Property Sale Process in Canberra – What’s Involved?
Signing of an Agency Agreement
The Agency Agreement is an agreement for a real estate agent to act as an agent on behalf of the vendor during the property sale process. It provides the agent with the legal authority to act on behalf of the owner, sets out the details and conditions of sale, as well as defining the limits of the agent’s authority and clearly articulating the costs that are likely to be incurred.
Preparation for Marketing
This is one of the most crucial phases of the entire sale process and involves everything required to get the property on the market. It includes pricing the property, choosing a method of sale (auction or private treaty), the conduct of statutory inspections, as well as the preparation of legal documents, staging, photography / videography and marketing materials.
It is important to note that before a property can be marketed in the ACT a complete Contract for Sale (including all of the of required documents) must be prepared and available for inspection by the prospective buyer. The Civil Law (Sale of Residential Property) Act 2003 s10 specifies exactly what documents must be included in the Contract for Sale.
This stage commences from the ‘go live’ date when all of the marketing materials are ready to go and the property can legally be marketed (a valid Contract for Sale is available for inspection by the prospective buyers). The marketing campaign will generally will be between 3 and 5 weeks long and will consist of active advertising, a number of open homes throughout the period, as well as continuous buyer feedback and engagement. Your real estate agent should clearly explain the marketing strategy to you and provide you constant feedback throughout the campaign.
There are three domains that should be influenced by the marketing campaign, including; digital, print and person-to-person. A skillful agent will be able to determine the right mix of where the campaign should focus, test-and-adjust as required and provide top quality service across all of those domains. The effectiveness of the marketing campaign can be judged by the number of telephone and online inquiries, attendances at the open homes and the number of requests for contract.
Offer and Acceptance
This stage is all about working out a win-win solution for both the buyers and the sellers. The real estate agent is under lawful obligation to get the best possible outcome for the vendors and should keep them fully informed of all offers and provide advice whether to accept or decline them. At the same time they should work to ‘bridge the gap’ between the buyer and the seller in order to get the best possible sales outcome. Once an acceptable offer is made a good agent should always request it in writing, with the solicitor’s and finance details included in the offer.
It is important to note that in the ACT the offer and acceptance on the purchase of land is not legally binding until the contracts are exchanged.
Exchange of Contracts
In Canberra the exchange of contracts will normally be coordinated by the vendor’s and buyer’s solicitors. The buyer and seller would have separately signed a copy of the contract, which are then ‘exchanged’ by the solicitors at the agreed time and date. During the exchange solicitors check that the content of both contracts is identical, the contracts are then dated and physically exchanged.
Once exchanged the contract becomes legally binding and the 10 percent deposit is paid (usually) into the seller’s Real Estate Agent’s Trust Account. Sometimes the vendor may agree to a deposit less that 10 percent, however even if a smaller deposit is accepted in order to conduct the exchange the purchased is still liable for the full 10 percent should they default on the purchase. At this point the buyer should commence building insurance cover for the property as they now have a financial interest in it.
Once the contracts have been exchanged the settlement phase commences serving two key purposes; allowing the buyer to finalise their finances and allowing the seller to fulfill any special conditions as per the contract (eg. any repairs of maintenance) and to prepare the property for the handover. The standard settlement term in the ACT is 30 days, however that can be extended upon agreement by both parties. It is not unusual to see settlement terms of 90 days or even longer, particularly when the sale is subject to buyer’s finance approval, which in turn depends on the sale of another property.
Just prior to the settlement day the seller’s solicitor will prepare the Settlement Statement detailing any fees and adjustments payable (rates, water bill, legal fees, etc.) and the buyer will have to pay the ACT Conveyance Duty (formerly known as the Stamp Duty). The pre-settlement inspection will be carried out by the buyer a few days prior to settlement. This serves to ensure that any special conditions (maintenance, etc.) have been carried out and the property is being handed over in as-agreed state. The seller’s real estate agent will normally facilitate the inspection and provide feedback on any issues to the vendor for final rectification.
At the end of the settlement period both parties solicitors will meet in a commonly used settlements room in Canberra, where a Transfer document will be provided by the seller’s solicitor to the buyer’s solicitor. This document will by used to register the transfer of ownership by the ACT Government.
Once the transfer is complete, the buyer’s solicitor will provide instructions to the real estate agent to release the deposit funds held in trust (minus the commission entitlement) and notify ACT Revenue Office and ICON Water / ACTEW AGL of the transfer of property’s ownership.
The real estate agent will then hand over the keys to the buyer.