Hodges Real Estate

Buying and Selling Information

What is your commission fee?

At Hodges we always operate our sales through a commission scheme. This benefits the seller much more than a flat fee scheme as it means the Agent is motivated to go above and beyond to sell your home for the most optimal price. Be wary of flat free schemes and ‘cheaper’ alternatives to selling your home, as there is no reason or motivation for the agency to get you the most optimal price for your home. Although it may seem enticing at first, and appear as a cheaper alternative, it can cost you tens of thousands overall.

With our commission scheme you have the assurance and commitment of your Hodges property professional being relentless in achieving you the best result for your home. Our Agents only get paid when they sell your home for a price YOU are happy with.

Our commission schemes can vary based on the location, style, desirability, and forecasted rent return of your property. Typically, the commission fee will range from 1.5% – 3% based on the total sell value of your home. This can be discussed and negotiated with your Hodges Agent to ensure the selling campaign is tailored to your needs and your specific property. At Hodges we don’t operate on a one-size-fits-all basis, but prefer to take a customise

 

What do I need to do to get the house ready to sell?

The saying ‘you never get a second chance to make a first impression’ is spot on when it comes to selling houses, so it’s essential to showcase your home in the best possible light. We’re going to uncover some hot tips for becoming ‘open inspection ready’.

Keep it neutral

Your taste may not be everyone’s cup of tea, so try to present your home as neutrally as possible to appeal to the wider market. By keeping things simplistic you’re making it far more viable for potential buyers to envision their own furniture, style and décor in their imagination while exploring your property.

If it’s broken, fix it

A home that appears valuable is more valuable. Make sure the property looks cared for and beloved, not neglected. It’s certainly worth getting small issues fixed as the value can equate to thousands in the mind of a potential buyer.

Simple touches speak volumes

A few simple touches can make all the difference. If you’re limited by time, don’t panic! There are simple ways to embellish the property without having to commit to a full-blown re-decoration project. For example, fill blank walls with mirrors and paintings, or add plants and vases to empty surfaces to create a homelier feel.

Entice the outside inside

Make your home inviting for the outside world. If it’s going to be a hot day, crank that air conditioning and make your viewers comfortable as they peruse your home. If it’s the middle of winter use warm lighting indoors and outdoors, light fires, and heat your home accordingly.

Placement is key

Utilise your furniture in a way that maximises the space in the home. Think about your current layout and shift if necessary, to create that wide-open, spacious scene. Open all internal doors to create an open flow, as well as create the illusion of more space.

Lastly but firstly

Ensure the front façade of the house and front garden is up to scratch. This is the viewer’s initial impression of the property. You don’t want to turn them off before they’ve even stepped inside. Make sure the façade of your home is immaculate and the path, driveway and garden is clean and inviting.

Once the hard work is done, relax and disappear for the viewing, letting our highly skilled Hodges property professionals do their job.

 

What is a Due diligence checklist?

The due diligence checklist is a requirement that must be presented by either the seller or the seller’s representative and made available to potential buyers of a property sale. The purpose of the checklist is to assist potential buyers with identifying any concerns that may alter their decision to purchase the property, for example disclosing whether they will be buying into a body corporate and what this amount equates to. For more information follow the below link…

https://www.consumer.vic.gov.au/housing/buying-and-selling-property/checklists/due-diligence

 

How do I make an offer on a property?

In Victoria for private sale the property is marketed, and then prospective buyers are invited to make an offer to the seller or the seller’s agent. Generally, for residential property sales and rural properties less than 20 hectares, you are granted business days following the offer to review your decision and change your mind. If an agent is acting on behalf of the seller, the offer to buy must go through the agent. You will then be required to make an official offer by signing the contract of sale and the agent will present your offer to the seller unless he/she has been instructed not to.

 

What does ‘on the market’ mean?

On the market when referring to property essentially means the property is available for buyers to now officially purchase. In even simpler terms it means the property is available for sale.

 

What is depreciation?

Depreciation is term used in property that refers to the lessening of value in an asset that occurs over time.

 

What is bridging finance?

Bridging finance usually refers to a short-term arrangement of a loan needed when you require to buy another property, but have not yet sold your current property, and need the funds to facilitate this second purchase. It is short term because you have the intent of selling your current property. It is typically an interest only home loan with a strict loan term. Once you do sell your original property the bridging loan is closed and converted instead to your new home loan. It should be noted that for a bridging loan the interest is generally compiled and accounted for monthly so the longer your home is on the market waiting to sell, the more expensive this process becomes for you. The bridging loan period can vary based on the lender and your situation, but it is typically six months for purchasing an existing property and 1 year for a new property.

