1. Sole or exclusive agency
The Real Estate Institute of Queensland (REIQ) recommends sellers use the exclusive agency method to sell residential property as it is the most effective.
The REIQ recommends the exclusive agency method, where the sale of the property is in the hands of only one party, over an open listing, where the seller lists their property with a number of real estate agents.
An exclusive agency is advantageous to the seller as the appointed agent will be dedicated to selling the property. This saves the seller the confusion of having to liaise with more than one agent.
Furthermore, this method will save the seller the time and money involved in advertising and marketing costs when a number of agents are trying to sell the property.
Under the Property Agents and Motor Dealers Act (PAMD) 2000, a seller can only appoint an agent under this arrangement for up to 60 calendar days. During those 60 days the seller may decide not to renew the appointment if the property has not sold.
The seller can agree to make a further appointment up to 60 days, but the renewal cannot be made earlier than 14 days before the term expires.
Under any selling arrangement using a real estate agent, the seller and agent must sign a PAMD Form 22a - Appointment of Real Estate Agent (Sales and Purchases) in order to legally set the terms of the selling agreement.
2. Auction
Selling by auction is also an exclusive agency agreement and is therefore also subject to the 60-calendar day agreement period. The auction process requires the seller to pay the agent to arrange effective marketing and advertising plans to maximise exposure of the property and the auction date to potential buyers.
Under the auction system, the seller agrees to pay commission to the listing agent if the property sells before the date of the auction, at the auction or in an agreed period after the auction.
The same conditions that apply to the auction process will also apply to the tender process.
There are many advantages to selling a property at public auction, in particular:
An auction is a three-pronged marketing push. The vendor has the opportunity to sell their property before auction, on the day of auction, or in the event the property is passed in, directly after auction.
There is an ability to set a reserve price and a settlement date to suit the seller.
As the reserve price is not disclosed it gives the seller a chance to test the market.
A written marketing plan with pre-agreed appointment times enables the sellers to arrange their lives during the lead up period.
The auction process by its very nature creates a sense of urgency; buyers have a definite time frame in which they must act. Buyers see the purchasers as competition rather than the seller. Auctions create a competitive environment.
With sale by auction in Queensland, all contracts are unconditional and no cooling-off period applies.
Auctioneer:
The first step in selecting the right person to conduct the auction is to consider who has the most to gain.
Choose someone with local knowledge of the area with the support of an agency that is keen to make a sale.
Auctioneers today are highly trained in their field having attended courses and sat written and practical professional examinations with the REIQ. Furthermore they hold current registration under the Land Agents Act.
When your auctioneer is a member of the REIQ you have the additional benefit of dealing with an auctioneer who is bound by the high ethical standards of the Institute as well of their profession.
Agreement:
Legislation requires that a written agreement must be signed between the seller and the auctioneer. In this, the auctioneer will require an exclusive agency for a specified period, which cannot exceed 60 days but by mutual agreement can be renewed.
Promotion:
This is considered by many to be the key to a successful auction by creating interest. There is a legal obligation to clearly explain to the seller where and how monies will be spent and show examples of the advertising mix. At this stage the seller's input is very important to help identify the probable market.
Arriving at a reserve price:
It is the sellers right to set the reserve price, below which the auctioneer is not permitted to sell. Consult with your agent when setting the reserve price, as they will be familiar with recent sales of similar property in the area. Remember to be realistic when making your appraisal, bearing in mind supply and demand in the area as well as other general market considerations.
Selling before the day of the auction:
It is not uncommon for interested buyers to make offers on properties prior to auction day. Some will be on fishing expeditions of course, to try and find out the reserve. However, most will be genuine, in such cases the agent will discuss the offer with the seller, and a decision can be made to either consider the offer, or continue with the auction as planned.
It is not unheard of for the seller to sell the property prior to going to auction. In this case the agent will generally - on the seller's instructions - invite all potential buyers to also make an offer. The seller then accepts the most appropriate offer and contracts are signed prior to the auction date.
Auction day:
On auction day, buyers will be held to the conditions of sale by public auction. In the course of conducting an auction there are a number of possible outcomes:
Should the highest bidder reach or exceed the reserve price - the property is sold and the auctioneer will conclude a binding contract between the buyer and seller. The auctioneer may sign the contract on behalf of either or both parties if instructed to do so.
In the event that the highest bid falls short of the reserve price the auctioneer will usually ask for the seller's instructions before passing the property in. This means the seller has the opportunity to accept the last bid, by placing the property "on the market" so that it may definitely be sold "under the hammer". This factor often creates more excitement, which can encourage further bidding, and a better price may be achieved.
It can be that the highest bid does not reach the reserve price and the property is passed in - the highest bidder is generally informed of the reserve price and may be given the initial opportunity to buy. Failing this, the property is placed on the market for sale by private treaty, at which time anyone may negotiate with the sole agent.
Tips for a successful auction
- Work out the appropriate advertising budget to ensure your property is widely advertised taking into account the identified market.
- Make sure the property is well presented because a potential buyer's first impressions are crucial to a successful sale.
- Your agent will require that the contract and the accompanying statutory searches be available well in advance of your marketing campaign. Confer with your agent about this matter as they should be able to provide a tick list to help.
- Allow the agent to arrange as many inspections with prospective buyers as possible - it all creates interest. At a local level this could have a significant effect on the turnout on the day.
- For most, the spectacle will be the main draw as well as the eventual selling price so confidentiality is of the upmost importance. The REIQ suggests that you do not disclose or discuss your reserve price with anyone except your agent/auctioneer.
- Advertising material should only refer to the general area of price, not the reserve price.
- A sale by public auction is arguably one of the most exciting, effective and rewarding methods of buying and selling real property.
The REIQ has produced a Bidder's Guide for residental property in Queensland, which seeks de-mystify and simplify the auction process and provide clarification on the roles and responsibilities of auctioneers and bidders.
3. Open Listing
An open listing is where the seller lists their property with a number of real estate agents in the local area.
Under an open listing agreement, each agent can sell the property individually or work with another agent to sell the property.
Only the agent that introduces the buyer to the property will receive the commission from the seller.
However, the REIQ recommends using the exclusive agency method to sell your property the most effectively.
