In our humble experience, a contract for sale in NSW is in many respects fairly standard in wording and conditions.
Most Solicitors and Conveyancers use a Standard contract from The Law Society and/or the Real Estate Institute. The clauses in it are worded so they comply with NSW law and with the practicalities of buying and selling a property.
Virtually all solicitors include special conditions within the contract, which are designed to take care of some of the processes that have become necessary and were not included in when the standard contract was produced.
There was an old school solicitor near us that had a bit of a reputation of having a rather dry wit. He titled his special conditions “Not so special conditions”. His point was that most solicitors use fairly standard clauses. Imagination and humour in law and Conveyancing is pretty uncommon.
These are usually buried in the standard contract pages and sometimes the special conditions. They are required by law and must be displayed and printed in particular sizes with particular wording. Again, they are standard and unlike the conditions; must be presented in a particular way. The standard cooling off clause which allows a buyer to exchange the contract and then rescind the contract within 5 working days is one such notice. We’ve seen some agents and solicitors change that wording to read 10 working days. Because the notice no longer conforms, the contract is invalid. Be mindful to check that no one has amended the prescribed notices, and that they’re all there.
Required certificates and searches
These are the documents attached to the contract so the buyer has more certainty about what they’re buying. Again, the law says they must be included in the contract or the contract is invalid. For example certificates 149 from the council is mandatory.
Here’s some of the things we pay close attention to:
Things that cause solicitors grief
Release of deposit clauses. This enables the seller to use the deposit to buy another property. Solicitors put them in when they are acting for the seller and then become annoyed with the clause when they are acting for the buyer. The reason is; if the deposit is released and the property doesn’t settle, it can be hard to get the money back. This puts Solicitors in a position where they risk being sued. They will always put forward the safer option, even if that means you can’t sell the property and go broke.
This should be simple, but sometimes it can be a convoluted process. Let’s start with the law, any offer made to an agent must be passed on to the owner. An agent is not allowed to say no unless the owner has given them the authority to say no. The problem is, some agents take it upon themselves to make their own rules. For example, advising that the owner has already accepted an offer, hence they won’t submit your offer because that’s gazumping and that’s bad – this is illegal.
Jackson+Rowe will never not submit an offer. We submit all offers that are made, no questions asked. Usually we will ask a few questions to get an understanding of your needs:
The idea behind this, is that an offer is not an offer, unless it is an agreement that can be accepted. For example, if you offer to pay $500,000 but won’t commit to signing a contract, then the owner can say that’s great but how do I sell it to them if they won’t sign. Likewise, if you have a condition that stipulates you will only buy the property on the provision that your current property sells ,then its hard for an owner to have any certainty. We’ll still submit your offer but we need to know the conditions attached to the offer so it’s clear for both parties.
The second thing we will ask you to do, is to put your offer in writing. This ensures there isn’t any question later on as to the conversations which took place.
Some things that you shouldn’t do
Don’t get intimidated by an agent who rejects your offer. They may not like what your offer but they can’t reject you. Be up front about issues and concerns. If you need to get finance approved or you want a strata search or building inspection, voice your needs. Ask the agent if there are any issues that they know around building, pest or strata. They may not want to answer or they may say that ‘you’ll need to make your own inquiries’ however they cannot withhold important information from you that they are aware of.
You should also ask when you can expect a response. They can say that they will counter at $X or they can say, ‘that’s not enough’ or they can even say that they will not be responding. They are not required by law to give you a particular response but by asking when you’ll hear back, it closes a loop that lets you know when the agent expects to come back to you.
There is no simple answer for this because no sale is ever like the last, and no owner is the same. But that’s not to say you shouldn’t know because you should.
Across our business we work with a communication system known as ‘closed loops’.
Creating a closed loop in communication is telling the other person key steps:
Any real estate practice must be consistent with the law, nonetheless we too often witness things that agents do that are well meaning but go against the intentions of the laws that govern sale of property. One of those areas is the managing of multiple offers on a property. To the layman, it’s called gazumping.
