When you hear the words ‘getting ready to sell your property’, you probably think about decluttering and painting. But there are other admin and legal things which you need to do before you can sell.
Start thinking about the contract early
I recommend you speak to Conveyancers and choose the one you want to use (us!) at the same time you’re choosing a real estate agent, or possibly even before you choose your agent.
Be aware, your real estate agent cannot show your property to anyone until they have a contract.
This is a legal requirement, overseen by the Department of Fair Trading. If you and your agent do show a property without a contract, you’re both at risk of being fined, up to $100,000.
This applies to all residential property. Technically it’s not required for property over 2.5 ha or commercial property, however if you are selling one of these types of properties, it is easier and quicker to entice a purchaser if your contract is prepared and ready to go.
Even if your agent is selling off-market, he or she must have a contract before they disclose the address or let prospective purchasers inspect. It’s OK for an agent to say they have something coming up, but they can’t share the address. Some agents in fact do that, or even let prospective purchasers inspect without a contract, but remember, you’re risking a fine as well as them. Is it worth it?
Some parts of the contract can be fiddly and take time. So remember, getting ready to sell your property doesn’t just mean a lick of paint and some photos – it also means getting all your documentation in place.
Considerations in preparing your contract
Some inclusions in the contract are straightforward. Others may take time and effort.
Title searches and Council certificates
We will organise these as part of our service. They are not generally an issue but certificates from the local council and water authority can take time to come through and when they do further enquiries may be required. So don’t leave these till the last minute.
Swimming pools & Spas
If you have a swimming pool or spa, you must attach a certificate to the contract.
You will need to organise an inspection, through either a private certifier or the council. Allow time for this – It generally takes a couple of weeks and could take longer.
You could receive either a compliance certificate or a non-compliance certificate, depending on the results of the inspection and compliance with the Swimming Pools Act.
If you have both a pool and a spa:
- a spa connected to your pool is generally included together with the pool certification.
- a separate spa (say, under your pergola) requires separate inspections and certificates for your pool and your spa.
Recent structural building works
If you’re had structural building work done to the property at any time in the last six years, your contract must include warranty insurances, occupation certificates and sign offs.
If you carried out works as an Owner/Builder, we need to disclose this in the contract also. Non disclosure leaves you liable to with penalties.
Unapproved alterations
It’s not unusual to find that some renovations to the property haven’t been approved by Council. This could be work you’ve done yourself, or even something the previous owner did.
We usually need to disclose this in the contract to a prospective purchaser. We want to make sure the purchaser has no grounds to challenge the contract and rescind or even sue you after settlement.
For example, in a recent matter my client bought a property around 20 years ago. At that time it had a carport with a rumpus room over the top. The client converted the carport into a granny flat, put in a kitchen and made the upstairs rumpus room into a bedroom. In the contract, we disclosed that it was not Council approved as a habitable room. The ceiling height in that old rumpus room doesn’t comply with current regulations for bedrooms.
Note that a bedroom is classed as habitable, but a rumpus room isn’t, because people don’t sleep in in (in it) permanently.
This client had also put in a kitchen, plus a bathroom and toilet at the back, to make it fully self-contained. Once again, that’s not Council-approved. The floor is directly on the slab of the old carport, whereas a habitable room requires a step up so that the floor isn’t on ground level.
The risks of non-disclosure
Having no council approval can affect the price you can get when you sell your property. But non-disclosure is risky. Suppose your purchaser wants to get a building certificate. Council may refuse because the building is non-compliant – and at this point your buyer can reclaim their 10% deposit and walk away. This leaves you as the vendor with a non-compliant property and no purchaser. The next thing that happens is Council place an order on you to make the property compliant. Now you can’t sell until you fix those issues.
If you’re purchasing another property at the same time as you’re selling, the impact can be even bigger. The contract to purchase is not connected to the contract to sell, so you could find yourself needing to complete on your new property without any funds from the sale of the current one.
On the other hand, if you declare the property is non-compliant, the purchaser might not care. You didn’t, while you were living there, after all! So you might get a slightly lower price, but at least you complete the sale.
This might not be the ideal scenario with a nice, clean contract, but it’s the best option.
Inclusions and Exclusions
Inclusions and exclusions can cause unnecessary stress and disagreement if they’re not spelled out precisely.
It’s important to know what’s included in the sale, as the two parties may have different expectations:
- The trampoline in the back garden
- The automatic pool cleaner
- The gas heater
- The dishwasher
- The TV that’s attached to the wall. (And if it’s not included, if you’re taking that TV with you, are you going to remove the bracket, then fill and paint the wall?)
The most extreme case I’ve seen was a vendor in a heritage style home which had a beautiful arbour and rose garden out front. At the pre-settlement inspection everything looked just fine, but when the buyer went back with the key the next day, the rose garden was gone. That one was difficult to resolve. No one was completely happy.
Nowadays I recommend that you put any plants you’re going to take be into pots. Also, be clear about other garden features like fountains.
A detailed contract like this can you take a little longer getting ready to sell your property, but the sale itself goes a lot more smoothly. And remember, even the smoothest property sale is stressful! Getting it right upfront is a good way to minimise that stress.
Getting your team together
There are a number of people involved when you sell. You need a Conveyancer and an estate agent, clearly. You may also need finance, especially if you’re planning to buy again.
If you need finance, the sooner you get your finance representative involved, the better. It means you have a clear idea what you can afford to buy next.
We recommend getting your budget and your paperwork organised first, then you’re free to focus on the more ‘practical’ aspects of getting ready to sell, like painters and landscapers.