 

When will I receive my house deposit after selling?

The house deposit is required to be paid when the buyer exchanges signed copies of the contract with the seller in a standard property sale. This occurs before settlement, and almost instantaneously after the purchase decision has been made. The deposit usually amounts to 10% of the total sale value of the home.

 

What is an off market sale?

An off-market sale in the property world traditionally refers to a property that is sold without any public marketing or advertising. As the home is not promoted through the usual avenues where the target market is looking, the property is not exposed to as many potential buyers. Selling your home off market is not an idyllic way to attain the most optimal price and it’s usually a last-minute decision to get buyers through the door quick. It is also sometimes used as a way of testing the market if you are not in a rush to sell before investing in marketing and promotion of the property. Not all properties are suitable for an off-market campaign. At Hodges we customise a campaign to suit your financial needs, timing restraints and target buyers, whilst ensuring we receive the most optimal result. Speak to your local Hodges property professional about a strategy that’s tailored to you and your property.

 

What are the benefits of selling off market?

Selling your home off market obviously reduces the cost of the campaign for the seller as they don’t have to incur the costs of advertising. Advertising and marketing can become very expensive. The average marketing campaign in Victoria averages around $6000 to $8000.
Selling off market enables you to get potential buyers through your home immediately when organised with the agent. You are not reliant on waiting on a campaign start date, property boards, professional photography, organising and promoting public open for inspections, or uploading your property advertisements up to the real estate portal. This can be convenient as off-market sales are commonly related to relationship/marriage breakdowns, financial reasons, deceased estates or stressful reasons that require the home to be sold immediately.

Selling off market also enables an element of privacy. You know those who are coming through your home are serious buyers and not nosy neighbours or friends trying to have a sticky beak.

You should still reach the right buyers. The success of an off-market campaign relies on the proactiveness of the agent in advising the target market of your property. At Hodges our agents are professional match makers and have the ability to draw upon our extensive database to find the right buyer for your home.

If you do decide to sell off market, make sure you choose your agent and agency carefully. You will require someone who is committed and has the time and energy to sell your campaign for an optimal result.

 

What is a deposit bond?

A deposit bond serves the purpose of an insurance policy. It is the policy document that expresses to the vendor that the insurance company or bank will pay the 10% deposit to the vendor in any of the situations where the deposit would normally be forfeited by the vendor.

No money physically changes hands with the deposit bond. All acquisition funds are dealt with and paid at the time of settlement. As the normal course of settlement occurs, the purchase price is paid in full, and the deposit bond simply lapses.

 

What is capital gains tax?

Capital gains tax is the levy you are required to pay for the profit of a sale and it is calculated by the difference between what you paid for an asset and what you sold it for. Your vehicle, main residence, depreciating assets used solely for taxable purposes, and assets bought before 20 September 1985 are excused from this tax.

 

What is the first home owners grant in Victoria?

If you’re a first home buyer in Victoria, you could be eligible to receive a first home owners grant of up to $20,000.
However, there are certain eligibility requirements, and if you don’t meet these specific conditions you unfortunately won’t be able to apply for this grant.
Firstly, both yourself and your partner must have never received this grant from any state in Australia, as well as never owned or part owned a property prior.
You are only eligible if you are buying a NEW property up to the value of $750,000. You are not eligible if the worth of your home exceeds this amount or if you are buying an established home.
Another condition is that you must be purchasing the property as your main residence and are required to live in it for at least 12 months following settlement or completion of building.
If you are located in metro Melbourne and meet the above conditions you will receive a grant of $10,000, those in regional Victoria however, can receive up to $20,000.

 

What is a flat fee commission in Real Estate?

flat fee commission in the property world, refers to where you pay your agent a flat fee regardless whether the property sells or the price the property sells for. While this may be enticing and seem like a cheaper alternative at first it can be negatively detrimental to your overall profit and cost you tens of thousands overall.
With a flat fee, there is no motivation to get the best price. This means the agent gets paid regardless of if the result of selling your home is good or bad. This is entirely different to a commission scheme, where the agent is paid a percentage from your overall homes selling price. This results in having the assurance that the agent is motivated to get the most optimal result for your home. You are a partnership working together, on the same team, both with something at stake or something to lose. You know you have the full commitment, focus and assurance from the Agent in getting you the best price for your property.
Usually with a flat fee scheme you are required to pay the fee regardless of if the home sells. Meaning, if you don’t sell this is literally amounting to wasted dollars. Again, this is entirely different to a commission scheme where the agent only gets paid once the house sells for a price you are happy with.
Be wary of flat free schemes and ‘cheaper’ alternatives to selling your home, as there is no reason or motivation for the agency to get you the most optimal price for your home.