First of all, let’s look at what the law requires an agent to do and what not to do when dealing with offers.
If a buyer has paid a part deposit, that doesn’t necessarily mean that the buyer has signed a contract. The buyer must be told if there is another offer on the property. They don’t have to be told how much or by who, just that the offer has been made.
Unless you have paid a part deposit, agents are not required to update you on the property. (eg, if they are getting building inspections done or their finance organised). If you want to be notified, pay a deposit upon having an offer accepted. The deposit is fully refundable to you if you don’t go ahead.
The next thing is that an agent must submit any offer made. Even if the agent ‘promises’ you that the property is yours, if someone else makes an offer, all offers need to be submitted. It’s not about ethics, it’s the law. Agents get very little out of a gazumping situation, except everyone hating them. The lesson here is don’t just be happy with acceptance of an offer, pay a deposit and sign a cooling off contract. You’ll be safer, a lot safer.
We know being well informed about a property is important to a buyer. For example, if you haven’t had an offer accepted but you are negotiating and another buyer makes an offer, will you be told? It depends on the agent. Some will, some won’t. There is also the issue of the validity of the information the agent gives you - how do you know that you aren’t being lied to if an agent says there’s a higher offer? The law stipulates that agents aren’t allowed to misrepresent information, so lying about an offer is illegal. This doesn’t mean it doesn’t happen.
The Jackson+Rowe process:
No system is ideal for everyone involved. Every negotiation is part science, part economics and unfortunately, part games. If you don’t want to answer a question, say you don’t want to answer rather than make something up. Know what a property is worth to you, what another buyer might pay and what price you would be unwilling to pay. If you can get an agreement somewhere in that range, you’ve got a good deal.
Loan approvals are funny things; everyone thinks they have them until the bank tells them they’re just one check, form away before they can ‘finalise’ everything.
Pre-approval does give you some confidence, and is well worth it if its your first property purchase or if you are unsure whether you qualify. In simple terms, getting a pre-approval will tell you (based on the information you tell the bank and on the assumption that you can actually prove what you are saying) what the bank will lend you.
So if the bank says you are pre-approved for a loan of $400,000, then you need to keep a couple of things in mind:
Jackson+Rowe is a second generation business and was established in 1957. We’ve seen many booms and busts, tight credit markets and periods of double digit growth in property prices and in rental prices.
Ryde is one of the most stable areas in Sydney. The average length of ownership of a property in our area is over 24 years. People move here to stay. That stability creates a fantastic underpinning of demand and interest for property. In the last 5 years, we have sold well over 95% of all properties listed with an average time on market of less than 4 weeks.
The idea of Spring as the best time of year to sell was true 30 years ago. For a plethora of reasons, the volume of properties sold in pring and Autumn was a lot higher than those in Winter and Summer in the 1970’s.
When it comes to sales success and certainty of selling, all seasons deliver much the same results.
This is really a question about who’s going to buy it and they want to see. The question about furnished or unfurnished affecting the sale price is valid because it can and it does. The mistake people make is that they think there is only one right answer for all properties and for all buyers. There isn’t.
You must consider how the property is presented and who is the best buyer for the property. Different groups or demographics have different interests and look for different things. For example, a home that is more suited because of its good floor plan and structure, but is in a run down state will probably get better offers from someone looking for something to do up. In this case furniture is a distraction and the property is better presented as empty. On the other hand, a property that is ideal for an older family and who probably hate the idea of needing to do work will look for a place that seems ready to move into and picture perfect. If that’s your market then you not only need to have the property furnished, but furnished in a way that the family will aspire to. That may mean using display furniture. We’ve seen display furniture used to make a tired home that wasn’t that extraordinary, look extraordinary and get an extraordinary price (not to over use the word extraordinary but you get the point).
