A residential property cannot be advertised for sale until a contract of sale has been prepared.
The contract must contain a copy of the title documents, drainage diagram and a current Zoning Certificate (section 10.7) issued by the local council.
If the property for sale has a swimming or spa pool, one of the following must also be attached to the contract from 29 April 2016:
- a copy of a valid certificate of compliance, or
- a valid occupation certificate (issued in the past 3 years) and evidence that the pool has been registered, or
- a valid certificate of non-compliance.
This requirement does not apply:
- to a lot in strata or community schemes that have more than two lots, or
- for any off-the-plan contract.
If you fail to attach one of these documents to the sales contract, the purchaser may be entitled to rescind the sales contract within 14 days of exchange, unless settlement has already occurred. To check if the property with a swimming/spa pool has a valid certificate of compliance, visit the NSW Swimming Pool Register website.
Property exclusions must also be included and a statement of the buyer’s cooling-off rights must be attached.
Visit the NSW Land Registry Services website for more information.
There are two main ways of selling a residential property: by private treaty and by auction.
When you sell your home by private treaty, you set a price and the property is listed for sale at that price.
Benefits of a private treaty sale:
- greater control over the sale
- time to consider offers by potential purchasers
- the ability to extend the time for which your home is for sale indefinitely
- potential purchasers must make offers for your property 'blind', without knowing what other buyers think it is worth.
Risks of a private treaty sale that should be considered:
- if the price you set is too high, your property may not sell
- if the price you set is too low, you may miss out on maximising the selling price.
You should also be aware that when a property is sold by private treaty, the buyer has a five day cooling-off period during where they can withdraw from the sale.
To sell through an auction process, the amount you want for the property is generally not revealed to potential buyers who are encouraged to attend the auction and bid for the property against other potential buyers.
Auctions have become an increasingly popular way to sell or buy residential property, but before you decide to go down that path, do your homework and familiarise yourself with the process and what it involves.
Setting a reserve price
The reserve price is the lowest amount you are willing to accept for your property. Before bidding begins, advise your agent what you nominate as the reserve price. This is usually not told to the prospective buyers.
If the highest bid is below the reserve price, the property will be ‘passed in’. You will then either try and negotiate a price with interested bidders or put the property back on the market.
If the bidding continues beyond the reserve price, the property is sold at the fall of the auctioneer's hammer.
The successful bidder must sign the sale contract and pay you a deposit on the spot (usually 10 per cent). There is no cooling-off period for anyone who buys a property at auction. If the property is passed in at auction but contracts are exchanged on that same day, the cooling-off period still does not apply.
Exchanging sale contracts is the legal part of selling a home. There will be two copies of the sale contract: one for you and one for the buyer. You each sign one copy before they are swapped or ‘exchanged’. This can be done by hand or post and is usually arranged by your solicitor, conveyancer or the agent. At the time of the exchange, the buyer will be required to pay a deposit, usually 0.25% of the purchase price.
The contract exchange is a critical point in the sale process for a number of reasons:
- The buyer or seller is not legally bound until signed copies of the contract are exchanged.
- Buyers of residential property usually have a cooling off period of five working days following the exchange of contracts during which they can withdraw from the sale.
- If the agent arranges exchange of contacts, the agent must give copies of the signed contract to each party or their solicitor or conveyancer within two business days.
- The cooling off period can be waived, reduced or extended by negotiation.
- There is no cooling off period for sellers. Once contracts have been exchanged, sellers are generally bound to complete the agreement.
- There is no cooling off period when purchasing at auction.
Settlement is the conclusion of the sale transaction and usually takes place six weeks after contracts are exchanged.