Selling a Property in Canberra ACT and How to Find the Best Agent
Real estate is a topic that everyone has an opinion on and the one likely to provoke a lively debate. It may be about housing affordability, interest rates, the pros and cons of investing in property or a number of other topics. However, one thing is clear – real estate is important to us as it is our biggest repository of wealth and the backbone of Australian economy.
When it comes to selling your home, the biggest asset that most people own, it is important to have a comprehensive understanding of what is involved, the timelines and the legal issues surrounding the process. Below we have compiled a Canberra-specific guide, which will give you an excellent overview of the process.
It is important to understand that the sale of property is a highly regulated process in the ACT (and across the country) and it is extremely important to choose and agent who has the required training and comprehensive knowledge of all legal requirements involved. The key documents relating to ACT specific legislation are the Civil Law (Sale of Residential Property) Act 2003 and the Civil Law (Sales of Residential Property) Regulations 2004. It is important to understand that the Criminal Code applies to offences against the Act, and therefore precise compliance with all of the requirements is of paramount importance.
So what are some of the key considerations when it comes to selling your home?
DIY Sale or a Sale Through an Agent?
Firstly you need to establish if you are going to do it yourself or through an agent. If you choose to do it yourself you will still be required to meet the same requirements as outlined in the Act and Regulations. You will also be required to assess and price your property, conduct a marketing campaign, conduct open homes and negotiate with prospective buyers. It is also important to keep in mind that a good agent is a professional who is highly skilled in all the requirements listed above and is likely to add value to the sale price of your home far in excess of their commission.
While private or ‘no agent’ sales are becoming increasingly common with proliferation of various for ‘sale by owner’ type internet portals, they only constitute a small proportion of all property sold in Australia. According to the Property Observer less than 1 percent of residential sales were conducted without an agent.
Given that most agents charge a reasonable commission for their services why would this number be so low? The obvious answer is that using a real estate professional to sell your home adds value far in excess of their commission. Value may mean different things to different people but could relate to increase in the final sale price, convenience, time-savings or the intricate knowledge of the local market not available in the public domain. Despite some media articles portraying the real estate agents in the negative light the truth is that the majority of agents work extremely hard to achieve a premium result for their customer. In a commission-based profession those who don’t provide excellent service and significant value to customers tend to be out of the job within the first 12 months.
Choosing the Best Agent – Some Key Considerations
Once you have decided to use an agent, how do you choose the right one to look after your property’s sale?
Qualifications. Just like in any other profession qualifications are very important in the real estate industry. The majority of ‘agents’ in the ACT are actually not licensed agents but ‘real estate salespersons’ as defined by the Agents Act 2003. This means that they hold a Certificate of Registration (which can be achieved in as little as 3 days training) and work under a Licensed Agent.
Only a small minority of agents hold an Agent’s License in the ACT indicating that they have completed at least a Diploma-level qualification in real estate, are responsible for at least one financial trust account and have significant annual compliance and audit responsibilities that they are subject to. Dealing with a fully licensed agent means you are dealing with a person who has shown commitment to their profession and self-development, as well as with significant legal responsibilities placed upon them. When choosing someone to represent you and your most significant financial asset you should inquire about their actual industry qualifications and not just look at a glossy self-promotional brochure with recent sales data.
Other important factors to consider when choosing a real estate agent are; the commission structure, marketing fees, the agency they work for and the level of service provided.
Commission. Just like many other things in the real estate domain the agent’s fees and commission are generally negotiable. WhichRealEstateAgent.com.au has collated data on the real estate agent fees in the ACT and they can vary from around 2 percent of the final sale price to more than 3 percent in some cases. You may find that some franchise type agencies have very rigid commission structures that have very little room for movement. It is also likely that smaller boutique agencies are able to offer more flexibility when negotiating the cost of agency services due to less overheads and less regulation from corporate headquarters. However, regardless of the type of agency a good agent will charge a fair commission for the work that they do and the value that they provide.
Marketing Fees. As a rule of thumb you should try and allocate around 1 percent of the property’s value to marketing costs to achieve the best possible sale result. While in a lot of cases it may be possible to run an effective marketing campaign with significantly less funds (as little as 0.4%), there is no doubt that a larger marketing budget will attract a greater number and a wider variety of potential buyers. The most common marketing expenses include internet portal fees, home staging, large format signboards in front of the house, printed brochures, social media advertising, professional photography, print advertising and local leaflet distribution. It is important to note that Canberra has the most expensive internet advertising costs in the country with the costs of just basic advertising across the 3 major internet portals currently approaching $1700. A good agent will be able to put together a comprehensive marketing strategy for your to get the best possible result. As the marketing fees are generally paid up front in the ACT by the vendor (property seller) a degree of flexibility on the agent’s part is also important. They should be able to work around your financial situation and tailor a strategy that meets your expectations.
Agency Type. The real estate industry is one of the most fragmented industries in the country. Unlike, for example grocery shopping, no monopolies or duopolies for real estate services exist on the national or even state levels. There are some larger franchise brands but they are a minority compared to the thousands of independent and local real estate agencies around the nation. The ACT alone has more than 100 independent real estate agencies that provide a variety of property related services to their local areas. While the major franchise names maybe familiar to some people looking for an agent, the reality is that it does not automatically translate into superior transaction results for an individual buyer or seller. In fact, a smaller agency controlled by an owner / principal is more likely to invest more time and effort per transaction, as compared to a franchise that deals with hundreds or thousands of property sales per year.
Level of Service. While the agency type can certainly play a part on the quality of service provided it ultimately comes down to an individual and their personal demeanor and performance. It is often said that past performance is the best predictor of future performance and there is no better way to judge that than the first couple of personal interactions that you have with them.
- Are they prompt in responding to your inquiries or do you have to wait for days to get a response?
- Do they actually do what they promised to do or are you chasing them up for information?
- Are they able to provide answers to your questions or do they need to go away and speak to someone else?
- Are they making inflated promises to sell your property above market value or are they providing you with honest advice?
- Are you dealing with the agent or their assistant?
Asking these questions before committing to an Agency Agreement with a particular agent will allow you to objectively evaluate your comfort level with a particular agent. Just remember, once you sign the Agency Agreement you will be working closely with that agent for at least 3-4 months so you need to be comfortable that they will provide you with the best possible service and fight on your behalf to secure the best possible financial outcome for you.