If you’re under financial stress and you’re wondering how to sell your house quickly, or you’ve never sold your property before, it’s hard to know where to start when the time comes to sell your home. In this article, we will uncover the ins and outs of selling a property in Australia so that you can feel confident as you go through the various stages and the costs involved.
1. Decide on Selling your Home & Doing the Research
a. Once you decide it’s time to sell, you will need to do your homework to figure out approximately what your property is worth! Research your local area online (check out Realestate.com.au or Domain.com.au), review which properties have sold within the past 90 days, assess recent auction results in your suburb and see if you can find demand information for properties in your area. However, try not to get too hung up on a figure – the property market could be trending up or down during the period in which you are selling.
Also, do some research on your local real estate agents. Take note of their years of selling experience, experience in selling via public auction, private sale and sale by tender (expression of interest), and particularly keep an eye out for agents who have sold properties that are similar to yours. Having an agent with intimate knowledge of your suburb will help you get the best and fairest price in the long run! Also put some thought into which strategy out of private sale treaty, public auction or sale by tender (EOI), is going to fetch you the highest selling price.
The most common property sale strategy is private sale treaty, where you set your asking price and the property is listed for sale at that price. The pros of this selling strategy are that you get more control and time to consider offers during the process, less pressure than an auction, and usually, this strategy is less expensive. In an auction, you would set a reserve price (the lowest possible amount you would be happy to accept), however, you can accept pre-auction offers. Auctions can be a good idea for those who need a quick sale, if your property is highly unique, or if it is located in a sought after suburb.
Typically, auctions are most beneficial during property booms, but they can be more expensive and returns are generally riskier. Finally, sale by tender (expression of interest) is a hybrid type of “silent auction”, where there is no listed selling price. Interested buyers submit the highest offer they are willing to pay by a defined due date, and the seller has the discretion whether to accept an offer or reject them all.
Because of the confidential nature, a sale by tender can lead to the winning bid being significantly higher - but you also risk the chance of receiving lower bids, in which case you can negotiate. Other downfalls of the tendering process include high marketing costs and the risk of a smaller buyer pool. Your real estate agent is likely going to give you a recommendation based on the uniqueness of your property, your goals and their experience.
2. Choosing a Conveyancer
a. A conveyancer is a professional who understands the complexity of real estate property law. It is very important to note that Australian states differ in when a conveyancer is legally required to sell – in Victoria, New South Wales and Tasmania you will require a conveyancer before putting a property on the market, but in Western Australia and Victoria, you only require a conveyancer when you accept an offer. It is generally recommended to seek the advice of a conveyancer before you begin the selling process, as they will conduct property searches that may reveal important information that you may be unaware of (such as whether there are building approvals, restrictions and encumbrances (easements/caveats) on the property).
Because buyers have the legal right to know about these matters, you as the vendor (seller) could be held liable for oversight if an issue isn’t revealed ahead of time. It is also generally recommended to steer away from DIY conveyancing kits, as whilst they can save you money, there are legal risks involved in dealing with the complexities of property law, and you will be held liable for mistakes (which can be very costly, especially if you don’t have professional indemnity insurance).
Your conveyancer’s role will also include preparing, clarifying and lodging documentation; researching the property, title certificates, encumbrances and other information; taking deposits and trust accounting; calculating and disbursing payments for property rates and taxes; conducting the property settlement with all relevant parties, and overall representing your best interests alongside the real estate agent. At this point, you may be wondering how to choose a conveyancer!
As conveyancing fees and the level of service you get may vary, be sure to research fee structure, ask for a fee list, check whether they are licensed in your state, and search for online or personal references as an indicator of reputability. Whilst it may be tempting to go with the cheapest option, an experienced and responsive conveyancer can save you from financial and emotional stress if something goes wrong!
3. Choosing an Agent for Selling Your Home
a. One of the most important tips for selling your home, is to get familiar with several real estate agents before you choose the one! Once you have done some online property research and have a vague idea of local property prices and agents, set aside a weekend to attend some open house inspections in your area – by doing so, you will get a better feel for competing properties whilst gaining a first-hand experience of how your potential agent presents the property and engages with buyers.
Watch and interact with the agent, noting how you feel about their communication style and whether you feel confident that the agent will know how to sell your house quickly. How do they behave at the inspection? Are they on time? Are they welcoming to everyone? Do they highlight the best features of the property to you as a prospective “buyer”? Ask them about local schools, shops, and facilities in the area, and test their knowledge on local demographics and the kind of buyers who are looking in the area.
