an agent, there must be a signed written agreement (a sales agency agreement) between you and the agent, authorising the agent to act for you. Before you and the agent sign a sales agency agreement, the agent is required to provide a guide explaining your rights and obligations under the agreement.
The agent must give you a copy of the agreement once signed. It is very important to retain this for your records as it shows the details of what the agent has agreed to do for you and the fees you will be charged.

The sales agreement must specify how the property is to be offered for sale, the duration of the agreement, services to be provided and the cost of these services. The agreement must also disclose the nature, source and amount of any commissions, rebates or discounts expected to be received by the agent in relation to those services.

In a sales agency agreement the agent must specify the agent's genuine estimate of the selling price of the property. The price can be expressed as a dollar amount (e.g. $300,000), or a price range. If a range is specified by nominating upper and lower values, then the upper value must not exceed the lower value by more than 10%. That is to say, if the lower value is $300,000, then the upper value cannot be higher than $330,000. You must also specify in the agreement a price that you would accept for the sale of the property (i.e. your bottom line).

It is possible to vary the provisions in a sales agency agreement but any changes must also be in writing and be signed by both you and the agent.

The price that you and the agent specify in the sales agency agreement will affect how the property is marketed. Agents are prohibited from representing to potential buyers (including in an advertisement or verbally) a likely selling price that is less than the agent's estimated selling price or your bottom line (whichever is the higher).

To guard against disagreements about fees and charges and the scope of the agent's authority, it is important to ensure that your agreement clearly sets out:

• how and on what grounds it can be terminated by you or the agent
• commission rate
• proposed marketing strategy and associated fees.

The fees and terms can be negotiated so that, for example, the agent could incur a commission penalty if they don't achieve the estimated sale price or a bonus for exceeding the sale price.

Make sure you understand the agreement and what you will have to pay before signing it. Once it is signed by you and the agent it is binding and there is no right to cancel it (subject to the terms of the agreement). Keep your copy of the agreement and refer to it if you have any questions about your rights or obligations or if any problems arise.

There are two main types of agency agreements:

• sole agency agreements, and
• general (or open listing) agreements.

The agent will charge a fee for a service. This can be in the form of a commission, a set fee or a combination of both.

Sole agency agreements

Sole agency agreements are the most common form of agreement. Your agent will most likely suggest a sole agency agreement, particularly where sale is to be by auction. Under a sole agency agreement the agent has the exclusive right to sell the property and is entitled to receive the agreed commission whether or not they actually sell the house. Therefore, if you sell the house yourself, you will generally still have to pay the agent their commission.

General or open listing agreements

Under general open agency agreements the agent is only entitled to commission if he/she sells the property. Depending on the terms of the agreement, you can open list your property with several agents and generally cancel the agreement at any time by giving written notice to the agent. Most agents will not offer a general agency agreement, because it leaves them at risk of meeting the costs of marketing the property without a guarantee of commission if the property is sold

Withdrawal from sale

If you have listed your property with an agent and decide to withdraw your property from sale, there may be consequences if you list the property with another agent before the original agreement has lapsed. For example, you may have to pay commission to the first agent even though a second agent sold the property. If the agreement with an agent expires or is terminated, the agent may still be entitled to commission if the property is sold to a buyer who was introduced by that agent. Seek legal advice if you want to terminate an agreement.

Unfair contract terms

The Australian Consumer Law provides that unfair terms in consumer contracts are void. A ‘consumer contract' is a standard-form agreement for the supply of goods or services which is wholly or predominantly for personal, domestic or household use or consumption.

A term is ‘unfair' when it:

• causes a significant imbalance in the parties' rights and obligations arising under the contract; and
• is not reasonably necessary to protect the legitimate interests of the supplier; and
• causes financial or non-financial detriment to a party.

A court must have regard to the transparency of the term and the contract as a whole in determining whether a term is ‘unfair'.

For further information on unfair contract terms, see Contracts.

The sale

In order to get the best price for your property and be sure of a sale, make the time and effort to present it in the best way possible. Some agents will offer a service of helping with decorating, paint touch-up, gardening etc. to have your home looking its best. But remember, this is a service that you will be charged for.

