Mads Properties CC Seller's Guide

SELLER'S SGUIDE ELLER'S GUIDE

IINDEX NDEX

Sell First Or Buy First?

Deciding whether to sell first or buy first.

Setting The Correct Asking Price

Reveal the value of your home.

Get Support From A Property Expert

Leverage someone who is the master of their craft, that is trustworthy and has your best interest at heart.

Deciding On The Best Offer

Discover how to choose correctly between multiple offers.

Offer To Purchase (OTP)

After receiving an acceptable offer, you will need to get an official offer to purchase document (OTP) signed.

Home Inspection

After signing the OTP, your property will have to undergo an inspection and an appraisal from the buyer’s bank.

Schedule A Moving Date

Agreement of the moving date is part of the paperwork.

Guide

Sell First Or Buy First?

Should you sell first and then begin searching for houses, or search for houses first and then sell your house? To work out the answer to these questions, you need to ask yourself two questions: what are your financing options and what are the current market conditions?

QUESTION 1: HOW ARE YOU FINANCING YOUR NEW HOME?

A) Selling your current home as equity for your new home:

In this case, there will be a suspensive condition in your OTP that states that the sale of the home will only proceed once your property has been sold In situations where there is multiple offers on the table, sellers may choose to reject your offer in favor of a buyer who already has the necessary financing available

Selling first in this scenario increases the chances of securing your dream home when you find it However, selling first could also lead to a impulsive decision in order to limit the amount of time spent in whichever temporary living situation you ’ ve set up

Possible temporary living options:

• Paying occupational rent to remain in your home which you ’ ve already sold to avoid moving costs and the effort of moving twice

• Staying with a friend/relative to avoid paying rent However, this comes with the hassle of having to move more than once You will also have to pay for a storage unit in which to keep all of your furniture

• Finding a short term rental This includes the risk of not knowing how long you need to rent a space for, as well as moving costs and possible storage unit costs

B) Setting up bridging finance

You could set up a bridging finance option on your current home loan. The bridging finance will be based on the equity available on the property, your expected cash inflow and your credit record.

This reduces the risk of your offer being rejected to a lack of readily available finance as you can use these funds to pay the transfer fees so that the transfer process is not delayed. However, there are interest payable and administrative costs involved in this option, and it can end up being a rather expensive solution.

C) Purchasing cash

If you can afford to purchase a second home without first selling your first home, unfortunately, the answer to this question doesn’t become much simpler.

Choosing to buy first, you carry the risk of having to pay off two bonds while waiting for the sale of your first home. Choosing to sell first, you'll run the risk of rushing your purchase in order to decrease the time spent in your temporary living situation.

QUESTION 2: WHAT IS THE STATE OF THE MARKET?

Where to find this information?

A real estate professional will be able to assist you with this valuable information They will also provide insight into the average amount of time homes in the area are listed for on the market and how much they are selling for, you can use this info to calculate a time frame and possible equity expected from the sale of your property You can then use this information to decide whether it's best to sell or find a home first

Selling in a Buyer’s Market:

If the market seems to be favoring buyers (abundance of similar homes for sale in your area which drives house prices down), then you might want consider holding onto your current property while you search for a property you like in the hopes that the market will swing to favor sellers In this scenario, you carry the risk of losing your dream home if local market conditions don't improve and your property doesn't sell within the time frame stipulated in the OTP, or if your property sells for a lower price than what you had originally had in mind.

Key Takeaways: Plan to gain less out of the sale on your property, but purchase a new property for less too.

Selling in a Seller’s Market:

From a buying perspective, you also need to give yourself enough time to find the right property that fits into your criteria. If you find yourself in a seller’s market (fewer homes for sale), it could take more time than you initially expected. To avoid making an impulsive decision to purchase you might later regret, it might be better to find your ideal home first and sell after, if you find yourself in this kind of market.

Key Takeaways: Plan to get a higher price and pay more for the house you may be buying.

Setting The Correct Asking Price

Why is it important?

This is the key to getting full value. Properties that are listed on the market for long periods of time lose their appeal and sellers are forced to lower their initial asking prices anyway. In a lot of cases, sellers are eventually selling their property for a lot less than what they would have received if the home was priced correctly at the beginning.

