Selling your property is often the largest transaction anyone makes in their lifetime, so it is crucial you understand how the sale process works along with the meaning of specific terminology that real estate agents and buyers will use. There are many words and phrases used daily by agents that you may have never heard, which could leave you very confused and could cost you thousands of dollars if misunderstood.
Read on to understand the terminology used during the sale process and how you can maximise your sale price.
Appraisal
An appraisal is conducted by a real estate agent, providing you with their opinion on the current market value of your property. An appraisal is provided free of charge and is a great tool to use before deciding to sell your property. It will allow you to understand what sale price you may achieve, along with the agent providing tips on how to prepare your property for sale. It is also a great opportunity to get a feel for the agent and assess if they are the right agent for you.
Before deciding to sell, we recommend to usually receive an appraisal from 2 - 3 agents, which will give you a better understanding of who is the best agent for you.
To receive your Free property appraisal Click Here
Private Treaty & Auction
Private treaty and auction are the two sales methods which can be used to sell your property.
With private treaty, your property is listed for sale and offers are invited. Potential buyers will inspect your property during an inspection / open home and submit an offer if they are interested. Your agent will negotiate with the buyer, allowing you to achieve the best sale price possible.
The auction process involves buyers attending your property on a set date in an attempt to place the highest bid to purchase your property. If orchestrated correctly, an auction can create competition between buyers, causing them to bid higher resulting in a sale price above the owners expectations.
Settlement period
Settlement period refers to the time period from the sale date until the date the buyer takes ownership of the property. Usually the settlement period is 6 weeks, unless negotiated between the buyer and seller. Depending on your situation, a longer or shorter settlement period can greatly benefit you. For example if you sell your property and you want to allow time to buy a new property and move in, you may request a 3 month or longer settlement period.
On & Off Market Listing
You can decide to sell your property either on or off the market. Off market is when it is not advertised online, and promoted through the agents database of buyers. It is typically used for high end properties or when an agent knows that have a buyers looking for that specific type of property.
On the market listing is when your property is advertised online on all the main portals, eg Realestate.com & Domain.com. This will cost a few thousand dollars to advertise your property, however it is definitely well worth the investment as you will have access to thousands of potential buyers.
Unconditional Offer vs Conditional Offer
With a conditional offer, the buyer has a cooling off period of usually 5 - 10 days which allows time for due diligence e.g. pest and building inspections, preparing finance etc.
The buyer will pay a deposit of 0.25%, allowing them to put the property 'on hold' for the
5 - 10 day period while they do their checks and decide if they definitely want to commit to the property.
This is good for the buyer, however as the seller this means if they pull out, you may have missed out on other buyers in that time period.
An unconditional offer from a buyer is when they make an offer with no cooling off period and pay the full deposit upfront, so they are committed to the property. Buyers often use this tactic when negotiating as it is an enticing offer to the owner. At auction, there is no cooling off period.
Reserve Price
At an auction, the property owner has the right to set a reserve price, meaning the base price they are willing to sell their house for. During an auction, once bidding has reached the reserve price, the agent or auctioneer will call out "on the market" which means the bidding has met or exceeded the reserve and the highest bid will win the auction and purchase the property. If the bidding does not reach the reserve price, the owner can adjust the reserve lower to meet the market or pass the property in and sell it at a later time under private treaty conditions.
Ensure you are prepared by:
Using our free agent comparison tool to find out who is the best agent in your suburb, specific for your property type.
Speaking with an experienced agent in your local area will help you further understand your properties current value and how it will perform in the current market, along with local market trends.
For tips on How to guarantee that you choose the best real estate agent and pay less commission, click here
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