 

What is a property appraisal?

At Hodges, a property appraisal is a free, no obligation, accurate evaluation of your home and its value in the current market. Contact your local Hodges property professional today to organise yours at a time that suits you.

 

What are comparable properties?

Comparable properties are properties with characteristics that are similar to a listed property and is intended to give you an indication of the value. They are essential in assessing the current market value of a property accurately.
Agent’s or the agent’s representative must consider the three most comparable property sales to the property they are listing, to determine a reasonable sale price. You are not required to consider comparable property sales to determine your estimated selling price, if you rationally and honestly believe that fewer than three comparable properties. Within metro Melbourne the comparable properties must have been sold within the last six months and located within two kilometers of the property for sale.
If the property is located outside of metropolitan Melbourne the comparable properties must have been sold within the last 18 months and located within five kilometres of the property for sale.

 

What’s included in the statement of information?

The Statement of Information must outline an indicative selling price for the property. This could be a single price or a price range of up to 10 per cent. The price cannot be of less value then:
– the agent’s estimated selling price
– the seller’s asking price
– a price that arose in a written offer that has previously been rejected by the seller.
– details of the three most comparable properties or alternatively present a statement expressing they wholeheartedly believe there are less than three comparable sales within the prescribed period
– the median house price or unit price for that suburb.

 

Can you buy a house before you sell yours?

Usually most people sell before buying a new home. This is for the obvious reason that the proceeds from the sale of the old home are usually required to purchase the new one. For many people buying before selling is not a sensible option as it is much more difficult to qualify for a new mortgage if you are carrying a debt on your current home. It is possible though, so if you have the equity and believe you are able to buy before selling, speak to a mortgage broker or financial expert to create a strategic plan and to ensure you are aware of all the additional settlement costs

 

What is common property?

Common property is whatever is outlined as shared or common property on the plan of subdivision and may include gardens, passages, walls, stairwells, pathways, driveways, lifts, foyers and fences. The owners corporation is accountable for this shared land.

 

What is an owner’s corporation (body corporate)?

An owner’s corporation manages the common/ shared land. You are likely to be apart of an owner’s corporation if your dwelling is situated among shared land, like owning a flat, apartment or unit. This law sets out the duties and powers of owner’s corporations.

 

How long does settlement take?

The Settlement period commences from the day the contract is signed. The length of the period is one of the clauses in the contract, which allows the vendor and buyer the capability to negotiate and agree on a settlement period that suits their needs. The vendor and the buyer both need enough time to arrange their finances, paperwork, moving, cleaning etc. In Victoria it is quite common to agree on a 30, 60 or 90 day settlement, with 60 days being the most popular.

 

What is the cost of selling a property?

There’s a lot to consider when selling a house, especially the costs involved for sellers and how much to invest in order to get the best sale. Here is a rough breakdown of what you can expect to pay, but keep in mind you can work with your Hodges property professional to create a campaign that suits your budget, your property and the market within which it resides.
Conveyancing

  • Costs: $800 to $1300
  • Conveyancing is a requirement and to ensure your fees are used efficiently, use a local solicitor as they have better local knowledge and can identify any issues (e.g a special condition)

Marketing

  • Costs: $6000 to $8000 for an average marketing campaign in Victoria
  • Marketing is important to ensure a property is shown to as many potential buyers as possible
  • While an agent recommends and strategizes a marketing campaign, the seller covers the cost of marketing a property

Agent’s fees

  • An experienced agent will have specialised knowledge of the specific market and demographic to ensure they get the best possible price for your home
  • There are two types of real estate fees:
    • Flat fee – an agreed fixed fee between the vendor and agent for the sale of the property
    • Percentage of sale fee – the agent gets a certain percentage of the final sale price, which can range from 1.5% to 3%
  • Bonuses can also be used where the agent and vendor agree on a percentage-based bonus if the property makes above the agreed reserve

Styling

  • While styling is an extra that is not a required cost, it really helps to maximise sale price as it gives people a great first impression of the home and can show the properties liveability potential.
  • The styling of a completely empty home can cost up anywhere between $2000 – $6000. However, other options include free styling advice from agents, decluttering or updating your home or borrowing furniture from friends.
  • We have stylists we work closely with and can recommend so speak to your Hodges property professional for the best referrals and advice.

