What Happens Next – Your Guide To The Marketing Phase Of Your Property Sale
What Happens Next? Now that I have exchanged contracts to sell my property
Client Property Address
Commencement Date 1
What Happens Next – Your Guide To The Marketing Phase Of Your Property Sale
Our promise to you Since 1988 we have strived to provide the very best real estate service in Sydney to the many property buyers, sellers, investors and tenants who call on us for help and advice each week. This booklet and the advice it contains is part of that promise. We hope you enjoy the content and profit from the experience. Remember, our offices are open 7 days a week to help you with any real estate matter so be sure to call us if you think we can help. You'll find contact details for your nearest Prudential Real Estate office on the back page of this booklet.
2
What Happens Next – Your Guide To The Marketing Phase Of Your Property Sale
Congratulations ! If you have just signed a contract to purchase a property you will ďŹ nd the next few pages of information absolutely invaluable.
KEEP THESE NOTES UNTIL YOUR SALE HAS BEEN COMPLETED Each of these 15 simple steps will explain what happens over the next few days and how your sale will proceed to settlement. More importantly, these notes will explain what you can do to make the whole process smooth and headache-free.
1.
Is Your Property Sold Not yet ! The sale of your property is not certain until the purchaser agrees to continue with the sale beyond the last day of the cooling-off period. There are a number of things that will occur over the next few days as we move through the purchaser's cooling-off period and each of these will be explained in the next few pages. Right now both you and the purchaser have signed identical contracts for the sale of your property. You have both agreed on the sale price and the terms of the sale.
Sale Price
$ days
Settlement Period DAY
MONTH
YEAR
Expected Settlement Date
Now that both parties have signed their respective contracts we can undertake an exchange of contracts. This is where we check both contracts to ensure they are absolutely identical and then apply today's date to finalise this part of the sale process.
3
What Happens Next – Your Guide To The Marketing Phase Of Your Property Sale
Our next step is to rush the contracts to the solicitors (or conveyancers) involved in the sale. First we send an urgent fax advising them of the key details of the sale. This early advice allows them to begin work on the transaction immediately. Next we express post the contracts to each of the solicitors (or conveyancers). When each of the solicitors (or conveyancers) receives their signed copy of the contract they will begin the legal process of conveying ownership of the property from your name to that of the purchaser. This process (called conveyancing) concludes when your sale has completed.
2.
Inclusions When you sell your property you not only agree to sell the bricks and mortar, the roof tiles and the fences, you also agree to sell the inclusions. The inclusions are household items that are not necessarily a permanent part of the property (in the same way your fences are designed to be a permanent addition to the property). Listed below are the inclusions you have agreed to sell with your property. These inclusions are listed on the contract of sale which you have now signed and are summarised on the next page ;
4
What Happens Next – Your Guide To The Marketing Phase Of Your Property Sale
Number
Number
THIS LIST OF INCLUSIONS IS VERY IMPORTANT.
Fixed Floor Coverings
Garden Shed
Light Fittings
Gas Heater
Blinds
Bar-B-Q (all or part ?)
Curtains
Insulation
Alarm System
Slow Combustion Fire
Fly Screens
Clothes Hoist
Screen Doors
Garden Lights
Ceiling Fans
Sprinkler System
Ducted Air Conditioning
Range Hood
In-wall Air Conditioning
Other :
Dishwasher
Other :
Microwave
Other :
Pool Cleaning Equip. (Manual)
Exclusion :
Pool Cleaning Equip. (Auto)
Exclusion :
TV Antenna
Exclusion :
3.
What Happens Next - A Simple Explanation Of The Cooling-Off Period When you exchange contracts with the assistance of a real estate agent the law in NSW requires that the purchaser be allowed a 5-day cooling-off period. The cooling-off period allows the purchaser the necessary time to investigate the property, arrange their finances and make an informed decision about proceeding with the sale. On the other hand there is no cooling-off period for a property seller. Once contracts have been exchanged with the purchaser you are locked into the sale.
