Sole or exclusive agency
The Real Estate Institute of Queensland (REIQ) recommends sellers use the exclusive agency method to sell residential property as it is the most effective.
The REIQ recommends the exclusive agency method, where the sale of the property is in the hands of only one party, over an open listing, where the seller lists their property with a number of real estate agents.
An exclusive agency is advantageous to the seller as the appointed agent will be dedicated to selling the property. This saves the seller the confusion of having to liaise with more than one agent.
Furthermore, this method will save the seller the time and money involved in advertising and marketing costs when a number of agents are trying to sell the property.
Under the Property Agents and Motor Dealers Act (PAMD) 2014, a seller can only appoint an agent under this arrangement for up to 60 calendar days. During those 60 days the seller may decide not to renew the appointment if the property has not sold.
The seller can agree to make a further appointment up to 60 days, but the renewal cannot be made earlier than 14 days before the term expires.
Under any selling arrangement using a real estate agent, the seller and agent must sign a PAMD Form 6 – Appointment of Real Estate Agent (Sales and Purchases) in order to legally set the terms of the selling agreement.
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 opportunity 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 seller.
As the reserve price is not disclosed it gives the seller a chance to test the market.
A written marketing plan with pre-agreed appointment times enables the sellers 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 seller. Auctions create a competitive environment.
With sale by auction in Queensland, all contracts are unconditional and no cooling-off period applies.
The first step in selecting the right person to conduct the auction is to 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.
Auctioneers today are highly trained in their field having attended courses and sat written and practical professional examinations with the REIQ. Furthermore they hold current registration under the Land Agents Act.
When your auctioneer is a member of the REIQ 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.
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 90 days but by mutual agreement can be renewed.
This is considered by many to be the key to a successful auction by creating interest. There is a legal obligation to clearly explain to the seller where and how monies will be spent and show examples of the advertising mix. At this stage the seller’s input is very important to help identify the probable market.
Arriving at a reserve price:
It is the sellers 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.
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 seller to sell the property prior to going to auction. In this case the agent will generally – on the sellers 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.
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:
Tips for a successful auction
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.However, the REIQ recommends using the exclusive agency method to sell your property the most effectively.
To the client The commission is negotiable. It must be written as a percentage or dollar amount. Make sure you understand when commission is payable. If you choose ‘Other’ and the contract does not settle, the agent may still seek commission. To the agent You should ensure that commission is clearly expressed and the client fully understands the likely amount and when it is payable. Refer to section 104 and 105 of the Property Occupations Act 2014.
Advertising & marketing costs:
Real estate agents will present an advertising and marketing program for your property designed to achieve for you the highest possible price. This can involve advertising your property through signboards, local newspapers, on property websites, or dedicated property magazines.
Remember that the agent must itemise these costs – before the Appointment of Real Estate Agent (Sales and Purchases) PAMD Form 6 is signed by the seller – and both parties must sign the Advertising Schedule agreeing to the advertising and marketing items and their costs.
A coordinated advertising and marketing campaign 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.
The REIQ strongly recommends the use of a qualified solicitor in property matters such as conveyancing.
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.
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.