Property Sale Process in Canberra – What’s Involved?
The property sale process in Canberra is very similar to the way property is sold across the country. The key differences relate to the ACT-specific legislative requirements, the role of the real estate agent and the way that the settlements are conducted. The process consists of 8 distinct phases for the vendor (seller) and 7 phases for the real estate agent acting on their behalf. Lets have a look at these phases in more detail.
Preparatory Phase (Vendor)
During this phase the vendor will generally conduct a basic market survey and establish the approximate sale price for their property. They will also consider whether to try and sell the property themselves or use the services of an agent. Statistics indicate that an overwhelming majority of properties are sold through a licensed agent – simply because the consequences of getting it wrong during the DYI sale are simply too great. Incorrect pricing and marketing strategy could potentially mean the loss of tens of thousands of dollars. In most cases the vendor will either have a preferred agent that they have already dealt with or they will speak to a least a couple of agents to conduct a property appraisal.
Based on all of the information gathered during this phase the vendor will make a decision to sign an Agreement for a particular agent to represent them during the property sale process. Click here for our explanation on how to select the best agent to represent you when selling in Canberra ACT.
Phase 1 – 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.
The Agents Act 2003 stipulates that no commission fees are payable to an agent without a signed Agency Agreement. Agents Regulations 2003 specify that the Agency Agreement must contain the following information:
- identification of property (address and description)
- names of parties to agreement
- information identifying parties
- principal’s (owner’s) authority to enter into agreement
- authorisation for licensee (agent) to act on behalf of the principal (owner)
- duration of agreement
- termination of agreement (how and when can agreement be terminated)
- reimbursement of licensee (for any specified expenses)
- remuneration (the circumstances in which commission is payable and the estimated amount)
- warnings and statements as per the Regulations in relation to Exclusive and Other Agency Agreements
An Agency Agreement will usually include a separate Marketing Schedule / Annex that clearly indicates the baseline marketing costs involve in the selling of a particular property (such as online advertising, brochures and signboards), as well as optional additions such as staging, print advertising and social media. For a comprehensive explanation of the real estate marketing strategies please see our Marketing page.
The Agency Agreement is normally signed either at the end of the agent’s listing presentation or left with the owner to review and consider before signing. It is important that the agent clearly explains all the terms of the Agreement and does not use pressure-sell tactics to sign the document on the spot with no or little explanation.
Phase 2 – 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 the method of sale, conduct of statutory inspections, preparation of legal documents, staging, photography / videography and preparation of marketing products.
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 2003s10 specifies exactly what documents must be included in the Contract for Sale. For a list of documents by the type of property please see our Required Documents page or click here.
The vendor (property seller) will normally engage a conveyancer or a solicitor to prepare the contract. This could take anywhere from a few days to a few weeks depending of the location of the documents, conduct of required inspections, etc. If you do not already have legal representation we are more than happy to recommend a number of firms that we have worked with in the past, both in the Gungahlin region and the wider ACT. Please contact us to discuss and we will point you in the right direction.
If the building inspection and Energy Efficiency Rating (EER) reports are required they are normally booked and carried out at the same time as the Contract for Sale is being prepared by the conveyancer or solicitor. The building reports will identify any issues with the property that need to be either rectified prior to sale or (if not rectified) disclosed to prospective buyers as material facts.
Other than the regulatory and legal issues in most cases the property itself will require preparation prior to professional photography and being presented for sale. This may include reducing the amount of furniture and decorations in the house, removing anything that it overly personalised, making sure that the house is clean both on the inside and outside, as well making the garden and outdoor areas look as presentable as possible. A good real estate agent will be able to guide you through all of the preparation required as well as assisting with organising cleaners, gardeners, tradespersons, etc.
On some occasions real estate agent may recommend that a property be styled by a professional stylist. While this can be a costly investment (0.3 to 1 percent of the property’s value) our experience and research indicates that money invested in presenting your property in the best light possible is normally re-couped many times over in a higher sale price. Katrina Maes in her book the Australian Guide to Home Staging points out that staged homes on average achieve sales results of 7.8 percent above the asking price. This represents an 800 to 2,000 percent return on investment (ROI) and is really something that should be considered when selling home at every price level and in all market conditions.
