What is a sales authority?
Once you choose an agent, you will be asked to sign an authority to sell, appointing that agent. This is a legally binding contract, which fully sets out the details of your agreement with the agent, including:
• whether the property is to be sold by private sale or auction (and the auction date)
• the negotiated commission and marketing expenses with GST set out separately
• the circumstances under which commission is payable; this will depend upon the type of authority signed, whether it is an ‘exclusive’ or ‘general’ authority
• the agent’s estimation of the likely selling price or selling range
• the authority period or amount of time given to the agency to sell the property.
The authority must include two statements:
• a rebate statement indicating whether or not the agent is to receive a rebate from advertising or other expenses
• a statement explaining that you can lodge a complaint with Consumer Affairs Victoria should a dispute over commission or outgoings arise.
Source: Consumer Affairs Victoria
What different types of authorities exist?
The most common type of sales authority is the exclusive authority which means you appoint a single agency to exclusively market your property. Under an exclusive authority the agent is entitled to commission when the property is sold or when the agent receives a binding offer at the vendor’s reserve or asking price.
You should not sign more than one exclusive authority, as in certain circumstances you may have to pay more than one commission.
Although it is less common, you can use a general authority. This allows you to list with more than one agency but only pay commission to the agency that sells your property.
Source: Consumer Affairs Victoria
Can I cancel an authority?
Not during the exclusive authority period unless your agent agrees, if you have signed an exclusive auction or private sale authority. If the exclusive authority also has a non-exclusive period you can cancel that at any time, by giving your agent written notice.
If you engage the services of another agent on an exclusive basis while you have a current exclusive authority, you may have to pay each a commission on the sale of your property.
If you gave your agent a general sale authority, you can cancel it at any time by giving your agent written notice.
Source: Real Estate Institute of Victoria
Do I have a cooling off period after signing an authority?
No. The authority you have signed does not provide you with the right to cool off.
Source: Real Estate Institute of Victoria
What should I expect from a real estate agent?
If you list a property for sale with an agent, you are engaging that agent to help sell your property. The agent must act in your best interests, including following your lawful instructions and engaging in good estate agency practice.
The agent will charge you a fee for this service, usually in the form of a commission. The commission is negotiable and can either be a percentage of the sale price, a fixed fee or a combination of both. You can also expect to pay an additional cost for advertising associated with marketing your property.
You can expect the agent to:
• advise you about a method of sale
• provide you with a marketing plan and market your property
• give you an estimated selling price or price range based on their experience and skill
• advertise an up-to-date price for the property reflecting rejected offers or changed market conditions (although it is not compulsory for a price to be advertised)
• communicate all verbal and written offers from prospective buyers to you, unless you instruct the agent in writing not to do so
• organise and attend open house and other inspections
• organise and conduct an auction if applicable
• arrange the signing of the contract
• receive and hold the full deposit.
Laws govern the licensing and conduct of agents. These laws prohibit unethical practices such as misrepresentations about property including the price, location, size and dummy bidding at auctions.
Source: Consumer Affairs Victoria
What is a private sale?
In a private sale, the property is advertised and offers are invited from prospective buyers. The sale is negotiated between the buyer and seller, usually with the help of an agent.
Common features of a private sale:
• the seller and buyer negotiate a sale price
• the contract may be conditional – with the seller’s approval, the buyer can make the sale subject to finance (obtaining a loan), a satisfactory building inspection report, or other conditions
• there is a three business day cooling-off period (with exceptions) for residential properties.
Source: Consumer Affairs Victoria
What is a public auction?
An auction is a public sale, usually conducted by an agent acting as auctioneer. The auction is advertised for a specific place, time and date. Prospective buyers bid and, if the property is declared ‘on the market’, it is offered to the highest bidder.
Common features of an auction:
• the price is determined by competitive bidding between prospective buyers
• the contract is unconditional
• you have no cooling-off rights if you buy at auction.
Source: Consumer Affairs Victoria
Which method of sale should I opt for?
The agent will recommend a method of sale for your property based on its type and location, the nature of the market and your available time frame and personal preference. They should also back up their recommendation with recent sales data.
You should understand all the advantages and disadvantages before deciding on a method of sale. The agent’s commission is generally the same whether the property is sold privately or at auction.
Source: Consumer Affairs Victoria
How much commission should I expect to pay?
