24 Feb 2022For a residential property sale to go as smoothly as possible for all parties, it is helpful for real estate agents to provide complete and accurate information to the lawyer (solicitor) or conveyancer who is handling the transaction. This article outlines some of these items.
Sales process for residential property
There is a normal sales process for a residential property, which is outlined below. However, sometimes, through mutual agreement between the buyer and seller, certain steps and conditions in the process will be different.
It is important that the real estate agent provides such information – as well as all the other details of the sale – accurately to the lawyer or conveyancer to ensure the process can proceed as efficiently as possible.
The real estate agent normally negotiates the deal between the buyer (purchaser) and the seller (vendor), and then provides information to the lawyer or conveyancer to fine tune the details in the contract.
The contract is then sent to both the buyer and the seller to be dated and signed, meaning the contracts are “exchanged”. This is when the contract officially comes into existence and the settlement date is set.
It is before the exchange that the buyer pays the deposit, which is put into a trust account by the agent, or in some cases into the lawyer’s trust account, until settlement.
Settlement generally happens six weeks after the date of exchange, although different periods can be negotiated. On settlement, the deposit is released to the seller and the agent gets their commission.
The process is different if the property is purchased at an auction. At auction, subject to the reserve price being met, the highest bidder signs the contract and pays the deposit immediately.
Important information real estate agents should provide
For the exchange to happen as smoothly as possible, it helps if all of the correct information is provided to the lawyer or conveyancer from the outset. A diligently drafted Sales Advice can certainly expedite the process.
The more accurate the information is upfront, the better, as it avoids problems and delays in the exchange.
In some situations, contracts are exchanged by the agent. Be forewarned, if the wrong information is entered in the contract – such as an incorrectly spelt name or purchaser entity – the contract may need to be rescinded.
Although some of the information required below may seem self-explanatory, small mistakes or omissions can make a big difference to the process.
These are some of the common problems we encounter.
- The parties’ full names and addresses
Do we have both parties’ full names and addresses, and are they correct? This may seem like very basic information, however missing or wrong information results in time being spent by the lawyer or conveyancer chasing up the correct details, which can slow things down considerably. Or, as mentioned earlier, in the worst case it can result in the contract being rescinded.
Another consideration is whether the parties are purchasing or selling the property in their own name, or a company name or a super fund. It is important the correct name is entered into the contract. If a trustee of a trust or superfund is purchasing, the full name(s) of the individual(s) trustee (s) or company trustee must also be provided.
- When is the settlement date?
While the settlement date will often be after the standard period of six weeks, it is important that the real estate agent checks this with the parties, that they both agree on the date for completion and that they supply that information in the sales advice to the lawyer or conveyancer.
- Payment of deposit – when and how?
The deposit is paid prior to, or on the day that contracts are exchanged. This needs to be specified – when is the deposit payable, and also, how? While the deposit is often paid in a lump sum, sometimes it will be paid in instalments.
- Conditions to be included in the contract
Are there any other conditions that need to be included in the contract? For example, is the sale subject to early access to the premises, and if so, is rent payable?
- Items to be included in the sale
All items included and not included in the sale should be listed. For example, is it a standalone house or does it have a separate shed/garage? Does it have blinds, and if so, are they staying there? Does it have flyscreens or a clothesline, and so on.
The current legal contract for sale and purchase of land 2019 edition, which is available from the Law Society of NSW, contains a checklist of standard inclusions.
This can be a good starting point for compiling the list of items. Real estate agents can then add anything else that is missing.
Other things for real estate agents to consider
Finally, it is very important for the agent that they ensure they have a signed agency agreement, and a warning statement. This must be completed and signed to ensure the agent receives their commission.