Is the agent able to answer all of your questions? Do they make you feel comfortable to ask questions? Do they follow up with more information after the inspection? Do you feel the agent is honest and integrous in their dealings?
All of these things are strong indicators of how proactive the agent is, and how they will deal with you and your potential buyers, so it’s important that you are happy with their conduct and communication style! In addition, on Realestate.com.au and Domain.com.au under the “Find Agents” tabs, you can check individual agents’ historical sale prices, success with different types of sales and properties, and consider their “time on market” results, based on properties that they have recently sold.
4. Pre-Listing Inspection, Appraisal and Competitive Market Analysis (CMA)
a. A real estate property appraisal is a specialised estimation of your property’s value, based on the location, structure and conditions, building faults, home features, caveats or encumbrances, local council zoning, and the current direction of the property market. Included in the appraisal should be a Competitive Market Analysis (CMA) of at least 3 properties of a similar standard or condition to your property, that have sold in the last 6 months.
This information should give you some good tips for selling your home. Whilst any licensed real estate agent in Australia should be able to offer an appraisal, it is recommended to go with a local real estate agent who has intimate knowledge of your suburb. When the time comes to engage for listing, ask your top 2 or 3 agents to inspect your property and provide you with an appraisal and potential plan to market your home. Most real estate agents will offer you a free appraisal, as well as a rough estimate on how long it might take to sell under current market conditions. (Note that an appraisal isn’t the same thing as a property valuation, which is used to give a definitive value of a property to obtain a mortgage loan).
Also, whilst you have the agent in attendance at your home, come prepared with a list of questions to ask, such as what you can expect during the selling process, how long they think it will take for your property to sell, and how they intend to communicate with you throughout the selling process. Ask them for their recommendation as to which type of sale will work best for your property (private sale, auction or tender), suggestions to improve your property’s value, what additional costs should be included in your budget, and how their commission structure works.
Also considering commission (and especially in a deflated market), it can be tempting to simply go with the cheapest agent – but when it comes to selling property, you get what you pay for. Some agents might charge you out of pocket for marketing expenses, whilst others might charge a higher commission, but include marketing costs. Check out the Openagent.com.au Real Estate Agent Fees page for a comprehensive breakdown of the fees, commissions and costs of selling property.
5. Signing the Agency Agreement
a. Once you’ve selected your real estate selling agent, you will be required to sign a legally binding “Contract of Appointment” which details the commissions, estimated selling price, duration of the agreement, costs that may be incurred on your behalf (eg. advertising and marketing fees), when your payments will be due, which services your agent will provide and how they will be provided. Note that in Australia, your agent is obliged to discuss appointment types with you.
The two most common appointment types for selling a property include open listing and exclusive agency. In an open listing, you can list openly with multiple agents at the same time, and whichever agent sells the property gets paid the commission – this strategy can potentially save you on commission. With exclusive agency (the most common type of arrangement) you grant a single agency or agent the right to sell your property and are required to pay the agent’s commission when your home settles, regardless of who sold the property (meaning you could end up paying 2 commissions).
However, whilst you are likely to pay a higher commission selling a property with an exclusive agency than an open listing, your agent is better incentivised to build a relationship with you and work harder to find a buyer and get a good price. Pay special attention to the period of time that the exclusive agreement covers (90 days is standard), because if you sign for a year and your agent doesn’t do their job, you will stress out about how to sell your house quickly if you legally can’t get another agent until that time has passed.
Thoroughly read the contract to ensure you are satisfied with the terms of selling your home before signing, (if you aren’t happy or aren’t sure, negotiate and/or seek legal advice), and as always, keep a copy for your records.
6. Preparing the Property for Sale & Advertising
a. Here’s one of the biggest tips for selling your home that can pay big dividends! Leading up to your agent’s appointment, it is recommended that you start preparing your property for presentation. One of the biggest buyer turn-offs is general wear and tear – think scuff marks, chipped tiles, scratches, leaky taps, worn carpets, stains, cracked windows, and wall dents. Damage, unsightly areas, and general wear and tear signal that work is required to bring the property back up to standard, diminishing buyer enthusiasm and ultimately lowering the price that buyers are willing to pay. Don’t underestimate the power of a fresh coat of paint in a neutral colour for selling your home – especially if you have brightly coloured rooms in the property! You want potential buyers to be able to imagine the house with their stuff in it (not yours).