5
What Happens Next – Your Guide To The Marketing Phase Of Your Property Sale
The standard cooling-off period is 5 business days. Both the Law Society of NSW and the Real Estate Institute of NSW agreed that this period was sufficient when the legislation was first drafted in 1991. The cooling-off period commences on the day after an exchange of contracts. So, if contracts are exchanged on a Wednesday, the first day of the cooling-off period would then be Thursday. The 5 business day cooling-off period would then be Thursday, Friday, Monday, Tuesday and Wednesday. In this example the cooling-off period would expire at 5.00pm on Wednesday. (Note : Public holidays are not counted as business days). On or before the last day of the cooling-off period the purchaser is required to pay the balance of any deposit outstanding. (Note : Most purchasers pay an initial deposit of one-quarter of 1% - 0.25% - of the agreed purchase price when they agree to the purchase and then pay the balance of their 5% or 10% deposit on the last day of the cooling-off period) If the purchaser fails to pay the balance of their deposit or for some other reason decides not to proceed with the sale we will inform you immediately. Should the purchaser pull out of the sale (called "rescinding") part of their initial deposit will be paid to you as compensation for having your property off the market. The amount that would be paid to you in these circumstances would be 0.25% of the agreed purchase price. Here's an example using your sale price and the deposit amount paid by your purchaser.
Agreed Purchase Price
$
Deposit paid On Exchange Of Contracts
$
Penalty Amount forfeited by the purchaser to you should they decide not to proceed
$
Refund payable to the purchaser should they decide not to proceed
$
The good news is that most buyers (about 97%) proceed with their purchase beyond the cooling-off period. They encounter no problems with the property they intend to buy, their finance is approved without a hitch and they are happy to go ahead with the sale. One more thing regarding deposits. During the sale of your property all the money paid to us by the purchaser as a deposit is required under current NSW legislation to be held in a
6
What Happens Next – Your Guide To The Marketing Phase Of Your Property Sale
trust account. Prudential Real Estate conducts a properly qualified trust account for these purposes. Deposit funds held in a trust account do not earn interest for our company. NOTE : During the cooling-off period no “new� buyers will inspect your property. Your property will be off the market in favour of the buyer that has signed a contract to purchase your property. Naturally we record the details of any new buyer that shows interest in your property but they will not inspect your property until and unless your buyer withdraws from their purchase of your property
4.
First, Contact Your Solicitor / Conveyancer Once an exchange of contracts has occurred we recommend that you contact your solicitor or conveyancer no later than the next business day. Be sure to tell him or her that you have exchanged contracts for the sale of your property and that we will forward the counterpart contract signed by the purchasers that same day. During the cooling-off period there is not a great deal for either you or your solicitor to do - we are all waiting on the purchasers to complete their investigation of your property and to finalise their finance. Nonetheless, it is a good idea to advise your solicitor (or conveyancer) how they can contact you, if required, during the coolingoff period.
5.
Pest And Building Inspections Once an exchange of contracts occurs the first thing a purchaser will do is arrange an inspection of your property by a qualified pest inspector and an inspection by a qualified building inspector. The pest inspector will look for evidence of infestation by such insects as termites, borers, spiders and cockroaches as well as mice, rats and birds. The building inspector will look for evidence of structural damage, in the walls, the roof and the foundations. Once these inspections have been completed the purchaser will be presented with a report detailing the findings of both inspections. The important thing to remember is that pest and building inspectors are paid to find even the smallest flaw in your property and their reports often sound scathing.
7
What Happens Next – Your Guide To The Marketing Phase Of Your Property Sale
If damage or infestation is detected during these inspections the resulting report will most likely contain an estimate of the cost of rectification. When damage or infestation is detected most purchasers will take one of two courses of action ; a.
Withdraw from the sale ; or
b.
Ask you to lower the agreed purchase price by the value of rectification works indicated in the pest or building report.
