You've taken the leap and decided to sell your home or investment property. It’s a big decision but committing to sell is only the first step. If you’ve never sold a property before it can be a long and involved process. We outline what’s involved to help make your sale as smooth as possible.
9 steps to selling a property
1. Get prepared
Tackle any home maintenance and have a clear-out to maximise your chances of selling.
It might also be worth researching recent sales in the local market to get an idea of the sale price you might be able to achieve. Downloading an AMP property report could help with this.
2. Choose a real estate agent
To choose a real estate agent, ask family and friends for recommendations or attend open homes to get a first-hand view of their sales techniques. Once you have a shortlist, interview several to help you find the best fit. Be sure to ask about their fees and charges upfront and don’t be afraid to negotiate.
3. Pick a sales method and set a price
You’ll need to choose a sales method. Two common types are private treaty or auction. Your real estate agent can advise what works best in your local area, for your property type and in the current market conditions.
They can also advise you on what your property is worth and help you set an asking price (in the case of a private treaty sale) or establish a guide price (in the case of an auction).
- Private treaty
A private treaty can enable you to have a longer sales campaign and more time to consider offers. But there’s a risk that if your asking price is too high your property won’t sell, and if it’s too low you may miss out on maximising the price.
Auctions create competition between buyers that can drive the sale price up. However, they can be riskier as you never really know how interested buyers are, or how much they think your property is worth, until the auction day.
4. Formalise the agency agreement
The agency agreement is the contract between you and your real estate agent. It covers whether they have exclusive rights to sell your property and for how long, their fees, any additional costs such as marketing (online advertising and for sale boards) and administration fees.
5. Prepare the vendors statement and contract of sale
The vendors statement (also called a section 32) is a legal document explaining whether there’s a mortgage on the property, any covenants that would restrict what the owner can do with it, any easements the land is subject to (drainage, rights of way, or power lines for example), council zoning and associated declarations.
You’ll likely need to hire a conveyancer (a property law specialist) or solicitor to prepare this. They’ll also need to prepare the contract of sale, which must include the title documents, drainage diagram and a current planning certificate issued by the local council. Inclusions and exclusions must also be outlined (standard inclusions in property sales include fittings and fixtures such as fixed floor coverings, light fittings and window coverings).
These details vary for each state. You can find the exact requirements for buying and selling property via the government’s information and services website.
6. The sales campaign
This involves getting your property ready to be shown, having your marketing photos taken and holding open homes, which your real estate agent will coordinate. Generally, sales campaigns last 4-6 weeks.
7. Securing a sale
- Private treaty
Under a private treaty sale, once an offer is accepted, you and the seller exchange signed copies of the contract of sale, and the buyer pays a deposit. The buyer has a five-day cooling-off period during which they can withdraw from the sale.
If you’re selling by auction, the buyer is the person who bids the highest price on auction day, providing that amount is above your reserve price (the minimum amount you’re willing to sell your property for). If bidding doesn’t reach your reserve price, your property is passed in – which means you’re opting not to sell the property for the highest bid that was achieved at auction. However, a sale may be negotiated later between your real estate agent and one of the bidders.
If the property is sold at auction, the buyer must sign the contract of sale and pay the deposit immediately. There is no cooling-off period, even if the property is passed in but sold by negotiation later on the same day.
8. Discharging your mortgage
If you’ve got a mortgage on the property, you’ll have to arrange for it to be finalised before settlement. This involves giving your lender a completed discharge of mortgage form. The process can take several weeks, so it’s important to make arrangements with your lender shortly after you’ve exchanged contracts of sale. There are usually costs involved in discharging a mortgage. You may want to contact your lender before you put your property up for sale, so you can be aware of any costs, and the process involved.
Settlement usually takes place six weeks after the contract of sale is exchanged and is overseen by your conveyancer or solicitor. This is when you receive the full sale price – minus the deposit, the amount owing on your mortgage (which is paid to your lender), your conveyancer or solicitor’s fees and your real estate agent’s charges.
Once settlement has occurred, the sale is concluded, and you’ll need to move out immediately.
Other things to think about
Depending on what your property was used for, any profits from the sale may be subject to capital gains tax (CGT). If your property was only ever used as your main residence, you’ll likely be exempt from CGT, but if it was an investment, any profit from the sale may be added to your assessable income in the year you sold. Consult your accountant or tax adviser as to your personal tax situation. Visit the ATO for details.
For more information about property investment, including tips and the pros and cons, you can read our comprehensive guide.
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