This being said, when selling a property it is equally as important to increase appeal without overcapitalising - so just think, will the new buyer be likely to replace it? If not, don’t worry about it! Your agent should also be able to identify which areas need attention before you conduct your open home. Further, take the time to deep clean and declutter. Reducing the amount of “stuff” in an area creates a better sense of space. If you consider it from the buyer’s perspective, cupboards overflowing with containers and wardrobes bursting at the seams will give buyers the impression that your house is smaller than it is, and that they too will have this problem.
By cleaning out the clutter and giving attention to hidden areas, it will instead give the impression that the property has been well maintained and there should be no hidden problems. Finally, styling your property nicely can add appeal to buyers and between 5-10% to your overall selling price! You may be able to do this yourself or have the property professionally styled and “staged” (with rented furniture and décor (can cost up to $5000 but is especially worth it if your property is empty)). And just as the inside is super important – so too is outside maintenance!
A high standard of presentation both inside and outside will probably take considerable time to prepare and maintain up until the point of sale, so it’s recommended to get started as soon as you resolve to sell! Once your property is tidied up, it will be time to bring in the professionals! Your marketing plan may include some or all of the following: a “for sale” sign installed out the front, a floor plan drawn up, a professional photographer and/or videographer taking footage of your property, a copywriter may be hired, online advertising on social media and real estate websites may take place, print brochures may be mailed out, and the real estate’s database of potential buyers may be contacted by mail, email or SMS. According to Openagent.com.au, you should expect to spend between 0.5% to 1% of your property’s price on marketing and advertising, and a good agent will organise for the marketing to appear within the first 21 days of going to market.
7. Conducting Inspections with Potential Buyers (Open Home and Private Home Viewings)
a. Home inspections with buyers are usually conducted on weekends, where your property will be open to the general public, and your real estate agent will be in attendance to answer questions from viewers, spruik the property’s best aspects and ensure that every prospective buyer leaves with a professional pamphlet. Of course, holding an open home has pros and cons - because showing your property to the biggest pool of potential buyers can help you sell faster and get a better price – but you must also take precautions, as anybody can enter your home on that day, and there is no clear way to ascertain your visitors’ true intentions.
Be sure to safely stow away any small valuables that would be easy to pinch, as people are going open all of your cupboards and draws, and peak into every nook and cranny of your house! It is usually recommended that the owner vacate the premises during the inspection, however in some instances (such as the agent becoming preoccupied) your presence and expertise in the property can be of assistance (such as highlighting how a particular room could be repurposed). If you want to be present during the inspection nobody can stop you – just be careful not to be pushy, but be available and allow people to approach you.
All in all, it’s best to discuss with your agent whether or not they think your attendance would be beneficial. Also note that selling a tenanted investment property can be tricky, as your tenant may be comfortable where they are and may not want to go through the hassle of selling! In order to overcome this, it’s possible to offer them some form of compensation such as reduced rent, or paying for cleaning services for the duration of the sale, with an agreement that they maintain the property in a presentable state.
The great thing about having a tenant, is that this may appeal to property investors! Particularly if you have a good tenant, both the investor and the tenant are likely to find great reassurance from being able to continue n as is after settlement day. All in all, there is no way to know how many open home weekends you will need to hold until your property sells – some properties will sell on the first open home, and others might take months! Regardless of your circumstances, you will know that your agent is doing a good job if they give plenty of advance notice and feedback, advertise well in advance of open day, come prepared with all of the marketing materials, behave professionally and take the inspection just as seriously as you do!
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8. Sale Negotiation, Offers, Counter Offers and Acceptance
a. After weeks of inspections, you’ve received an offer – congratulations! Because selling a property is one of the biggest financial transactions most people will ever undertake, it’s important to ensure that you get the best possible price to walk away with more profit in your pocket! Keep in mind that your agent’s expertise will really help (they are on your side, and the size of their commission may depend on the sale price), and also be mindful to keep your conveyancer in the loop to ensure everything is above board! Here are some tips to help you win the negotiation game!
By this point you should have a realistic idea of your current position, bottom line and approach (based upon whether or not you have time on your side, how much equity you have, or if your property is “in demand”). One of the most important things to do before negotiating, is to detach emotionally by being prepared – at the end of the day, this is a business transaction, and the last thing you want is to feel stressed or fall into desperation.