People also use furniture as a measurement to gauge the size of a room. In fact, most people can tell room size by looking at the gaps between furniture. Think of display homes and how they are fully furnished to look like something you would love to live in. In summary, when faced with the question of to furnish or not to furnish, the answer depends on a variety of factors:
How long is a piece of string? Renovating and doing up a property is something that can make you a profit, it can pitch the property to a better buyer profile who will pay more money, it can reduce buyer objections by resolving concerns and it can go terribly wrong, make the property no longer appeal to your best buyers and make it attract offers that are far less than what you could have received. We’ve seen things go well and we’ve seen people a lot of money.
Rule one, who’s your best buyer for this type and style of property? If yours is a young family, or a renovator or a builder, what would they want to see? If it’s a status buyer, what do they expect? Each will want and expect and be excited by different things. The young family will want space and something that they can do a bit of simple work to like repainting. Structural work is not what they have finances for and they’ll run. Doing the painting will not return a profit because they’ll stretch to their maximum to buy it anyway. In other words they offer you the same regardless.
A renovator is excited by possibilities. Don’t do the work because he will think he can do it better, nicer, different. In fact, have the place look as run down as possible. He’s in love with what he see’s as potential for the property, not the starting point.
A status buyer insists that everything is beautiful. You need to paint, carpet and display it beautifully.
Rule two, never forget rule one!
We sell a lot of tenanted properties, in fact 9 out of 10 times we keep the tenants in the property during the sale. But that’s not to say there aren’t issues along the way.
Issue one, access : A property can’t be sold unless a buyer can see inside and we have had tenants that have refused us access. The lease allows for the property to be sold during the tenancy and it also requires that the tenant give access a minimum of twice a week. We do need to provide notice and there are a number of strategies to set up access to avoid the tenant refusing access.
Issue two, presentation : This is the one that most people worry about and again if its approached properly there shouldn’t be problems. You don’t need it to be at a display home standard unless it’s a status buyer, but you do need to ensure that the tenants presentation is not off putting.
Issue three, co operation: Issues can arise when a tenant won’t cooperate with the agent, particularly if the agent gets the tenant off side by being rude etc. Some sales people think that the tenant does not have rights or that they are better than the tenant. They can become difficult to deal with if they feel that the salesperson is a ‘villain’ and needs to be taught a lesson.
Issue four, possession : Over 80% of buyers are looking to move into the property they buy. If a tenant is under lease then it can make the property unsuitable to the buyer because they do not want a tenant but rather a home. Some solicitors also caution buyers not to settle on a property until it is vacant.
The best approach is to look at the property and how it’s displayed. Think through each issue and work out what’s likely to happen and which is the best way forward. Ask the agent what they think and ask why and don’t accept an answer that says nothing more than, ‘it’s better vacant because it just is’
In short, yes. There are however, a few things to consider.
Properties can be sold with vacant possession or subject to tenancy. Vacant possession means that the property will be vacant and able to occupy on the date of settlement. Whereas subject to tenancy means that there is a valid lease in existence at the time of settlement. A lease creates rights for a tenant to occupy the property which means that the owner does not have the right to occupy the property – this is what effects the sale and in some respects the value of the property.
If a buyer is intending to buy the property to live in, and there is a lease that has a number of months before it expires then the buyer is less likely to buy. The drop in numbers of buyers interested means that competition for the property is less and so the possibility of increasing the value through competitive pressure is weakened. More importantly, it can also be the case that the best buyer for the property is a buyer profile like a young family that need the home to live in. If that’s the case, the tenancy can block your best buyers and so offers will only come from those parts of the market that see less value in the property.
On the other side of the argument, it may be the case that the tenant and the certainty of the lease creates value. This is often the case with commercial property where the value of the property is related to the income the property generates.
This is the third most commonly asked question for agents. Ironically we feel it takes first place in the most poorly answered question.
We are going to take a punt and suggest that if you have asked this question or are reading this answer you already have some feeling and thoughts on the matter. You aren’t alone.
In Sydney, approx. 40% of properties are sold using auction, leaving 60% of sales being sold via private treaty. Both methods are used in the market place and both methods can and do create great sale prices. Just as importantly for some, both have been known to create great disappointments. No system is immune to problems, no system is perfect or right for everyone and every situation. So how to choose?