As your agent our job is to ensure your sale proceeds as planned. And as soon as we are aware of such a problem we will immediately discuss the issue with both you and the purchaser - our aim will be to negotiate a solution that is satisfactory to both parties. Here's a problem that often occurs in these circumstances . . . When the purchaser discovers there is something wrong with the house they would like to buy they are understandably upset. They then ask for a sizeable discount off the asking price, on the advice of their solicitor, to compensate them for the rectification works detailed in the pest or building report. When some property sellers hear that the purchaser is demanding a discount for rectification works they are understandably upset and inclined to say "No". They say that both parties agreed on a sale price and that's that - they stubbornly refuse to re-negotiate the sale price of their property. When this occurs the sale is generally lost and the property goes back on the market. Now the property seller has the option of paying to have the problem fixed or simply offering the property once more to the marketplace. And when the next buyer comes along their pest or building inspector will invariably detect the same problem. At the end of the day the property seller has to cover the cost of the rectification works - either by paying directly or by allowing a discount off the asking price. Either way, it's smarter to negotiate the problem with the first buyer rather than pay for the repairs and hope to find another buyer at the same price. We all remember the old saying, "A bird in the hand is worth two in the bush". Hopefully this won't occur during your sale . . . but if it does we'd like you to be fully aware of your options. NOTE : We recommend that, where possible, you be present when a pest or building inspector attends at your property so that you can hear their opinion first-hand.
8
What Happens Next – Your Guide To The Marketing Phase Of Your Property Sale
REMEMBER – If there’s a problem at any time during your sale we are the only people who can talk to both the buyer and the seller. Solicitors can only talk to their own client. So call us first if there’s the slightest hitch
6.
Re-Inspections During the cooling-off period (and right up to settlement) most purchasers will want to re-inspect your property. Often this is to undertake such mundane tasks as measuring your windows for new curtains or blinds, checking the available space for their refrigerator or simply showing off their purchase to members of their family. On the other hand the object of the inspection may be to personally inspect those matters raised as possible problems in their pest or building inspection. No matter what the reason may be for the purchasers inspection you can be sure of the following ;
7.
a.
Any inspection of your property must be arranged through our office. We will then call you to arrange a suitable time.
b.
A member of our staff will always accompany the purchaser during an inspection.
c.
We will endeavour to minimise unnecessary inspections by the purchasers so as to maintain your privacy. However, this is not always possible and we ask for your patience during this period. (Remember, the purchasers are probably exited about their purchase and sometimes they don’t realise they may be invading your privacy)
Extensions To The Cooling-Off Period During the cooling-off period your purchaser will endeavour to arrange a pest inspection, a building inspection and the formal (written) approval for their finance. Sometimes, despite their best efforts, a purchaser is not able to arrange these matters within the specified 5 business days. When this happens, the purchaser's solicitor (or conveyancer) will ask for an extension of the cooling-off period.
9
What Happens Next – Your Guide To The Marketing Phase Of Your Property Sale
So long as the purchaser's reasons for the request for an extension are genuine we generally recommend you allow the extension with the following conditions; a.
A purchaser's solicitor will invariably ask for an extra 5 days. We strongly recommend you only allow an extra 2 days. If additional time is required at the end of this 2-day period an additional request can be submitted to your solicitor.
b.
No matter what happens we recommend that the maximum total period you should have your property off the market is 10 business days.
c.
If after 10 business days the purchaser has failed to complete all their arrangements for the purchase of your property we recommend that your property be put back on the market. If the purchaser still wants to buy your property they can do so once they have completed their inspections and obtained their loan approval.
During the cooling-off period we will continue to record any fresh buyer interest in yourproperty and should it come back on the market these new buyers will be amongst the first to inspect. Please also remember that the cooling-off period and any extension does not effect the settlement period - if your settlement period is 42 days these are counted from the date of exchange not the end of the cooling-off period.
8.