Be careful not to reveal too much to potential buyers about the reason why you’re selling (i.e. divorce or financial issues) as this can undermine your negotiating power. If the buyer pushes for a reason, keep it open-ended with a response such as “we’ve been considering selling for a while, and it’s just time”. Also, try to learn as much as you can about the buyer’s perspective, why they are in the market, how fast they are looking to proceed, whether or not they have finance approved, and the size of their deposit – all of these factors signify how serious the buyer is, and how smooth the process is likely to be.
When the first offer comes in, you might be keen to jump on it – but it is best to apply thoughtful consideration before accepting, rejecting or countering in property negotiations! Note that in many cases, an offer will include a standard clause requiring a building and pest inspection, and a formal valuation before the final contract of sale is written up. Double-check who is required to pay, as the contract may stipulate that the buyer, seller, or both parties cover these expenses.
Another common special condition is that the buyer sells their own house before purchasing yours – note that this may cause a settlement delay. If you have gone to auction, you might also receive offers prior to the auction date – if this happens, seek your agent’s advice! Whatever the nature of an offer or the conditions, if you choose to make a counter proposal, this signals that you are still serious about the offer, but your commitment does come with reservations.
Using the countering tactic also buys you more time to consider other offers, however, you can also put an expiration date on the counter to prompt a fast response. If you reject an offer outright, this sends a strong signal that you know your property is worth more than they are offering, so there is a chance that you might never hear from that buyer again – but if they do come back again, this shows that they are still interested!
Typically in Australia, your real estate agent will assist you with both negotiations and drawing up the contract to ensure all due diligence is carried out (such inspections, maintenance and repairs), with the costs of any final repairs to be taken out of the final settlement figure. However, real estate agents are not qualified to give legal advice on the contract, draft clauses, or modify contracts, and this is why it is important to run all offers and counteroffers by your conveyancer to ensure your interests are protected. Once you finally come across an offer with favourable conditions, it is then recommended that you have your solicitor or conveyancer review the final contract before you sign it!
9. Under Contract, Conveyancing & Settlement
a. Once the contract has been signed by the buyer, they are subject to a cooling-off period (the number of days varies by state law), which begins when the buyer (not the seller) signs the document. During this time, the buyer’s conveyancer will make enquiries and may order further inspections to the property to detect any issues before the contract becomes legally binding.
If for whatever reason the buyer rescinds the contract, they forfeit a penalty from their deposit (usually 0.25% of the purchase price). Also note that in an auction, a cooling-off period may not be available to the buyer. If the buyer backs out of the contract after the cooling-off period has ended, they will be subject to further penalties.
Once both parties have signed, the property becomes listed as “Under Contract” until the settlement date, so that the real estate agent may still take queries from interested buyers should the contract fall through.
Once all of the conditions of the contract have been met from both sides, it becomes “unconditional”. A final, pre-settlement inspection may take place before the final date of settlement to confirm that property’s condition is the same as when formally inspected, and to conduct any final cleaning, repairs or safety inspections per clauses in the contract.
Leading up to the date of settlement, the conveyancers will ensure that all of the required documents are correctly prepared and signed; make sure that all outstanding government or body corporate taxes, rates, fees and charges are paid; calculate purchase price adjustments as per the contract terms and conditions; organize final repayment and discharge of the mortgage over the property, and ensure that the seller gets paid in full.
Your conveyancer should be able to advise whether you are subject to a clause for “vacant possession”, in which you should have cleared out the property and organised your removalist by the date of settlement! Once settlement day comes, the transaction is finalised!
This article is general in nature only. We cannot give you legal advice, but as experts in personal insolvency, we hope that this guide has given you a good general overview of the process of selling a property in Australia. Unfortunately, many people do find themselves in over their heads with debt, and are forced to sell their homes or investment properties under extenuating circumstances.
Whilst it is never a pleasant experience having to conduct a distressed sale of assets, for some people it can help to reduce their debt burden. Before taking drastic or hasty action, however, it is always recommended to seek the advice of your lawyer, accountant, financial planner or trusted financial professional, to assess your options and make sure that the decision to sell your property is in fact the best decision for your financial future.
There are some debt solutions (such as refinancing or a debt agreement) which may allow you to retain control of your hard-earned assets. Also note that if you apply for bankruptcy, a trustee will be nominated on your behalf to sell your assets over a certain threshold. As always, be sure to assess all possible options and seek professional advice before turning to selling your property or filing for bankruptcy as a solution to bad debt problems. If you would like to know more about debt solutions that could assist you with your unique financial situation, call Credit Counsellors on 1300 003 328, and one of our friendly experts will be able to assess your circumstances and help point you in the right direction.