Before you start you should prepare a detailed budget of all of the expenses you will incur when selling your property. That will give you a prediction of how much money you will have left when the sale is complete. This is particularly relevant if you intend to use the proceeds of the sale to purchase another property.

Make sure you identify all of the possible expenses throughout the transaction. You should allow generous amounts for each possible expense so that you can see how much money you will be left with even if you face the worst-case scenario. This is how you avoid a financial shock, or even worse, a shortfall.

Potential costs may include agent’s sales commission, costs of paying out your existing loan, legal fees and disbursements, the cost of getting survey of the property, the cost of getting an Occupation Certificate, a compliance certificate or a Building Information Certificate, the cost of getting a pool fencing complying certificate, the cost of rectifying the pool fencing if necessary, the cost of any painting or repairs needed to present the property attractively, the cost of cleaning up the garden, the cost of any styling that might be necessary, and ultimately removalist’s costs. If the property is not your principal place of residence, then you might need to talk to your accountant about whether you will face a capital gains tax or land tax liability.

When you think about appointing a selling agent the first thing that might come to your mind is how much commission you will be charged. However, this may be the least important thing to consider. It’s much more important to think about how professional they are, how reliable they are at returning your calls, how well you think they will present the property to prospective purchasers, how they will present the property in the advertising, how energetically they will follow leads to introduce prospective purchasers, and whether they have an appropriate plan that matches your particular property.

You may have the idea that you could get a better result by listing your property with more than one selling agent. However, has the potential for costly problems to arise. A dispute over which agent is actually entitled to the commission can result in you being liable for paying two commissions. Similar problems can arise if you terminate an agency agreement and enter into a new one. To avoid these problems appropriate terms must be included in the contract for sale, and appropriate enquiries made before exchange of contracts.

Prior to signing an agency agreement with your selling agent, you should consider carefully the terms of the agency agreement. This includes not only the amount of commission payable on the sale, but also whether the property is to be sold by auction or private negotiation through the agent, the amount to be paid to the agent as a marketing budget, and the ways in which that amount will be spent.

You should also consider the appropriate term of the “exclusive agency period”. Being clear about the terms on which a selling agent is engaged is important in avoiding unforeseen disputes emerging before, during, or after the sale. Like all legal documents you should get advice from a solicitor before signing.

If you intend to avoid delays when selling your property, then your contract terms should not be drafted so one sided in favour of the seller that purchasers become hesitant to agree to them. You may have seen contracts with dozens of special conditions, but if they are not specifically needed for your transaction, or too one sided against the purchaser, then they are only likely to cause a delay in exchanging contracts while the purchasers solicitors attempts to negotiate a more reasonable document. A delay in exchanging contracts can mean that you lose the sale altogether.

The contract should provide you as vendor with sufficient protection without upsetting the purchaser by worrying them with excessive, unnecessary, unfair, or unreasonable special conditions. It is common to see contracts with special conditions dealing with matters that are quite adequately dealt with in the standard Law Society of NSW pages of the contract. Our experience of dealing with hundreds of contracts over the years equips us with the expertise to advise you on how to avoid these traps.

When you are preparing to sell your property one of the important first things to decide on is the list of inclusions and exclusions. Inclusions can be divided into fixtures and fittings. Generally, fixtures must remain at the property unless they are specified in the contract as exclusions. This is unlike fittings, which must be taken away from the property by you prior to completion unless they are specified in the contract as inclusions.

We recommend that you get this sorted out from the very start. It is common to see contracts that have been prepared in a lazy way by not properly specifying the inclusions and exclusions. Shortcuts like this will only cause a delay in exchanging contracts and or a dispute which can cost you your sale.

Generally, you will improve the chance of a smooth sale if you make appropriate disclosures about the property in the sale contract. The general principle is that after exchange of contracts the purchaser cannot make objections or claim compensation in relation to anything that is disclosed in the contract. This means that it is important to disclose in the contract matters such as improvements that were constructed without Council approval, improvements that encroach across the boundaries, fences that are a long way off the boundaries, existing disputes with neighbours about damage caused by tree roots, issues regarding driveways or retaining walls, and any favours you may have done for your neighbours such as allowing them to lay drainage pipes through the land.

By including an identification survey in your contract for sale you are providing prospective purchasers with real evidence of the location of the improvements on the land relative to the boundaries. It also shows where the fences are located relative to the boundaries and any encroachments across the boundaries by improvements on the subject property or by improvements on neighbouring properties.

It is not compulsory that you include a survey in your contract the sale of land, but it is a way of giving the purchaser some comfort that things are located properly relative to the boundaries.

A Council Building Certificate (or Building Information Certificate) specifies to purchasers that the local Council will not issue work orders against the property as it presently stands for a period of seven (7) years. Prospective purchasers may then take this as an indication that the improvements on the land were built with Council approval and comply with building regulations.

If construction of improvements on your land are relatively recent then you may have an Occupation Certificate. This is a certificate issued by a certifying authority or private certifier that works carried out on the land complied with the conditions attached to the development consent.

