Methods For Selling Your Property
There are five different methods of selling your property with four employing the services of a professional real estate agent.
- Sole or Exclusive Agency
- Open Listing
- Do-it-yourself (DIY)
1. Sole or Exclusive Agency:
The REIQ recommends these methods of selling property as two of the most effective. By appointing a real estate agent on the basis of a Sole or Exclusive Agency agreement, the seller should limit himself or herself to one agent selling their property to potential buyers.
This can be advantageous as the one agent may be more focused on selling your property for the best price possible by virtue of the fact that he or she does not have to compete with other agents. Under the new Property Agents and Motor Dealers Act (PAMD) 2000, a seller can only appoint an agent under this arrangement for maximum of 60 calendar days. During those 60 days the seller can decide not to renew the appointment if the property has not sold.
However, the seller can agree to make a further 60-day appointment but the renewal cannot be made earlier than 14 days before the term expires.
If the seller succeeds in selling the property by their own efforts, they are not required to pay the original agent any commission if it is a sole agency. Under an Exclusive arrangement, the sellers pay commission to the agent regardless of whether the sellers sell the property themselves.
The Sole or Exclusive Agency method is recommended over the Open Listing method because the sale of the property is in the hands of one party only, saving the seller the confusion of having to liaise with more than one agent. Furthermore, this will save the seller the money and time involved in advertising and marketing costs when a number of agents are trying to sell the property.
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.
A Multilist agreement is also an exclusive agency agreement where the seller appoints one agent and that agent agrees to work in conjunction with other Multilist agents in order to sell your property.
When the property is sold, the agent's commission is divided between the original listing agent and the agent that actually introduced the successful buyer to the property. The total commission payable by the seller is no higher than it would be if it were only being paid to one agent.
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 option to sell your 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 vendor.
- As the reserve price is not disclosed it gives the vendor a chance to test the market.
- A written marketing plan with pre agreed appointment times enables the vendors 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 vendor. Auction creates a competitive environment.
- With sale by auction all contracts are unconditional and no cooling-off period applies, in Queensland
A sale by public auction is arguably one of the most exciting, effective and rewarding methods of buying and selling real property.
4. 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. Many Real Estate Agents do not like this method, but for the vendor it has its advantages particularly in small communities, with a high a turnover of visitors. To offset this it has been known for a higher than normal rate of commission be paid.
5. Do-it-yourself (DIY)
As the name implies, this method describes a seller doing the job of the real estate agent, who takes on the tasks of marketing and advertising a property as well as introducing and arranging for prospective buyers to inspect a home. DIY also requires the private seller to negotiate a price tag on their home with prospective buyers and then finally arranging the Contract of Sale with the buyer and organizing legal and financial arrangements for the transfer of the property.
The REIQ does not recommend this method of selling as it is considered too risky for amateurs to do the job of the licensed professional - especially as they are dealing with their most valuable asset.
Market analysis, valuation, marketing, advertising and negotiation are all skills in which experienced and licensed real estate agents are professionally trained.
If a private seller conducts the transaction and it results in difficulties or financial loss, the seller (and the buyer) will not be able to claim compensation from the State Government's Claim Fund.
This document has been developed and produced as a community service and is offered as a guide only. Please use the information provided in this document as a prompt to further discuss this information with your preferred Real Estate agent.