In Victoria, there is no amount set by law regarding the amount of commission a real estate agent can charge you. You are free to negotiate with the real estate agent regarding their sales commission, marketing fees or any other expenses that you may be required to pay.
As a guide, real estate commissions in Victoria generally range from 1.5% to 2.5% in metropolitan areas, and between 2.5% to 3% in regional and rural Victoria.
What is an estimated selling price?
Before you sign an authority to sell, the agent must provide you with an estimate of the selling price of your property. This is the price the agent estimates your property is likely to attract, based on their experience, skill and knowledge of the market. It must be recorded in the authority to sell as either a single amount or a price range.
If estimate is recorded as a range, the difference between the top and the bottom figures must not exceed 10 per cent of the bottom figure. For example, a quoted range of $500,000 to $550,000 is $500,000 plus 10 per cent.
This price is not a sworn valuation or a guaranteed selling price and it does not have to be the same as the seller’s asking price or auction reserve price.
Source: Consumer Affairs Victoria
What is a Section 32?
Before a property is sold, the seller must provide the buyer with a ‘vendor’s statement’ or ‘section 32’.
This is usually prepared by the seller’s legal practitioner or conveyancer. It is then signed by the seller and made available to prospective buyers, usually by the agent before the sale or auction. The buyer may then have the statement checked by his or her own legal practitioner or conveyancer prior to purchase.
The vendor’s statement contains information about the property’s title, including mortgages, covenants, easements, zoning and outgoings such as rates. It does not include any information about the condition of buildings, whether they comply with building regulations or if measurements on the certificate of title (or similar documents evidencing title) are accurate. It is the buyer’s responsibility to find out about anything not covered in the vendor’s statement.
The information that must be included in the vendor’s statement is outlined in section 32 of the Sale of Land Act 1962. This can be viewed online at the Victorian legislation and parliamentary documents website.
The vendor’s statement is a legal document and must be factually accurate and complete. If the vendor’s statement contains false, incorrect or insufficient information, a buyer may be able to withdraw from the sale or take legal action.
Source: Consumer Affairs Victoria
How long will it take to sell my home?
The time it takes to sell your home will depend on a number of factors. The price you are after, the location, buyer demand for your style of property and even events locally and nationally can play a part.
An experienced Aligned Real Estate selling agent will understand your local market and be able to assess how the current circumstances will apply to you and selling your home.
A good rule of thumb is to look at comparable sales for properties similar to yours and ascertain how long these properties have taken to sell.
What should I expect from an agent at an open for inspection?
When selling your home, the key to success is to get buyers through the door. At an open for inspection, this is an opportunity for your real estate agent to engage potential buyers in conversation to ascertain their true level of interest in your home.
The aim of any conversation with a potential buyer is to find out each buyer’s specific circumstances and requirements. The agent will then be able to highlight to each buyer particular aspects about your home that they feel will appeal and be relevant to them.
A potential buyer will attend an open house to view a home to decide if it fits their requirements. Whilst an agent needs to be attentive to answer any questions that arise, they also need to be respectful of a buyer’s need to feel at ease in a home and not feel pressured.
A good agent is adept at knowing when to engage in conversation with a potential buyer and when to discretely provide them with space.
Why should I not be present during an open for inspection?
Anyone considering purchasing a home will want to take their time to wander through and start to feel at ease. Once a buyer starts to picture themselves living in a property, they are more likely to seriously consider buying your home.
If a buyer feels that they are intruding on a current owner’s space, they may feel uncomfortable and choose to leave early. When a buyer knows they can take their time, they will feel relaxed, unhurried and wander through your property, giving due consideration as to whether it suits their needs.
How do I declutter and why is it important?
First and foremost, you want any potential buyer to picture themselves living in a property. If your home is scattered with personal items such as family photos, or cluttered with oversized or excess furniture, this can negatively impact a buyer’s first impression.
A buyer will want to know that their furniture will fit into the home they buy. Many people cannot visualise a space, so decluttering will open up each room and help your home appear larger and lighter.
If you’re unsure about what you need to do, speak to a Aligned Real Estate team member who can guide you on presenting your home for sale in the best possible way.
What does ‘overcapitalised’ mean?
If you have spent more money on your property than you will likely recoup from the selling price, this is referred to as having ‘overcapitalised’.
