Understand the finer details about selling a house

What can sellers expect from an agent?

Agents are obliged to act responsibly and ethically when dealing with both buyers and sellers. Strict laws govern their licensing, authorisation and conduct.

Anyone in the business of buying, selling or leasing property on behalf of another person must either:

•  hold an estate agent’s licence
•  be employed and authorised by a licensed estate agent as an agent’s representative.

An agent’s representative must have written authority to act on behalf of their employer. The licensed estate agent is responsible for the employee’s professional conduct.

Only deal with a licensed estate agent or an authorised agent’s representative. You can check whether a person is a licensed estate agent or an agent’s representative by searching the Victorian Business Licensing Authority’s public register of estate agents.

If you list your property with an agent, you are engaging the agent to help sell your property. The agent will charge a fee for this service, usually in the form of a commission.

The agent is bound by professional conduct regulations to:

•  always act in your best interests
•  follow your lawful instructions
•  engage in good estate agency practice.

Estate agents must:

•  advise a seller that all commissions and other outgoings are negotiable
•  at an auction, disclose any bid made by the seller to advance the price of the property
•  communicate all verbal and written offers from prospective buyers, unless you instruct otherwise in writing
•  state an estimated selling price in the sales authority that does not misrepresent the price at which the agent genuinely believes the property may be sold.

You can expect the agent to:

•  advise on a method of sale
•  provide a marketing plan, and advertise and market the property
•  advertise an up-to-date price for the property reflecting rejected offers. It is not compulsory for a price to be advertised
•  organise and attend open house and other inspections
•  attract prospective buyers
•  organise and conduct an auction (if you choose this method of sale)
•  arrange the signing of the contract
•  collect and hold the full deposit.

Estate agents must not:

•  mislead or deceive any party
•  make or accept dummy bids
•  at an auction, accept any late bids after the fall of the hammer
•  keep any rebates or discounts they receive for advertising or other services they buy on your behalf. They must immediately pass these on to you
•  charge you more for advertising or other outgoings than you authorised in writing or they paid for the service.

How to select a Real Estate Agent >>

What do agents charge >>

Estimated selling price

This is the price the agent estimates your property will attract, based on their experience and knowledge of the market.

The estimated selling price:

•  is not a valuation or a guaranteed selling price
•  does not have to be the same as your reserve price
•  must be recorded in the sales authority as either a single amount or a price range.
If recorded as a range, the difference between the top and the bottom figures must not be more than 10 per cent of the bottom figure. For example, a quoted range of $400,000 to $440,000 is $400,000 plus 10 per cent.

Price misrepresentation

The practice of deliberately overstating the estimated selling price to get your business is known as overquoting.

It is illegal for an agent to:

•  mislead you about the estimated selling price of your property
•  advertise or advise a prospective buyer of a price that is less than your asking price, or if there is no such price, the agent’s estimated selling price. This is known as underquoting.

Marketing and advertising

Ask for a comprehensive, written marketing plan. This:

•  will be based on the agent’s experience, the nature of the property and your preferences
•  should include advertising methods and costs, and the price or range at which the property will be advertised.

Even if the property fails to sell, you will have to pay for marketing and advertising costs that you have authorised. You can avoid this expense by negotiating a ‘no sale, no fee’ arrangement in the sales authority, but make sure there are no hidden charges.

To be clear what you are paying for, ask the agent to provide a written schedule outlining advertising and other outgoings. All expenses are negotiable and must be recorded in the sales authority.

Rebates

Agents can be offered significant discounts or rebates by newspapers for buying bulk advertising.

It is illegal for agents to keep advertising or any other rebate, even if you agree.

•  An agent must pass on to you any rebate or discount they receive, such as for advertising.
•  If benefits are received in a form other than money, such as gifts, then the monetary value of the gift must be passed on to you.

If the exact price is not known, then the agent must estimate the value.
The amount of any rebates or benefits must be stated in the sales authority.

The sales authority

When you choose the agent, you will be asked to sign a ‘sales authority’ appointing that agent. This is a legally binding contract, which sets out all details of your agreement with the agent, including:

•  whether the property is to be sold by private sale or auction and, if by auction, the auction date
•  the negotiated commission and marketing expenses with GST set out separately
•  the circumstances under which commission is payable. This will depend upon the type of authority signed, whether it is an ‘exclusive’ or ‘general’ authority
•  the agent’s estimation of the likely selling price
•  the authority period or amount of time given to the agency to sell the property.

The authority must also include two statements:

•  a rebate statement, completed if the agent is to receive any rebates from the advertising expenses
•  a complaints statement, which explains that you can lodge a complaint at Consumer Affairs Victoria if there is a dispute over commission or outgoings.

If the agency is to share commission for the sale, either:

•  the sales authority will include a commission-sharing statement
•  you may be given a separate statement before signing the authority, informing of commission-sharing arrangements.

If you want to make any changes after the authority has been signed, they must be made in writing on all copies of the sales authority and initialled by both you and the agent.

Authority types

Exclusive authority:

This is the most common type of sales authority. It means you appoint one agency to market your property.

The agency is entitled to commission when the property is sold, and can claim commission even if you sell your property without their help.

You should not sign more than one exclusive authority, as you may have to pay more than one commission in certain circumstances.

General authority:

This is less common. You list with more than one agency but only pay commission to the agency that sells your property.

What can be negotiated?

You can negotiate many aspects of the sales authority with the agent, including:

•  the method of sale:
There are two main ways of selling a property: by auction or private sale. Both methods have advantages and disadvantages. An agent will be able to recommend the best method of sale for your particular circumstances

•  the authority period:
The period of time the authority is in force with the agent. Once you sign the authority, you will not be able to cancel it during this period unless the agent agrees. There is no cooling-off period with an authority. We recommend your authority period does not exceed 60 days.

If no period is stated on an exclusive authority, the default period for sale by auction is 30 days after the date of the auction. For a private sale, the default period is 60 days after the sales authority was signed.

If the authority period expires and the property has not been sold, you should notify the agent in writing if their services are no longer required

•  the commission: The commission or agent’s fee is completely negotiable. You may wish to negotiate a ‘no sale, no fee’ contract, meaning you will not have to pay any commission or outgoings unless the agent completes the sale of the property. Check that there are no hidden charges.
•  advertising and other outgoings:
The amount spent on marketing and advertising is negotiable.
•  other terms and conditions:

Make sure you understand and agree upon all terms and conditions before signing. These conditions are negotiable. Any changes (deletions, amendments or additions) must be made on the authority and initialled by both parties.

All verbal agreements should be confirmed in writing on the authority and signed by both parties. If you have specific instructions for the agency, attach them to the authority.

Do I have to use an agent to sell my property?

Most sales are conducted through an estate agent or agent’s representative, but you can choose to sell without their assistance.

For further information : Consumer Affairs Victoria