Homes & Relocation Detail
Buying and selling property in Australia
Everyone knows that buying property isn’t as simple as heading down the street to your nearest real estate agent and handing over cash for the one you want, says Luke Fenney
Yet, buyers are still entering the market without fully comprehending the processes behind the various methods of buying property. Because there are no two properties the same, and with property market conditions constantly changing, the real estate industry offers a variety of sales methods. Each selling method has its associated pros and cons for both the buyer and seller. For example, a seller choosing to list through an exclusive agency with an asking price is restricting the maximum price they can get for their property– a positive for buyers, however, potentially a negative for the seller. There are various factors that influence the method chosen by a vendor to sell their property and it's often the listing agent who will play a role in making the decision. Many real estate agents are unwilling to learn the auction process and instead opt for taking on the responsibility of finding prospective buyers through other sales methods.
So what do you need to know, as a buyer or as a seller, about each selling method?
Exclusive Agency
Sellers choose to list their property exclusively with one agency which takes on the role of matching a buyer with a seller. Each agency offers a sales package which tends to vary slightly from agent to agent. Packages generally consist of a marketing campaign that includes online listings, print promotion and a sign out the front of your house.
The agent will also take on the responsibility of liaising with potential buyers, answering their questions and conducting open home inspections. As no real sense of urgency is created using this method, selling property this way can take anywhere from one week to one year. However, the key decision to make when selling through exclusive agency is whether or not to sell with or without an asking price.
Fixed Price
Advertising with a selling price helps target buyers looking to purchase within a certain price bracket and makes negotiating easier for both the seller and buyer. The flip side of advertising a price is that it restricts the maximum sale price you can achieve for your property. Therefore, determining the correct price of your property is essential– a task that is often quite difficult. Today's fluctuating property markets can increase or decrease home prices overnight. As a result many sellers are opting to market their property without an advertised selling price giving potential buyers the ability to negotiate sale.
Sale by Negotiation
Commonly referred to as 'sale by negotiation', offers are made by potential buyers once they have inspected the property. An offer can be made unconditionally or with attached conditions (conditional offer) and is usually accompanied by a 10 per cent deposit to demonstrate the offer's seriousness. The offer is then presented to the vendor who will make a decision whether or not to accept. If an offer is successful, the vendor will sign an acceptance and the sale is complete. Buyers should be aware that if their original offer is unsuccessful, additional offers can be amended and resubmitted for reconsideration. Choosing whether or not to market property with a price can be a difficult decision. On the one hand, you may get a higher price than you anticipated if you don't advertise a price, then again, you may not generate offers that meet your expectations.
Auction
Selling at auction is often regarded the fastest and most successful method for selling property. This option suits many people who are in a hurry to sell up or don't want the process to be drawn out over a long period of time. Establishing a sale date creates a sense of urgency for buyers and offers vendors the greatest opportunity to maximise the final sale price. Unlike other selling methods, where the terms of sale are often negotiated or altered, auctions allow the vendor to set the terms of sale and effectively maintain control. Potential buyers should contact the relevant sales agent prior to auction to find out more information and can even make an offer before the property goes under the hammer. Any property intended to be sold at auction must be advertised as so, and agents must make reasonable efforts to inform all interested parties if a property is to be withdrawn from auction or is to be sold prior to auction. Bidding at auction can be daunting for many first-time buyers. The best advice is to do as much research about the property first and determine the maximum price you can afford before the auction begins.
Luke Fenney works for realestate.com.au.