Most agents start off with a list of advantages of private treaty and a list of advantages of auction and then they say, ‘This is what you get with each, which one do you want?’ This is not always the best way to form your decision.
Let’s start off with some basics, the first is how similar is this to other properties on the market? The more similar it is to others on the market, the more competitive your property will need to be to find a buyer. The differences in the property need to be important to a group of buyers. You can have a lot of small old houses on the market but if your one is fully done up or conversely, badly in need of work then it may appeal to buyers who are not so attracted to the others on the market. You now have competitive advantage or better still, competitive difference and an auction needs competitive difference to work. Units typically vary to some degree but still mainly appeal to the same type of buyers. That’s why few units are auctioned.
The second factor is the size of the target market that has an interest in the property. You can have a very unique property, but if you need a very unique buyer who is few and far between, then it’s likely you don’t have buyers to drive an auction.
Making the decision is then a process:
You are going to feel a little out of control
Auction has no price, you can feel like you’re at the mercy of the elements so to speak. Without the ability to communicate to themarket about the price you want often has vendors feeling vulnerable that they will get low offers.
You will feel a bit exposed
Auctions tend to be public, and everyone worries that no one will want to buy it. If you start to think that go back to the question ‘is my property suitable to an auction?’ if the answer is yes, it will come together. Our average number of registered bidders at an auction is 7, our average number of bids is 22. If you choose auction for the right reason, you should be fine.
You could do very well
I know that is a cheap line but the idea of an auction is competitive bidding. Competition between buyers starts off as a competition between the bidder and their bid and what price they’d like to pay or think is fair. It ends up as a competition between bidders with each offering what they are willing to let it go to someone else. That is always more than what they think is ‘fair’.
It’s all done
An auction sale on the day is unconditional. That means that any deal done cannot fall through. It’s a little surprising to people but very few buyers get a building or pest inspection for an auction. It’s about social proof. They figure that if other people are bidding, it must be ok. We find 1 in 4 bidders get a report and more often than not, it’s another bidder who ends up buying.
It’s all done more often
This is more about statistics than it is about the magical power of auction. A higher proportion of auction properties sell over the agency period than do those that are being sold by private treaty. Some of that is because of skewing. The people who sell by auction can be more anxious to sell than those by private treaty; the properties being sold by auction have less competition in their target market so they have a better chance of selling and the prices achieved by auctions are better on many occasions than they would have been under private treaty conditions. Whatever the reason, the fact remains, more auctions sell and they often sell sooner. That’s a good thing.
What to do? If your property is suited to auction and you feel safe with the agent, go for it. If the answer is no to either, talk to us.
There are three price strategies and each has their benefits and limitations.
This is the original and most widely understood by buyers and sellers and is the oldest form of pricing. An asking price of a typical property worth $800,000 might be $830,000 or $840,000 and the property would be promoted in every advertisement with that price. Buyers would assume that that is the price that the owner would like to get but also assume that there is room for negotiation and will make offers below that with the expectation that the owner will come back to them with a counter offer.
Buyers like it because they know how much the owner wants, Sellers like it because it puts out there what they want to get.
The issues with it is that often if the price is high, buyers see the price first before they look at the property and dismiss the property before inspecting. Buyer response is usually an offer or silence. Price reviews need to be conducted every 2-3 weeks and price adjustments need to be roughly 3% to have an effect on interest levels and inspection numbers.
This approach to pricing started far more recently in an attempt to avoid having to do price adjustment and to attract better interest. Using our typical property again that was worth $800,000, it may be advertised as offers over $760,000. The idea is that two identical properties, one advertised with an asking price of $840,000 and another with an offers over of $760,000, the more attractively priced property would get all the interest and inspections and get more motivated offers.
Buyers like it because it’s more attractive and has a ‘got to look at this one’ price, Sellers like it because it gets better inspections and reduces the need to review the asking price.