Once the property has been prepared for sale and looking as best as it possible can the real estate agent will then organise a professional photographer / videographer to take photos / footage and present the property in the best light possible. While it can be tempting to try and save on the photographer’s costs in 99 percent of the cases this will result in a much poorer sales result. In fact, have a look at the local listings on www.allhomes.com.au, www.realestate.com.au or www.domain.com.au and see if you can see any properties that do not have professional photographs as part of their description. Such properties will generally attract much lower buyer interest, lower offer prices and will stay on the market for much longer. In fact we have seen a private listing that has been online for over 2 years and is still unsold!
Once the photographs / video has been taken the agent will then prepare all of the marketing materials including the signboard, online portal advertisement (both copy and photo selection), printed leaflets for local distribution, brochures for open homes and any social media content. All of this material should be presented to the vendors for final approval and any adjustment (if required) before going ‘live’. Once the vendors have approved all of the marketing materials and a valid Contract for Sale has been prepared and received from the vendor’s solicitors then the marketing campaign can commence.
Phase 3 – Marketing Campaign
This phase 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.
Digital real estate marketing in Canberra generally consists of two parts; online real estate portal advertising and social media advertising. While online portals used to be a low-cost advertising solution about a decade ago, that is no longer the case and online advertising is likely to consume the largest portion of the marketing budget for the property.
Allhomes.com.au is by far the most dominant player in the Canberra real estate market with approximately 70 percent of potential home buyers using only this website for finding their new home. At the same time Realestate.com.au is slowly gaining prominence in the Canberra market but it is a platform more tailored to attracting the out-of-area buyers and investors from interstate. Both of these portals should be used to market a property in Canberra, with www.allhomes.com.au accounting for the majority of local buyer inquiries.
Social media advertising, particularly Facebook, has also become standard in the ACT marketplace with most agencies using paid advertising and targeting particular segments of potential buyers (generally passive buyers). Social media advertising costs can range from as little as $50 to up to $1,000 depending on the vendors’ willingness to invest in gaining the maximum exposure for their property.
Print advertising has continued to be an effective tool in the real estate marketing arsenal. It tends to attract all types of buyers, including the researchers and shoppers, as well the older buyer demographic. The main print advertising channels in Canberra include the Canberra Weekly magazine and the Allhomes magazine distributed with Canberra Times on Saturdays. However, this advertising medium is certainly not cheap with costs starting at $500 and going up to $1,000 - $1,500 per week. A good real estate agent will be able to advise you whether this expense is cost-effective for your type of property.
The last and perhaps the most important marketing segment is the person-to-person domain. A good real estate agent should have a potential buyer database, excellent negotiation skills and be superbly organised and efficient. This is of particular importance throughout the marketing campaign as they will be dealing with tens of potential buyers and will be required to effectively follow-up and negotiate the best possible outcome on behalf of the vendor.
It is highly likely that some of the strongest interest and offers for the property will be received in the first three weeks of going to market. Once again, suberb judgement will be required from an agent to provide the best possible advice to vendors on whether to accept or reject a particular offer. Incorrect decision during this process can either end up costing thousands of dollars in poorer sales outcome or cause the vendors to miss out on the best possible offer for the property.
Phase 4 – Offer and Acceptance
This phase 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. Most agencies have an ‘Under Offer’ form that includes: the name of the purchaser, the details of the property, the offer, any conditions, finance details (approved, not yet approved, conditional, unconditional) and the buyers solicitor’s details.
Once the offer is accepted, the agent (or their agency) will raise Sales Instructions and will send them to both the vendor’s and purchaser’s solicitors. The Instructions provide all of the necessary details for the seller’s solicitor to prepare a final version of the Contract for Sale and send a copy to the purchaser’s solicitor. The buyer’s solicitor will then review the Contract for completeness and any issues that their client should be aware of. Once the buyer has reviewed the contract and is happy to proceed with purchase an Exchange of Contracts appointment is made.
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. At any point a higher offer may be accepted by the vendor, which is a situation known as being ‘gazumped’. While highly stressful for all of the parties involved it does occur reasonably frequently, particularly with popular properties that are in high demand.
It is important to note that the exchange would not occur without the buyer’s unconditional finance being approved in writing by the lender. This, in turn, is dependent on the formal valuation of the property. In our experience finance approval is one of the most common delays in the property purchase process so it is important for the buyer to have spoken to the lender and at least have organised conditional finance approval prior to making an offer on a property.
Phase 5 – 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.
Phase 6 – Settlement Phase
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.
Phase 7 – Settlement Day
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 ACTEWAGL of the transfer of property’s ownership.
The real estate agent will then hand over the keys to the buyer.