Unconditional Exchange Of Contracts On the last day of the cooling-off period the buyer will come into our office and pay the balance of any outstanding deposit. Once any outstanding deposit has been paid we wait until 5.00pm. At 5.00pm (barring any unforseen circumstance) your property will finally be sold. We call this point in the sale process "unconditional exchange of contracts". From this point on both you and the purchaser are locked in to the sale and settlement will now occur in accordance with the terms of the contract. Congratulations !! Some time after 5.00pm on this day we will erect a sold sign at the front of your property.
10
What Happens Next – Your Guide To The Marketing Phase Of Your Property Sale
9.
Transfer Of Deposit Most people who sell their property also go into the marketplace to buy a replacement property. And in most cases the sale of one property occurs at the same time as the purchase of another. For property sellers the matter of finding the deposit for their purchase can sometimes cause a problem. Nowadays it is fairly common for the deposit paid by your purchaser (to buy your property) to be transferred on to your purchase. Here's an example how this might work in your circumstances ;
Total deposit paid (or to be paid) by your purchaser
$
Less our GST inclusive fee (which must remain in our trust account)
$
Equals the amount that can be transferred on to your purchase
$
Here's a few additional things to note about deposit transfers ; a.
A transfer of deposit can only occur when both the vendor and the purchaser agree to the transfer. Most often this agreement is contained in the contract as a specific clause providing for such transfer.
b.
The transfer can only occur after unconditional exchange of contracts and only after we receive written notification from both solicitors (or conveyancers) and only when all cheques have been cleared through our trust account.
c.
Sometimes purchasers pay their deposit by way of a deposit bond. A deposit bond cannot be transferred. If your buyer pays their deposit for your property with a bond you will need to do the same when you purchase - this may cost several hundred dollars.
d.
A deposit transfer can only be used as a deposit for another property, the payment of stamp duty for another property purchase or (in certain circumstances) to pay for a bond for a rental property.
11
What Happens Next – Your Guide To The Marketing Phase Of Your Property Sale
10.
What Happens After Unconditional Exchange Of Contracts Most contracts for the sale of property allow for a settlement period of 42 days (or 6 weeks). The cooling-off period is included in the settlement period. (Refer to the details of settlement on page 1 of this booklet.) So, if your cooling-off period is 5 days (one week) then there will be 5 weeks remaining in your settlement period. If your cooling-off period is 10 days (two weeks) then there will be 4 weeks remaining in your settlement period. During the remainder of your settlement period your solicitor (or conveyancer) will attend to all the many details required to finalise the transfer of ownership of your property. For the property seller there's not a great deal to do except pack and finalise your own arrangements for moving to your new property. We will be in touch with you on a regular basis to ensure your plans are progressing smoothly. In addition we have a number of "helpful hints" to pass on to you during this time including a checklist called "Countdown To Moving Day" as well as a list of recommended after sales services that will come in handy as you move towards settlement.
11.
Keys, Warranties And Other Bits And Pieces About a week before settlement one of our support staff will be in contact with you to arrange the completion of our "Key Survey". Our Key Survey records each of the keys for each of the locks at your property that will be handed over on settlement. This is a very important step in the sale process. In the past the absence of some or all of the keys at the point of settlement has caused many problems and our Key Survey is the first part of our Key Hand-over System that eliminates most of these problems. Your co-operation with our Key Survey is vital to the smooth completion of your sale. In addition to the hand-over of keys it is important that you locate any warranty, installation, or instructional booklet or brochure you may have that explains the proper working of all fixtures that will be remaining at your property after settlement. Such material should be left in the cutlery draw of your kitchen when you vacate so that the purchaser can retrieve them for their own use.
12
What Happens Next – Your Guide To The Marketing Phase Of Your Property Sale
12.
