If a vendor decides to sell their property through a real estate agent they enter into a contract with the real estate agent usually called an ‘Agency Agreement’ Whilst the terms and conditions of Agency Agreements vary, the Agency Agreement will stipulate that they pay the agent a commission at an agreed rate or a rate determined by an applicable scale if a buyer is found through their instrumentality or through their introduction, or to a person introduced to the vendor by the agent or through their signs or their advertisements or if sold generally during the period of the Agency Agreement.
The Agency Agreement will usually provide exclusive rights to the real estate agent to sell the house for a fixed time, usually 90 days but this can be varied as agreed between the vendor and the real estate agent. The vendor should carefully read the Agency Agreement and if they have any doubts about it, seek legal advice.
Once an offer for the sale of the property is presented to the vendor, the vendor should consider all provisions carefully including sale price, conditions requested by the purchaser and what that might mean for the vendor, and the proposed settlement period. If in doubt, the vendor should take legal advice prior to signing. The vendor should also consider whether it is appropriate to seek the advice of their accountant or financial adviser before entering into a contract for sale particularly if the vendor is selling an investment property or is registered for GST or if there are queries as to the application of Capital Gains Tax and how that might affect the vendor.
Once the contract has been settled and signed for the sale of the vendor’s property to the purchaser, the vendor should nominate who they wish to have handle the conveyancing for them.
If the vendor has a mortgage they should contact their bank once they have an unconditional contract for the sale of their property for the release of their mortgage through their bank. If the property is mortgaged and money is still owed to the bank, it is usual for settlement to occur at the bank or the bank’s solicitors office.
Settlement requires attendance by the vendor’s solicitor, the purchaser’s solicitor plus any associated bank representative lending finance to purchase the property and the vendor’s outgoing bank. The vendor’s bank will then provide the title and discharge of mortgage to the vendor’s solicitor in exchange for what is owing. Generally these monies must be paid by way of bank cheque.
If there is no mortgage registered on the title to the property the vendor should ensure that they confirm the location of the original Certificate of Title to the property as soon as possible (i.e. whether held in a bank safety deposit box or with a law firm) to ensure it is available by the due date for settlement.
Costs of Selling and Moving
The real estate agent you propose to engage to sell your home should be able to tell you the basis on wich you will be charged and if there will be out of pockets such as advertising or sign boards. The Real Estate Institute of Tasmania (REIT) provides a guide of recommended commission and fees calculated on the property sale price achieved. You should discuss the fees and services that will apply with the real estate agent you choose to engage.
Removal expenses are another substantial source of expense. In addition there are costs associated with disconnecting and reconnecting utilities. Information is readily available from electricity suppliers, such as Aurora.