Whilst works undertaken by you, such as landscaping or a renovation to a kitchen or bathroom, will likely add value to the property, there is no guarantee that you will recoup the full amount spent on these improvements from the price you achieve when you sell your home.
What marketing costs should I budget for?
There are many different methods a real estate agent can choose to raise the profile of a home they are selling. Marketing methods can include: advertising on the internet, using social media, property signage, letterbox drops, holding open for inspections, promotional flyers, newspaper advertising and many more.
A marketing campaign will be agreed between the agent and the property owner and an Aligned Real Estate agent will tailor your marketing specifically to meet your needs.
Any marketing costs are payable by the vendor and constitute a separate expense to any sales commission that is payable to the agent. Marketing costs are payable by the vendor irrespective of whether or not the property is sold.
What does ‘going unconditional’ mean?
When a buyer makes an offer to purchase a property under terms to which the seller agrees, as soon as the contract becomes legally binding, this is referred to as “going unconditional”. At this point both the buyer and the seller are legally obligated to complete the transaction for the sale of the property on the terms agreed.
For example, a buyer may agree to purchase a home subject to obtaining finance to do so. As soon as the buyer has secured formal approval to finance the purchase, the contract will be deemed unconditional and the sale is binding on both parties.
What is a Vendor bid?
A vendor bid is a bid made by an auctioneer on behalf of the vendor, when conducting an auction of a property.
Only the auctioneer can make a vendor bid and only when the auction rules allow it. On auction day, the auctioneer will include this statement in his or her introduction before asking for an opening bid from the crowd.
As or before each vendor bid is made, the auctioneer will state that he or she is making a vendor bid, then state the amount of that vendor bid.
What does ‘Passed In’ mean?
If bidding does not reach the seller’s reserve price, then the property may be ‘passed in’.
The highest bidder then has the first right to negotiate with the seller.
What is a deposit and what happens when to the deposit?
The deposit is generally paid by the buyer to the seller’s agent. This happens either when the buyer makes their offer or by the date stated in the contract of sale. The deposit is held by the seller’s agent, conveyancer or legal practitioner, in a trust account, until settlement.
A seller who does not have an agent and who receives a deposit must pay it to their legal practitioner or conveyancer, or bank it in a special purpose account in an authorised Victorian deposit-taking institution. The account must be in both the seller’s and the buyer’s name.
In certain circumstances, the buyer may release the deposit money to the seller before settlement. In this case, the contract must have become unconditional and the buyer must be satisfied with the proof of debts information – that is, a statement by a seller detailing any mortgage or any other loans relating to the property. When this occurs, the deposit can be released no earlier than 28 days after the date the contract was signed.
Source: Consumer Affairs Victoria
How do I make an offer to purchase?
In order for an offer to be legally binding, the offer for the purchase of a property should be made on a formal contract document, irrespective of whether the offer is via a real estate agent or directly with a seller (the vendor).
A verbal offer is not legally binding and should not be relied upon by either party.
When an offer is submitted to the vendor, they have several options. A vendor can agree to the offer price and terms and sign the contract. If the offer is not acceptable to the vendor, the vendor can amend the price and/or terms and return it to the buyer for further consideration. This is known as a counter offer. This back and forth process may continue until both parties are happy and agree to the terms of the sale.
Where both parties cannot reach agreement on the offer price and/or terms, the parties will walk away from the deal.
What is a settlement date?
The settlement date is the date on which the balance of the purchase price is paid to the seller in exchange for the property title.
This is an official process conducted between legal and financial representatives of the buyer and seller. The settlement date is also the date on which the buyer can take possession of the property, unless otherwise arranged.
At settlement all outgoings such as rates and other charges will be adjusted between the seller and the buyer. The seller is responsible for rates up to and including the day of settlement. The buyer is liable from the day after settlement.
Source: Consumer Affairs Victoria
How do I determine I am receiving an accurate market appraisal?
It can be quite a daunting moment to hear what your property is worth and Aligned Real Estate is partnered with Core Logic has a database of more than 4.5 billion records, it’s what the data means to our clients that matters. On top of aggregating mountains of information into easy-to-consume formats, we use proprietary analytical technology to transform the data into new and valuable insights. This helps our clients make smarter decisions.
Core Logic’s diverse team of data scientists, researchers and analytic experts are always developing innovative new ways to unlock the power of the data, creating actionable insights that drive growth for our customers.
Core Logic prides itself on its data accuracy, which allows us to deliver on our promise to provide the most reliable and powerful property insights and analytics.