The issues are that sellers can find that while buyers will generally come up to market value eg $800,000, it difficult to lift the offers up above a few thousand dollars extra. They also often feel that the offers over the starting price are too low, many compensate by using higher offers over figures such as ‘offers over $820,000’ for example. This tends to reduce interest and the results. They can also find they end up back with having to review their advertised price until they get traction with the market.
This strategy is probably the most recent and we have found when used in a structured disciplined manner that the results are better than offers over and asking prices. Using our example again, a price range for an $800,000 house would typically be $760,000 to $830,000. A price range uses both an asking price and an offers over. Because both figures are used both figures can do what they were intended to do. The top figure is a figure that the owner would look at negotiating from and the bottom figure is a figure that the buyers can’t resist looking at.
Buyers like it because it’s clearly defines what the owner wants while making it attractive to inspect, Sellers like it for exactly the same reason.
The issues are that the price range must be set around the correct value. Price ranges that are set to high still won’t work. Agents also must be skilled in negotiation and in how they answer questions about what the owner wants and what other interest there is in the property. Done correctly, buyers will focus on what they fear other buyers might pay. We have managed this process when real estate valuers (who are some of the toughest to negotiate with) have been acting on behalf of the buyers. The results have been far higher than sales by other methods.
The internet has changed everything and real estate was one of the first markets to change as a result of its power. In the early 2000’s real estate was one of the top 5 search categories on the internet.
Now all our inquiries typically contacts us by email or phone, they meet us at the property to inspect and we negotiate by phone and sign contracts by emailing and express post. So back to the question, does an agent need to be nearby to sell a property? Answer, no.
In the City of Ryde (the Ryde Municipality) the proportion of property sold and managed by agents whose office is outside the boundaries of the municipality is up around 40%. The sale prices are no better or worse than the local agents. We have sold property in North Sydney, Hornsby and Glebe. We manage property in Penrith and the City.
The answer is yes, the problem with the answer is it’s to the wrong question.
The reality of modern day real estate is that the majority of agents use computer software for their sales processes. These programs are predominately database programs. They have the ability to record all the properties an agent appraises, lists and every buyer who inspects one of their listings or even inquires about a listing from the internet. The reality of modern day life is it’s easy to collect information and it’s just as easy to email all those buyers about other listings.
Under NSW law, a property is not to be marketed or offered for sale unless a contract is available to be looked at by a buyer and if they are happy to pay the price, signed by a buyer.
There are no verbal contracts when it comes to sale of property in NSW because the law specifically says that a contract for sale must be in writing. If a buyer has an agreement with a seller and goes off to get their finance organised and hasn’t signed a contract, then another buyer can come and make an offer The seller is free to sell to the highest buyer or to change their mind and not sell at all.
The contract of sale must have everything the Conveyancing Act requires to be a valid contract. The solicitor generally organises these papers and it takes about a week for everything to be obtained from council, water board etc. During this time the property cannot be advertised or buyers told about it.
Good question, we don’t take hostages.
An agency agreement is a written contract. Most agency agreements have a period of exclusivity, typically 3 months is the most common in the industry. The time frames involved in selling a property are usually:
Approx 3 months in total.
At Jackson+Roww if an owner has some reason for not wanting to commit to that period of time we will reduce that time frame. The reality is that if someone doesn’t want us to help them, then we will let them go.
The good news is that we can take care of everything. The first step is to get in writing, your instructions as to how you want your property. You will then sign a letter of termination for your old agent which and we notify the agent. Usually agents will require a notice period so they can get paperwork organised - we will negotiate that through with them so that there aren’t any issues.
We let the tenant know and set up new arrangements for the rent. We also arrange to do an inspection of the property as soon as possible so we know the condition and review issues such as rent levels and outstanding maintenance. In our experience, changeover of managing agents can happen seamlessly at time of the tenant vacating, when the tenant is under lease or when the lease has expired.