Market Time vs Sales Price

0 42 days

Full asking price

5 12 weeks 3% less than asking price

13 24 weeks 6% less than asking price

+24 weeks 10% less than asking price

How agents determine listing prices:

• CMA Data

Along with their own suburb specific knowledge and experience, a real estate professional will provide you with a Comparative Market Analysis (CMA) which will include factors such as the average price per square meter in that area, recent sales prices of similar properties and comparative prices of other houses that are still on the market.

• Property Specifics

Once the correct price is determined through CMA data, an agent will consider what features would set the property apart from others in the area to give a more accurate depiction of its value

• Current Market Conditions

If the market is saturated with similar houses, then the asking price will need to be adjusted in order to be more competitive and vice versa

How to decide between evaluations?

The highest evaluation isn’t necessarily the most accurate Ask your real estate professional to walk you through how they calculated that number and then consider if you agree with their reasoning

Seller's Guide

Get Support From A Property Expert

Why should you use an agent?

• Potentially increase your profit

Agents can often achieve a far higher selling price than what the homeowner’s would selling the home themselves. In an attempt to avoid paying commission, sellers often leave a lot of money on the table during the negotiation. Usually the selling price an agent achieves is enough to cover their commission and more. How do they achieve this? They have the necessary resources and experience to price the home appropriately. Also, if you have more interested buyers, most of the time you can achieve a higher price. An agent who has a strong network and connections in your area can achieve this.

• Save you time

It is a relatively quick process to list a property online, but that is not where the sales process ends. A lot of time is allocated to dealing with potential buyers, home inspectors, and appraisers. It is an agent’s responsibility to deal with all of these things so that the seller doesn’t have to. An agent can also find potential buyers, help sellers to prepare for home inspections and ensure that the sales process is handled efficiently.

• Negotiation skills

Agents negotiate and make deals for a living, so it is more likely they will get a better deal for the seller than they would be able to get for themselves. A property sale is one of the biggest deals that a seller will make in his/her live, so why not use a seasoned professional that has mastered negotiating skills in their field?

• Lowering your risk

Making a mistake while selling a home could lead to a seller having to deal with the possibility of legal consequences Selling a home is a complicated procedure that involves a lot of legal paperwork that needs to be filled out correctly An agent will know exactly what is required and how it needs to be addressed

Guide

HOW TO CHOOSE THE CORRECT REAL ESTATE PROFESIONAL

Choosing who to partner with can be a difficult choice Here are a few questions you can ask to find out who would be the most successful at selling your properties in the fastest amount of time and at the highest possible price

1. Is this person qualified with a valid FFC and registered with the PPRA?

2. Can I trust this person? Do they exaggerate truths?

3. Does this estate agent have a successful track record of completed sales?

4. Does this person listen to my pain points and provide a valid solution?

5. Is this person more interested in my benefit or their own personal benefit?

6. Is this person easily reachable?

7. Is this person knowledgeable and competent in the local market and the real estate industry in general?

8. Is this agent connected with an established brand whose resources can be tapped into in order to help me sell my home in the shortest amount of time and at the highest possible value?

PHOTO CHECKLIST

Before an agents takes photos of your house

the following is in order:

EXTERIOR:

Sweep the driveways

your swimming pool

you own one)

a bit of colour with new plants

Remove weeds, dead leaves, pet waste

INTERIOR:

garbage from the property

vacuum

room with

on all lights

mop

curtains/blinds

kitchen and surrounding surfaces

up and store all clutter/items

bathrooms

Ensure all beds are made

your valuables

pictures

invites viewers over, make

magnets off the fridge)

DIY:

any loose cupboard hinges or loose doors

cracked/yellowing ceilings

outdated fittings

up on chipped paint

Disclose all defects or faults on the property

Deciding On The Best Offer

When considering each of the available offers, here are some aspects to which you should pay attention to:

• The Suspensive Conditions

Most of offers that you will receive will be subject to certain conditions happening first, such as the sale of the buyer’s previous home or the buyer obtaining bond finance. While it is uncommon to find an offer that is without conditions, keep in mind that your home could be off the market while the t's & c's of the offer are waiting to be met. While all OTPs differ, the less conditions there are and the quicker the they can be met, the better.

• Does the buyer have a deposit?