Section 47AF of the Estate Agents Act 1980 stipulates that all agent’s working within Victoria must provide you with a Statement of Information which is approved by the Director of Consumer Affairs Victoria.
It must be used when a single residential property located in the Melbourne metropolitan area is being offered for sale. The Determination setting out the local government areas that comprise the Melbourne metropolitan area is published on the Consumer Affairs Victoria website at consumer.vic.gov.au/underquoting.
The indicative selling price in the Statement of Information may be expressed as a single price, or as a price range with the difference between the upper and lower amounts not more than 10% of the lower amount.
The Statement of Information must be provided to a prospective buyer within two business days of a request and displayed at any open for inspection for the property for sale.
The Statement of Information will also outline 3 comparable properties which have sold within the last 6 months and 2 km’s of your property address, this will give you a close indication of other properties in your local area to determine the best reserve price for your home.
So rest assured, Aligned Real Estate will provide you with the most accurate and up-to-date market appraisal for your home.
When buying a new home, what upgrades should we go for? What holds the most value? Do we upgrade the lot? Pick more square footage in the house? Add an extra bedroom?, etc.
A lot depends on why you are buying the house. Are you buying it mostly as a home or mostly as an investment? There is a difference.
For the most part, upgrades are high-profit items for builders. They aren’t designed to enhance the value of the house, but make you happier with the house you do buy.
If you are looking at your home as an investment, then you buy from the smaller to medium size in the tract and spend only a minimal amount on upgrades. If you are looking at your purchase as a home, then you select upgrades that will enhance your quality of living.
One rule of thumb is to always upgrade the carpet and padding.
I have to make a choice between an updated home in an older neighborhood or a newer home in a more modern neighborhood. The home in the older neighborhood has almost everything I want and is much larger, but which makes the most sense as an investment?
If your goal is to buy a home for it’s resale value and the one you are thinking of buying in the older neighborhood is at the upper end of values for that neighborhood, then it may not be the wisest choice. If it is similar or lower in price to the others, then there should be no problem, because pricing should be considered in relation to the local neighborhood and not compared to homes in other neighborhoods (for the most part)
Plus, is it a neighborhood on the decline, or are others going to be fixing things up, too, so that it is a neighborhood that is improving? It could turn out to be a very good deal as long as you don’t “overpay” because of the recent improvements.
Remember that you also buy a home for it’s value to you as a “home,” and that is something else you should consider. Which neighborhood would you AND your family feel most comfortable in?
I have a family friend who is a Realtor. I like her and she is a help but she gives me one price to sell my home for and I think it is too low. So I called another agent who suggested a price more in line with my expectations. Who do I choose?
You might want to consult a couple more Realtors on the market value of your home. Most of the estimates should be in the same ballpark.
It could be that your friend is being more honest with you about the value of your home and the other Realtor gave you a higher number because he already knew you expected it. This is called “Buying a Listing” and is the subject of an article on our web site.
Or it could simply be that your friend is a good friend, but not that great of a real estate agent.
Mixing business and friendships is always risky to the friendship. On the other hand, if your friend is truly competent and was providing wise advice, she may be offended if you ignore the advice and choose another agent.
Why should I use a real estate salesperson?
A real estate salesperson is more than just a “sales person.” They act on your behalf as your agent, providing you with advice and guidance and doing a job – helping you buy or sell a home. While it is true they get paid for what they do, so do other professions that provide advice, guidance, and have a service to sell –such as Certified Practicing Accountants and Legal Practitioners.
The Internet has opened up a world of information that wasn’t previously available to home buyers and seller. The data on listings available for sale is almost current – but not quite. There are times when you need the most current information about what has sold or is for sale, and the only way to get that is with an agent.
If you’re selling a home, you gain access to the most buyers by being listed in the Multiple Listing Service. Only a licensed real estate agent who is a member of your local MLS can get you listed there – which then gets you automatically listed on some of the major real estate web sites. If you’re buying or selling a home, the MLS is your agent’s best tool.
However, the role of an agent has changed in the last couple of years. In the past, agents were the only way home buyers and sellers could access information. Now agents are evolving. Because today’s home buyers and sellers are so much better informed than in the past, expertise and ability are becoming more important.
The real estate agent is becoming more of a “guide” than a “salesperson” — your personal representative in buying or selling a home.