The Different Methods of Selling Your Property

The REIQ suggests there are 5 methods of selling your property, the first four involve going through a real estate agent:

1. Sole or Exclusive Agency

2. Multilist

3. Auction

4. Open Listing

5. Do-it-yourself (DIY)

1. Sole or Exclusive Agency

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.

2. Multilist

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.

3. Auction

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.

4. Open Listing

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.

5. Do-it-Yourself (DIY)

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.

Choosing an agent

Choosing an agent who will handle the sale of your property may be one of the most important decisions you will make.

One way to establish an agent’s profile is to look at the weekend newspapers and see which agency markets effectively. Also ask friends, family and colleagues for their personal recommendations, particularly those who have sold property in the same area.

Using an agent who is a member of the REIQ offer sellers additional protection because our members attend regular specialised training courses, update their knowledge of legislation affecting the property industry and understand better than anyone the value of your property.

Using an REIQ member also means you are dealing with someone who must adhere to the Institute’s strict Standards of Business Practice.

This is what your agent should do for you when selling your property:

• The agent will use market analysis and comparative sales techniques to determine the value of your property;

• Provide you with an effective marketing plan;

• Ask you for recent rates notices, title information and a copy of your mortgage documents;

• If your property is a unit or townhouse, they will ask you for property details to complete a disclosure statement that the law requires to be given to potential buyers;

• Negotiate their commission and advertising costs with you;

• The agent will ask you to complete minor repairs before listing the property;

• The agent will ask for access to the property at all times once it is listed;

• The agent will ask you to maintain the presentation of the property.

The Cost of Selling Real Estate

Selling your property can incur costs such as the real estate agent's commission and legal fees when using a solicitor. The REIQ recommends sellers take into account the agent's commission, advertising and marketing costs, a valuation report, pest and building inspection reports, as well as legal and financial fees when they sell their property.

1. Agents Commission

The Property Agents and Motor Dealers Act 2000 regulates the real estate industry in Queensland. Introduced on July 1, 2001, this legislation has changed the way consumers buy and sell property in this State.

The Queensland Government has set the commission for real estate agents at a maximum of 5% of the first $18,000 of the sale price and 2.5% of the balance of the sale price. 10% GST is also payable on the agent's commission.

Sellers are by law able to attempt to negotiate below the regulated government commissions, however, agents are not obliged to accept.

Some examples:

2. Advertising & Marketing Costs

Real estate agents will charge the seller fees for advertising and marketing your property in order to achieve for you the highest possible price. This can involve advertising your property in local newspapers, on property websites, or dedicated property magazines. GST is payable by the seller on these items and included in the advertising account.

Remember that the agent must itemise these costs - before the Appointment of Real Estate Agent (Sales and Purchases) PAMD Form 22a is signed by the seller - and both parties must sign the Advertising Schedule agreeing to the advertising and marketing items and their costs.

Advertising and marketing is particularly essential if you decide to auction your property - the more people who are aware of the auction date, the more likely it is you will achieve a high turnout on the day and consequently sell your property at the best price.

3. Legal Costs

Solicitor's fees are negotiable - it is advisable to compare the fees being charges by a few different solicitors. Good referrals and past experience is valuable when choosing your legal representative.

Sometimes sellers are required to procure the Title Deed to their property through a solicitor.

4. Financial institution fees

As the seller of property your bank or financial institution may charge you for their attendance at the Settlement to receive and discharge the mortgage. Fees vary between institutions.

5. Valuation report

In some cases the seller may wish to procure a valuation of their property to give to potential buyers. In Queensland, contact the Australian Property Institute on Ph: 07 3832 3139 for names of registered valuers.

6. Inspections and other miscellaneous items

Miscellaneous costs to the seller can include preparing the property for sale through garden and painting service providers and other attendant costs of making the property look its best for potential buyers.

Sometimes real estate agents will encourage sellers to procure a pre-sale building and pest inspection report from a licensed professional (see www.bsa.qld.gov.au for more information). This can help to save the seller time when it comes to selling the property, as buyers are able to appreciate upfront the condition of the property for sale.

SELLING FAQs

Will GST apply to the sale of the family home?
No. In most cases GST will not apply to the sale price of existing residential real estate, including the family home.

Will GST apply to agents fees and advertising costs incurred when selling my property?
Yes. GST will apply to agent's fees and advertising costs agreed to when entering into a Selling Agency Agreement.

Will GST apply to the sale of new homes by developers?
Yes. GST will apply to the sale of newly constructed residential properties by a developer who is registered for GST. The margin scheme (see later) may provide significant savings in this regard.

Will GST apply to the sale of a residential investment property?
Generally, GST will not apply to the sale price of any existing residential property irrespective of whether it is a family home or an investment property. GST will however apply to the sale price of newly constructed homes, including investment properties, which are sold by a developer who is registered for GST.

Will GST apply to the sale of vacant residential land?
GST will apply to the sale of vacant residential land notwithstanding that it may have been sold previously, if the entity selling the land is registered or required to be registered for GST, the supply is made in the course or furtherance of the entity's enterprises, the entity makes the supply for consideration and the supply is connected with Australia (s9-5 GST Act). However, the parties to the sale of the land may consider the application of the margin scheme to reduce the amount of GST payable on the sale.

Will GST apply to the sale of a home by an original owner/ builder?
In most cases, the sale of a home by the original owner/builder will not be subject to GST unless that home was built in the course of, or furtherance of, their building enterprise.

Will an auction price include GST?
This will depend on the type of property being auctioned and whether GST is applicable to the proceeds of the sale. For the sale of private residential property there is no GST however, commercial property may attract GST and accordingly the auction price will be GST inclusive. The auctioneer will be required to announce before the sale whether the auction is being conducted on a GST inclusive or GST exclusive basis. The auctioneer will also need to announce whether the seller is registered for GST. If the margin scheme is being adopted by the seller then it is recommended that the property be auctioned on a GST inclusive basis.

Steps involved in Selling Real Estate

The REIQ recommends the following basic steps:

1. Choose a real estate agent

2. Decide on a method of sale

3. Agree on an appropriate marketing/advertising programme

4. Decide on a desired list price

5. Sign a PAMD Appointment of Real Estate Agent (Sales and Purchases) Form 22a with the nominated agent

6. Prepare your property for sale

7. Arrange for buyers to inspect property

8. Agree on the price offered by the buyer or nominate the reserve price in the case of an auction.

9. Sign a Contract of Sale

10. Arrange with solicitor/financial institution for transfer of property

11. Pay commission to the agent.

Note: If someone within the agency is buying the property and beneficial interest applies, a PAMD Form 28 must be signed before signing a Contract of Sale on the property.

Forms Used for Real Estate Transactions in Queensland

The Property Agents and Motor Dealers Act 2000 regulates the real estate industry in Queensland. Introduced on July 1, 2001, this legislation has changed the way consumers buy and sell property in this State. The new Property Agents and Motor Dealers Amendment Act 2001, effective from October 29, has resulted in the introduction of a raft of new forms that affect both the buyer and the seller.

Relating to the Seller

Form PAMD 22a - Appointment of Real Estate Agent (Sales and Purchases)
Form PAMD 23 - Sole or Exclusive Agency Notice for Sale of Property (Auctioneer)
Form PAMD 24a - Appointment to Act as an Auctioneer
Form PAMD 25 - Sole or Exclusive Agency Notice for Sale of Property (Pastoral House)
Form PAMD 26 - Appointment to Act as Pastoral House
Form PAMD 28 - Disclosure of Beneficial Interest to Seller

For more information, please refer to the REIQ website