Rather then being in a position where you are unhappy with your current agent and unable to resolve any service issues, give us a call.
Important to note; we are not insurance advisors and our opinions are purely that.
In our opinion, landlord insurance should cover accidental as well as malicious damage done by a tenant, visitor or event this will ensure you are covered if anything unexpected happens. It should also include Owners Liability, which will protect you against claims made by a tenant against a landlord as a result of a personal injury. These claims are rare, but if they happen and you aren’t covered, you can risk losing everything.
Here are some things you should look for:
Don’t be afraid to ask, it’s your future!
Let’s refine the question, how long does it take to find a good tenant, you really don’t want the other kind!
We are statistic nuts and track everything in our business so we know rather than guess what’s happening. Vacancy periods vary depending on times of the year. Just prior to Christmas when school years end and people move out of the area can take more time as compared to February when the universities and school start back. Our experience is that across a full financial year we average between 14 and 21 days vacancy between tenants moving out and new tenants moving in.
We are one of the more ‘selective’ agents when it comes to recommending new tenants to our clients. Our experience is that we will often reject 3 out of 4 applications we receive on a property. This can be because references can’t be checked, tenants history is patchy or people were less than easy to deal with. Its always a case that its better to reject a bad tenant than it is to take a bad tenant and then try and get them out of your property.
Our experience and expertise allows us to manage property throughout Sydney. In fact we manage property from Penrith to the City. Our clients like the idea that all their Sydney investment property is handled by one highly trained property manager who knows what they expect. Our tenants talk to us by phone and email as do our owners, we inspect property when due and we source tenants from the internet just the same as a local agent.
Simple answer, Absolutely!
Not only do you get to decide, but your choice is exactly that, you choose and we respect that. We will always provide guidance on:
‘Payment of rent is not discretionary!’ Many agents set up systems of rent collection that allow tenants to choose when and how they pay rent.
Just as the banks deduct your mortgage payment out of your bank account on the day due, so do we deduct the rent from our tenants bank accounts when it’s due. We also collect water usage and any other tenant payments by Direct Debit. Based on industry statistics and agency comparisons, agents that collect rent using only Direct Debit have 1/10th the rent arrears of other agents. That means you are 10 times less likely to have cash flow problems with your investment property. And because we have 1/10th of the arrears of our competitors, our property managers are able to put more time in working to resolve any payment issues with tenants; less problems for you and better resolutions.
Payment to you is the important question and we pay our clients monthly or twice monthly as they prefer. Our money is banked into your nominated bank account as cleared funds so you can draw on it instantly. And we offer the facility of emailed statements or access to your own password protected client portal which allows you to access your past statements, annual financial reports etc.
Yes we can and what’s more, we don’t charge for the service! The reason many owners have us attend to the payments of rates, strata levies and insurance premiums is that it’s easier for them, it is summarised in their annual statement which makes tax time much easier.
Furthermore it allows us to send water usage claims to the tenants and recover the expense. Water usage claims have some rules relating to water saving devices etc. and because we use direct debit, the money owing is deducted from the tenants bank account and paid to our clients without issue or unnecessary delay. The system is so good that we have had owners transfer the management of their properties to us because of our ability and speed to collect water usage.
It’s too simple to say that maintenance is handled in line with your instructions but that’s exactly where it all starts. When a tenant reports a maintenance issue the first thing our property managers see on the computer screen besides the problem is your instructions. And every owners instructions are different. Some want us to talk to them about every issue, others want us to look after issues without bothering them, some prefer their own tradesmen and so. Our system easily handles those variations.
A lot of complaints we hear from owners is that their agent gets work done, when in fact the problem or; more to the point the responsibility wasn’t the owner’s in the first place. We always review each item check initially as to who’s responsible.. With our experience we have forced strata managers to do work on behalf of our clients, ensured tenants have covered their full responsibilities and chased insurance companies for payment.
All our tradesmen are checked each year to ensure they carry full licencing and insurance. They must guarantee their work and must be able and willing to go back at our, or the clients request.