Open inspections

Advertising advises prospective buyers of the times your property is open for inspection. This will generally be for 30 to 45 minutes once a week or fortnight. Buyers may wish to arrange an alternative inspection appointment, through your agent, if you have one.

You may be asked by your agent whether you wish to make it a condition of entry that prospective purchasers give the agent their contact details. This may assist in protecting the security of your property against theft.

You may also wish to consider whether giving contact details may deter some people from inspecting your house as they do not wish further contact from the agent.

If there is anything you don't want the public to see, it should be hidden from view. All valuables should be locked away.

It is natural to want to present your property in the best possible light. First impressions count for a lot. Mow the lawn, add plants to the garden, keep the house clean and tidy, and consider repainting the walls. While it is acceptable to present a property in a good light, it is not acceptable to cover up, misrepresent or in any way mislead a buyer about the true nature of your property.

Cooling-off

You should be aware that a buyer is entitled to a cooling-off period of two clear business days during which they can withdraw from the sale. However, there is no cooling-off period if they are buying at auction.

The cooling-off period starts after the signing of the contract for sale, or the giving of the Form 1, whichever comes last.

There is no cooling-off period for sellers so you will be bound by the contract for sale as soon as you and the buyer sign it.

It is against the law for an agent to be paid a commission if a purchaser decides to cool off on a sale contract.


Your responsibilities as a vendor

The buyer must be provided with a Form 1 statement (vendor's statement) setting out the cooling-off rights and specified particulars regarding the property. Your agent will need to certify the completeness and accuracy of the statement.

If you are selling the house yourself but the buyer has an agent acting for them, then the buyer's agent must make the prescribed inquiries and certify as to their completeness and accuracy.

If neither you nor the buyer has an agent acting then it will be your responsibility to make the required inquiries of the Department of Environment and Heritage, Lands Titles Office and the local council, as set out in the Land and Business (Sale and Conveyancing) Act 1994 and the Land and Business (Sale and Conveyancing) Regulations 1995 and you will be responsible for the completeness and accuracy of the statement.

You should discuss with your agent which of your appliances, furniture and other personal effects, such as pot plants you do not want included in the sale. Generally, items such as hard-wired kitchen appliances and curtains and blinds are included. Make sure you advise the agent if you want to take any items with you after sale and ensure the agent specifically excludes them from the sale.

The Form 1 statement must be provided to the buyer at least 10 clear days before settlement where sale is not by auction.

Where the property is to be sold by auction, the agent must make the Form 1 available at the agent's place of business for three business days prior to the auction and at the auction place for 30 minutes prior to the auction.

The Form 1 must be accurate as at the date of service on the buyer. If after service of the Form 1 there are any changes in the matters disclosed in the statement, a notice of amendment must be provided to the buyer. This alters the buyer's cooling-off rights and effectively gives them a further two days from the service of the amended notice.


The Form 1 statement must be provided to the buyer at least 10 clear days before settlement where sale is not by auction.

Where the property is to be sold by auction, the agent must make the Form 1 available at the agent's place of business for three business days prior to the auction and at the auction place for 30 minutes prior to the auction.

The Form 1 must be accurate as at the date of service on the buyer. If after service of the Form 1 there are any changes in the matters disclosed in the statement, a notice of amendment must be provided to the buyer. This alters the buyer's cooling-off rights and effectively gives them a further two days from the service of the amended notice.

Contract terms

If the property is to be sold by private treaty rather than by auction, 'subject to' contracts may be negotiated. That means that the buyer may offer to purchase the property subject to, for example, a satisfactory building inspection, selling their existing house or obtaining finance. It may be in your interests to accept a slightly lower offer if the contract is not subject to any conditions.

You should also fix a settlement date prior to auction or in the contract for sale. This is the date on which the sale is finalised and the buyer can move into the property. The buyer, or people interested in bidding for the property at auction, may seek to negotiate the settlement date with you.

Settlement

Prior to settlement, both you and the buyer should retain a conveyancer to prepare settlement statements. They will prepare the Memorandum of Transfer, calculate the Adjustment of Rates and Taxes, prepare Settlement Statements and provide any other documents necessary to complete the transaction and settlement. Your conveyancer will also liaise with the buyer's conveyancer over settlement arrangements and will make contact with you and, if relevant, your financing institution, regarding when and in what way the final payment is to be paid.

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