Banks will require the majority of buyers to have a deposit of between 10% 30% of the purchase price of the home to be approved for finance. Deposits greatly increase a buyer’s chances of bond approval. Deposits are a good indication that the buyer is in a strong financial position to purchase a property and is serious about the offer at hand.

• Consider their financing option

Although it is us not usually a problem, it is still advisable to be cautious of buyers that require third parties to sign as surety on their behalf. Also look at whether the buyer can provide proof from the bank that the funds are available to back up the offer. Cash buyers will not be reliant on the bank for bond approval before they can go ahead with the purchase.

• Date of occupation

Pay special attention to the date of occupation on each of the offers. Ideally, the occupational date should happen at the same time of the transfer date if possible this ensures that unnecessary complications are kept to a minimum if the deal happens to fall through. If the offer contains suspensive conditions, don't allow occupation of the property until these conditions are met, and all documentation is signed by you and the buyer at the conveyance attorney

• Value of the offers given

Once you have considered all other factors and are happy to proceed, then you can consider the value of the offer Sometimes, a lower offer might be the best offer depending on the conditions presented to you Choose the offer that best fits your needs

Offer To Purchase (OTP)

What is an OTP?

An offer to purchase (OTP) is an agreement that lays out the terms and conditions of the property transaction between the buyer and seller. An OTP serves to protect the parties involved in the transaction and ensure that nothing is left to interpretation and prevents any ambiguity. Once the OTP has been signed by each party, it becomes the deed of sale on the property. Do not hesitate to ask questions to ensure that you understand what you are signing.

What should be include?

1) Fixtures & Fittings

Both parties must be in agreement as to what items are included in the sale of the property. As a rule of thumb, any fixtures or fittings that have been attached/installed in the property will stay.

2) Suspensive Conditions

These include any outstanding conditions (eg. sale of a buyer’s current home, bond approval, and a home inspection). As soon as the suspensive condition has been fulfilled, the real estate agent should be notified so that the OTP can be made unconditional. This step is vital because the contract and the whole transaction could fall through if the requirements are not met within the allotted time.

3) Date of Occupation

This outlines the date at which the seller will vacate the property, and you will take occupation, as well as the rates for occupational rent should you wish to move in before the property is transferred to your name

Home Inspection Seller's Guide

Understanding Your Rights

The voetstoots clause protects the seller against all defects (including defects that he/she is unaware of). If the seller is aware of a defect and conceals it, buyers will be able to take action against the seller provided they can prove that the seller deliberately hid it

How does it work?

Sellers are contractually required to have all their compliance certificates in order for the property transfer process to proceed Some of these certificates include:

• an Electrical Compliance Certificate (ECOC) issued by a duly qualified electrician

• an Electrical Fence certificate

• a Gas Certificate

• Beetle certificate

• Plumbing certificate

• Note: the certificates required may vary depending on the features of the home and municipal by laws

An estate agent may recommend their preferred electrician and home inspector to help a seller acquire these necessary documents but the seller is free to choose who they prefer, arrange the inspection, and send the ECOCs to the transferring attorney Keep in mind that the agent only acts as an intermediary here, the legal responsibility is that of the seller, not the estate agent

Guide

Schedule A Moving Date

Below are the things you will need to consider when setting a moving date:

1) Length of Entire Transfer Process

Remember to factor in the time it will take to register and transfer the property into the buyer’s name before agreeing on a moving date. This process, which includes cancelling the previous owner ’ s bond, registering for the new owner ’ s bond, and registering the sale at the Deeds Office, can take around three months. If the buyer wants to move into your home before it is registered in their name, then they will be liable for occupational rent set by you and agreed upon in the OTP.

2) Legally Binding Contracts

In the case that your buyer already owns a house which was sold in order to purchase your property, they will have had to agree to a moving date with the buyer for their current home. If they are renting, they will have to vacate the premises before the end of their lease agreement. Some buyers cannot afford to rent another property for a few months while they wait for you to move out so you should try and be as accommodating as possible around these dates if you want to minimize the risk of losing out on the sale.

3) External Factors

You should also consider various other factors, such as the weather and the availability of professional movers. It is wise to allow for some flexibility around the moving date. Ideally you would set the moving date a few days after you received the keys to your new home so that you will not be out on the streets if for whatever reason there is a delay in the key handover.