Methods of Sale to Sell Your Property
The REIQ suggests there are 5 methods of selling your property, the first four involve going through a real estate agent:
The REIQ recommends these methods of selling property as two of the most effective.
By appointing a real estate agent on the basis of a Sole or Exclusive Agency agreement, the seller should limit themselves to one agent selling their property to potential buyers.
This can be advantageous as the one agent may be more focused on selling your property for the best price possible by virtue of the fact that he or she does not have to compete with other agents. Under the new Property Agents and Motor Dealers Act (PAMD) 2000, a seller can only appoint an agent under this arrangement for up to 60 calendar days. During those 60 days the seller can decide not to renew the appointment if the property has not sold.
However, the seller can agree to make a further 60 day appointment but the renewal cannot be made earlier than 14 days before the term expires.
If the seller succeeds in selling the property by their own efforts, they are not required to pay the original agent any commission if it is a sole agency. Under an Exclusive arrangement, the sellers pay commission to the agent regardless of whether the sellers sell the property themselves.
The Sole or Exclusive Agency method is recommended over the Open Listing method because the sale of the property is in the hands of one party only, saving the seller the confusion of having to liaise with more than one agent. Furthermore, this will save the seller the money and time involved in advertising and marketing costs when a number of agents are trying to sell the property.
Under any selling arrangement 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.
A Multilist agreement is also an exclusive agency agreement where the seller appoints one agent and that agent agrees to work in conjunction with other Multilist agents in order to sell your property.
When the property is sold, the agent's commission is divided between the original listing agent and the agent that actually introduced the successful buyer to the property. The total commission payable by the seller is no higher than it would be if it were only being paid to one agent.
Selling by auction is also an Exclusive Agency agreement and is therefore also subject to the 60-calendar day agreement period. The auction process requires the seller to pay the agent to arrange effective marketing and advertising plans to maximise exposure of the property and the auction date to potential buyers.
Under the auction system, the seller agrees to pay commission to the listing agent if the property sells before the date of the auction, at the auction or in an agreed period after the auction.
The same conditions that apply to the auction process will also apply to the tender process.
There are many advantages to selling a property at public auction, in particular:
An auction is a three pronged marketing push. The vendor has the option to sell your property before auction, on the day of auction, or in the event the property is passed in, directly after auction.
There is an ability to set a reserve price and a settlement date to suit the vendor.
As the reserve price is not disclosed it gives the vendor a chance to test the market.
A written marketing plan with pre agreed appointment times enables the vendors to arrange their lives during the lead up period.
The auction process by its very nature creates a sense of urgency; buyers have a definite time frame in which they must act. Buyers see the purchasers as competition rather than the vendor. Auction creates a competitive environment.
With sale by auction in Queensland, all contracts are unconditional and no cooling-off period applies.
Auctioneer: The first step in selecting the right person to conduct the auction consider who has the most to gain, choose someone with local knowledge of the area with the support of an agency that is keen to make a sale, often auction advertising is seen as a way of advertising the agency over the property. This can easily be identified if the auctioneer runs the proceedings to a timetable, the passion for the job has gone and probably any enthusiasm as well, a key ingredient. Auctioneers today are highly trained in their field having attended courses; sat professional examinations both written and practical with the REIQ. Further more; hold current registration under the Land Agents Act. When your auctioneer is a member of the Real Estate Institute of Queensland you have the additional benefit of dealing with an auctioneer who is bound by the high ethical standards of the Institute as well of their profession.
Agreement: Legislation requires that a written agreement must be signed between the seller and the auctioneer. In this, the auctioneer will require an exclusive agency for a specified period, which cannot exceed 60 days but by mutual agreement can be renewed.
Promotion: This is considered by many to be the key to a successful auction, creating interest. The auctioneer with their team has experience in planning and arranging the marketing of property including advertising. The extent of the marketing campaign will depend on the amount the vendor is prepared to spend. There is a legal obligation to clearly explain to the vendor where and how monies will be spent and will show examples of the advertising mix. At this sage the vendor's input is very important to help identify the probable market. (More info..)
Arriving At A Reserve Price: It is the vendors right to set the reserve price, below which the auctioneer is not permitted to sell. Consult with your agents when setting the reserve price, as they will be familiar with recent sales of similar property in the area. Remember to be realistic when making your appraisal, bearing in mind supply and demand in the area as well as other general market considerations. (More info..)
Selling Before The Day Of The Auction: It is not uncommon for interested buyers to make offers on properties prior to auction day. Some will be on fishing expeditions of course, to try and find out the reserve. However, most will be genuine, in such cases the agent will discuss the offer with the seller, and a decision can made to either consider the offer, or continue with the auction as planned.
It is not unheard of for the vendor to sell the property prior to going to auction, in this case the agent will generally, on the vendor's instructions, invite all potential buyers to also make an offer. The seller then accepts the most appropriate offer, and contracts are signed prior to the auction date.
Auction Day: On auction day buyers will be held to the conditions of sale by public auction . In the course of conducting an auction there are a number of possible outcomes:
Should the highest bidder reaches or exceeds the reserve price - the property is sold and the auctioneer will conclude a binding contract between the buyer and seller. The auctioneer may sign the contract on behalf of either or both parties if instructed to do so.
In the event that highest bid falls short of the reserve price the auctioneer will usually ask for the seller's instructions before passing the property in. This means the vendor has the opportunity to accept the last bid, by placing the property "on the market" so that it may definitely be sold "under the hammer". This factor often creates more excitement, which can encourage further bidding, and a better price may be achieved.
It can be that the highest bid does not reach the reserve price and the property is passed in - the highest bidder is generally informed of the reserve price and may be given the initial opportunity to purchase. Failing this, the property is placed on the market for sale by private treaty, at which time anyone may negotiate with the sole agent.
Tips For A Successful Auction
- Work out the appropriate advertising budget to ensure your property is widely advertised taking into account the identified market.
- Make sure the property is well presented because a potential buyer's first impressions are crucial to a successful sale.
- Your agent will require that the contract and the accompanying statutory searches be available well in advance of your marketing campaign. Confer with your agent about this matter they should be able to provide a tick list to help.
- Allow the agent to arrange as many inspections with prospective buyers as possible it all creates interest particularly at local level this could have a significant effect on the day regarding turnout.
For most, the spectacle will be the main draw as well as the eventual selling price so confidentiality is of the upmost importance. We suggest that you do not disclose or discuss your reserve price with anyone except your agent/auctioneer. - Advertising material should only refer to the general area of price, not the reserve price.
- A sale by public auction is arguably one of the most exciting, effective and rewarding methods of buying and selling real property.
An open listing is where the seller lists their property with a number of real estate 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 receive the commission from the seller.
As the name implies, this method describes a seller doing the job of the real estate agent, who takes on the tasks of marketing and advertising a property as well as introducing and arranging for prospective buyers to inspect a home. DIY also requires the private seller to negotiate a price tag on their home with prospective buyers and then finally arranging the Contract of Sale with the buyer and organising legal and financial arrangements for the transfer of the property.
The REIQ does not recommend this method of selling as it is considered too risky for amateurs to do the job of the licensed professional - especially as they are dealing with their most valuable asset.
Market analysis, valuation, marketing, advertising and negotiation are all skills in which experienced and licensed real estate agents are professionally trained.
If a private seller conducts the transaction and it results in difficulties or financial loss, the seller (and the buyer) will not be able to claim compensation from the State Government's Claim Fund.
Courtesy of the Real Estate Institute of Queensland (REIQ)
REIQ website at www.reiq.com.au