Like surveys, these certificates are not compulsory documents however often they can put your purchaser at ease by demystifying your property. This can enable a quicker sale for a better price.

Asking your accountant to determine your liability for land tax, capital gains tax and GST is very important if the property you are selling is not your principal place of residence. The amount of tax you are liable to pay will greatly affect your net return from the sale. Clearly establishing your GST liability before deciding whether to put the property on the market, and certainly before you decide on the asking price is the best approach, minimising the risk of unexpected surprises.

When selling a non-residential property (such as a commercial, retail, or industrial property) it is crucial that during the negotiations you are aware of whether you are negotiating a GST inclusive or GST exclusive price.
If you are selling a property that was always part of an “enterprise” (that is, a property that is not your principal place of residence and not a “personal asset”) then you should talk to your accountant as soon as you have the idea of selling.

Normally, prior to the exchange of contracts, it is the purchasers who obtain their own pest and building reports on the property. However, if you wish to avoid being ambushed by a prospective purchaser falsely claiming that your property has defects then you should consider obtaining these reports before you place the property on the market.

This approach can also give you the opportunity to do repairs that you are not even aware need doing. This is all part of the approach of making the purchasers’ decision to go ahead easier, and thereby improving your chances of a good result.

If you have regularly had pest inspections, it may be useful to provide the selling agent with copies of the pest inspection certificates. It should be noted that it is not appropriate that these documents be included in the contract for sale.

Selling your property with a tenant requires you to consider whether you wish to sell with vacant possession or subject to the tenancies. Some properties sell best with a tenant in place with a long-term lease. For example, commercial premises and factories. In contrast, residential properties are generally more likely to be attractive to a wider range of prospective purchasers if they are being sold with vacant possession because some purchasers will be owner occupiers who have a need to move in as soon as possible.

You may feel that you need to delay the marketing of your property until you can have the property vacant because the tenant might be one who makes difficulties for the selling agent. You might also feel that you will get the best financial return by carrying out some refurbishment to your property which can only be done with the place vacant.

You may be asked to allow the purchaser to have access to your property prior to completion for the purpose of obtaining quotes, or sometimes storing furniture. This is often seen when the property is vacant, and the purchaser wants to commence refurbishing, renovations, or alterations. You may also be asked to allow the purchaser or purchaser’s tenant to take occupation prior to completion of your sale.

Early access and early occupation always exposes the vendor to additional risks. Therefore, generally it is our recommendation that the purchaser not be given any access to the property or early occupation at all prior to completion except for a final inspection shortly before completion.

However, these matters should be dealt with on a case-by-case basis as sometimes the risks to the vendor can be very small or at least manageable, and sometimes the vendor has to give into these requests to get the sale to happen.

Most commonly, the purchaser’s deposit is paid on exchange of contracts (or at the auction, as the case may be) and will be retained by the selling agent in their trust account until completion. On completion of your sale the agent will take their commission from the deposit and pay the balance to you.

Where appropriate, you may be able to negotiate release of the deposit to you prior to completion. This is normally only agreed to on the basis that you will only use the funds released as the deposit for the purchase of another property within in New South Wales.

You may also be asked by a prospective purchaser whether you will accept a deposit bond or bank guarantee instead of a cash deposit. In most cases we would recommend that you agree to these requests.

You may also be asked to accept a deposit in an amount of less than 10% of the purchase price. All this is a question on which you should obtain advice before agreeing as there can be real consequences for you.

Generally, when you exchange contracts to sell your property both you and the purchaser will be bound by the contract, and the purchaser will be legally obliged to complete the purchase (unless you agree to a rescission of the contract, or in the very unlikely event of the purchaser finding a “defect in title”).

However, you as vendor may elect to grant the purchaser a “cooling off period” in which case the purchaser may rescind the contract during the first five business days after the contract is exchanged. We recommend that you only grant your purchaser a cooling off period in very special circumstances (none of which come to mind).

A worrying time in any property transaction is the time between you and purchaser reaching agreement on price, and the lawyers exchanging contracts. It will generally be in your best interest that this period be kept to a minimum to reduce the risk of the other party deciding not to proceed. Therefore, you need the draft contract to be properly prepared so that it is ready to exchange on short notice, and you need your solicitor to be available to make the exchange happen urgently if necessary.

If you are about to sell your home, then you may need to make the decision as to whether you should find a purchaser for your current home before you start looking for your next place. Or you may be prepared to exchange contracts to buy your new home and then worry about selling your current property later.

If you sell before you buy then you could face the risk of not finding a new property to purchase in time for completion of your sale, and that will expose you to having to move twice.

On the other hand, if you buy before you sell then you could face the risk of not selling your property in time to have the proceeds of sale ready to use to pay on completion of the purchase of your new property. That may mean that you need to get a bridging loan which you will have to service until you find a purchaser.

The timing of these things can be very tricky particularly if you are purchasing “off the plan”, or if completion of your purchase is conditional upon the vendor obtaining probate in the case of a deceased estate or getting the property vacant in the case of it having been let to tenants.