Final Inspection Generally on the day prior to settlement the purchaser will arrange their final inspection of your property through our office. A member of our staff will escort the buyer through your property during this inspection. The purchaser's solicitor (or conveyancer) will have instructed the buyer to ensure that everything at the property is as they expected. One of the items they will have with them at the time will be a list of all the inclusions that you have agreed to sell with your property. You can find a list of those inclusions at the beginning of this booklet. If the purchasers are dissatisfied with the property in any way they will ask their solicitor (or conveyancer) to delay or cancel settlement until their complaint is adequately addressed. Buyers will expect the following . . . a.
The property should be clean inside and outside
b.
The lawns should be mowed and the edges trimmed
c.
The carpets should be clean (although it’s not necessary to steam clean the carpets this is advisable)
d.
There should be no rubbish left at the property
e.
All of the inclusions detailed on page 3 of this booklet should be left at the property in good working order
f.
Damage of any kind that was not evident at the time of exchange of contracts should be repaired prior to settlement
g.
All fixtures such as the stove, the hot water service and any air-conditioners should be in proper working order.
13
What Happens Next – Your Guide To The Marketing Phase Of Your Property Sale
13.
Settlement Day Unless otherwise arranged you must vacate your property completely on or before the time set down for settlement. For example, if settlement is expected to take place at 10.00am on Friday your purchaser will expect to be moving in to your property within 60 minutes of this time. It is therefore imperative that all your belongings are moved prior to 10.00am on Friday. In addition, the purchaser expects to pick up all the keys to the property from our office. It is therefore very important that you deliver all keys to our office no later than the day before settlement (unless other arrangements have been made as a result of our Key Survey). If we are holding any funds in our trust account that should be forwarded to you after settlement these funds will generally be available to you on the next business day following settlement. In order to draw a cheque for your outstanding funds at this time we will need a letter from the purchaser's solicitor called an "order on the agent". Mostly we receive this by fax within 24 hours of settlement. But until we receive this letter the law prevents us from drawing your money from our trust account. Please contact our administration manager in the week prior to exchange to arrange whatever cheques you might require after settlement. If you wish we can bank your money into your nominated account at no extra cost, saving you the effort of having to visit our office and then attend at the bank yourself. On the other hand many people are happy for us to post their cheque to their new address. No matter what your preference we are happy to assist.
14
What Happens Next – Your Guide To The Marketing Phase Of Your Property Sale
14.
Our Fee And How We Get Paid When your property settles we will deduct our fee from the deposit originally paid by the purchaser for your property. As such it is not necessary for you to draw us a separate cheque for our fees. The remainder of the money in our trust account is yours. Here's how it could work in your case;
15.
Total deposit paid (or to be paid) by your purchaser
$
Less our GST inclusive fee
$
Equals the amount that will be made available to you after settlement
$
Finally (And Most Importantly) Keep In Contact With Us At All Times
Remember our phone number . . .
And remember my mobile number . . .
Â
And remember that I am here to help you. Every month we assist dozens of families through the stress of buying a property and we are more than happy to answer any question you might have. All you have to do is keep in touch.
15
CAMPBELLTOWN Serving the local community since 1988 47 Queen Street, Campbelltown Phone 4628 0033 INGLEBURN Serving the local community since 2000 31-33 Oxford Road, Ingleburn Phone 9605 5000 LIVERPOOL Serving the local community since 1994 3/52-58 Memorial Avenue, Liverpool Phone 9822 5999 MACQUARIE FIELDS Serving the local community since 1994 Cnr Saywell & Fields Roads, Macquarie Fields Phone 9605 5333 NARELLAN Serving the local community since 2015 5 Somerset Avenue, Narellan Phone 4624 4400
prudential.com.au
PLEASE NOTE : 1.
2.
Recipients of this report are reminded that, although due care has been taken in the preparation of the within contained material, prospective property buyers, sellers and investors are always best served by making their own independent inquiries before entering into any real estate transaction. This report has been prepared for the sole and exclusive use of Prudential Real Estate clients and customers. The whole of the contents and design are protected by copyright. COPYRIGHT Š Michael O'Sullivan 2001-2015