To make a residential property sale go as smoothly as possible for all parties, it is helpful for real estate agents to provide complete and accurate information to the solicitor (attorney) or conveyancer handling the transaction. This article describes some of these elements.
Process of selling a residential property
There is a normal sales process for a residential property, which is described below. However, sometimes, by mutual agreement between the buyer and the seller, certain steps and conditions of the process will be different.
It is important that the realtor provides this information – along with all other details of the sale – accurately to the solicitor or conveyancer so that the process can go as smoothly as possible.
The real estate agent normally negotiates the agreement between the buyer (purchaser) and the seller (seller), then provides information to the lawyer or conveyancer to work out the details of the contract.
The contract is then sent to both the buyer and the seller to be dated and signed, which means that the contracts are “exchanged”. This is when the contract officially comes into effect and the settlement date is set.
It is before the exchange that the buyer pays the deposit, which is deposited in a trust account by the agent, or in certain cases in the trust account of the lawyer, until the settlement.
Settlement usually occurs six weeks after the trade date, although different periods can be negotiated. Upon settlement, the deposit is returned to the seller and the agent receives his commission.
The process is different if the property is purchased at auction. During an auction, provided that the reserve price is reached, the highest bidder signs the contract and immediately pays the deposit.
Important information that real estate agents must provide
In order for the exchange to go as smoothly as possible, it is useful that all the correct information is provided to the lawyer or the transmitter from the outset. A carefully drafted sales tip can certainly speed up the process.
The more accurate the information is from the start, the better, as it avoids problems and delays in the exchange.
In some situations, contracts are exchanged by the agent. Be warned, if incorrect information is entered into the contract – such as a misspelled name or procuring entity – the contract may need to be terminated.
Although some of the information required below may seem self-explanatory, small errors or omissions can make a big difference in the process.
These are some of the common issues we encounter.
- Surnames, first names and addresses of the parties
Do we have the full names and addresses of both parties, and are they correct? This may seem like very basic information, but missing or incorrect information means that the lawyer or transfer agent spends time looking for the correct details, which can slow things down considerably. Or, as mentioned before, in the worst case, it can lead to termination of the contract.
Another consideration is whether the parties are buying or selling the property in their own name, or in the name of a company or super fund. It is important that the correct name is entered in the contract. If a trustee of a trust or superfund is purchasing, the full name(s) of the individual trustee(s) or the corporate trustee must also be provided.
- What is the settlement date?
Although the settlement date is often later than the standard six week period, it is important that the real estate agent checks this with the parties, that they both agree on the settlement date and that they provide this information in the notice of sale to the lawyer or carrier.
- Payment of the deposit – when and how?
The deposit is paid before or on the day of the exchange of contracts. This needs to be clarified – when is the deposit payable, and also, how? While the deposit is often paid in a lump sum, sometimes it will be paid in installments.
- Conditions to be included in the contract
Are there any other terms that need to be included in the contract? For example, is the sale subject to early access to the premises, and if so, is rent due?
- Items to include in the sale
All items included and not included in the sale must be listed. For example, is it a stand-alone house or does it have a separate shed/garage? Are there blinds, and if so, do they stay there? Does it have mosquito nets or a washing line etc.
The current legal contract for the sale and purchase of land 2019 edition, which is available from the Law Society of NSW, contains a standard inclusion checklist.
This can be a good starting point for compiling the list of items. Estate agents can then add anything that is missing.
Other things for real estate agents to consider
Finally, it is very important for the agent to ensure that they have a signed agency contract and a warning statement. This must be completed and signed to ensure that the agent receives their commission.
Checklist for real estate agents
Agency contract and disclaimer
- Have the parties signed and dated the relevant agency agreement?
- If you represent the buyer, has a copy of this agreement been given to the seller’s lawyer or agent?
Do you have a contract to be able to market the property for sale? Is it complete?
- For example, if the property has a swimming pool, is the certificate of conformity/non-conformity of the swimming pool included?
- Is the corresponding town planning certificate up to date?
Items included in the sale
- Are all items to be included in the sale listed on the first page of the contract? Or in an inventory attached to the contract?
- Are there any particular items to exclude from the sale?
Will the exchange be conditional (agent exchange) or unconditional?
- Do any additional “sales notes” apply to this transaction, such as it being subject to building and pest inspections, financial approval, or the sale of the buyer’s property?
- Agents exchanging contracts must have received written permission to do so from both parties.
Full names and addresses
- Are all parties to the contract specified? Are all middle names included? Are all names spelled correctly?
- Is the purchase made by a company? If yes, what is the Australian Company Number (ACN)?
- Is the purchase being made by a super fund or a trust? Is the full name of the trustee(s) of the super fund or trust specified?
- When is it paid?
- How much is paid?
- Is it paid in a lump sum or in installments?
- Have you provided the buyer with agency trust account details?
- Have you notified the buyer and the seller’s attorney or transfer agent of the amount(s) paid by the buyer?
Additional or special conditions in the contract
- Are the parties aware of their contractual obligations? Such as bond release clauses, property tax or GST requirements?
- If not, it may be prudent to ask them to consult with their attorney or solicitor before exchanging contracts.
- Is the settlement date on the contract convenient for both parties?
- If not, has a different settlement date been communicated to the lawyers or co-owners of both parties?
The final inspection
- Have you agreed on a suitable date and time for the buyer to carry out a final inspection?
- Have arrangements been made to transfer keys, remotes, etc. to the new owners on settlement day?
- Has the money from the deposit, minus the commission, been transferred to the seller?
To buy a house
Stacks Law Firm
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.