 

What is a vendor bid?

A vendor bid can be made on behalf of the vendor by the auctioneer. This is often utilised when no one in the audience has raised their hand and is an attempt to get the ball rolling and commence the bidding process. This method of bidding by the auctioneer must be disclosed as a vendor bid.

 

What does passed in mean?

A property is passed in when the price of bidding at the property auction does not meet or enter into the vendor’s price reserve (this refers to lowest amount they are prepared to sell the property for). If this happens then the opportunity can arise for the highest bidder at the auction to negotiate further with the vendor, but there is no obligation for the vendor to sell at this stage.

 

How much is a house deposit?

The question is often asked by first home buyers, in todays market, how much do you really need to scrape and save? Especially with all lenders tightening their lending criteria. The answer is it varies drastically on a case by case basis. Lenders often recommend 20% as a safe mark, considering the additional expenses of stamp duty, lenders mortgage insurance (LMI) and professional fees such as conveyancing. Although in many cases for someone with little savings the one off LMI is used as a way to reduce the risk of lending money to someone with less than 20% deposit. So speak to a reputable lender or mortgage broker to discuss your finance options and capabilities.

 

What happens to my deposit?

Once you have paid your deposit, this will be securely and safely held in the Hodges Trust account until the release of deposit which occurs on settlement day. (see section 27 for additional information on releasing the deposit early).

 

What is a conditional offer?

A conditional offer is an agreement between both the vendor and the purchaser with a number of conditions attached and the contract of sale is subject to these events/conditions occurring. If the conditions are not met, you have the right to back out of the sale without any disadvantage or consequence. An example of a common condition is ‘Finance needs to be in place and calculated prior to the sale going ahead’. Usually if all the conditions are met the offer becomes legally binding.

 

What is an unconditional offer?

An unconditional offer is a binding agreement requiring both the vendor and the purchaser to adhere to their contractual obligations. Once the price is mutually agreed and accepted by both parties and there are no additional conditions attached to the offer, it is usually legally binding.

 

What are the limitations of Private Sale?

As private sales usually involve a cooling off period, this could unfortunately result in the buyer changing their mind. Unlike auctions which have a set ‘end’ date, private sale can often draw out and take up a lengthy period. Having no deadline, could potentially result in interested buyers not acting as urgently and being as motivated to compete for your property. As private sale prices are usually negotiated down, this could potentially result in the vendor receiving less than the asking price.

 

What are the benefits of private sale?

The benefits of private sale are it is much less intimidating for buyers. Auctions can be overwhelming and for this reason it may put potential buyers off the idea of getting involved in the bidding. From the other side of this spectrum, the vendor has time to consider offers made and vice versa without being under immense pressure. Private Sale can also reduce the cost of the campaign such a hiring a specialised auctioneer that selling by auction would incur. Private sale is a great option when there is no urgency for the vendor to sell, allowing them to be open to accepting different sale terms, such as a prolonged settlement date, sale subject to finance or subject to the sale of the buyer’s home. This can open up a wider network of potential buyers who could otherwise not consider the property. If your privacy is sensitive to you, and you would prefer to keep your sale outside of the public eye then private sale is likely to be a superior method of sale for you.

 

What are the limitations of selling at auction?

Auctions incur an additional cost to the properties campaign to cover the cost of hosting the event and accommodating a specialist auctioneer. For properties where people can access precise and recent sales evidence, an auction may not be the most effective method of selling. For example, multiple subdivided units of similar specification, or a large number of identical apartments, everyone would be aware of the sale price of other units, thus the competitiveness and fear of missing out would be dramatically reduced and private sale could result in a higher sale price per property. If the vendor has particular conditions of sale, such as subject to finance, auction is unlikely to be the best method of sale as it would rule out a lot of potential buyers who this property would otherwise appeal to.

 

What are the benefits of selling at auction?

Selling at auction is often believed to generate higher prices due to the competitive nature it evokes in people on the day, causing the price of the property to be pushed up. Auctions often exceed reserve prices quite considerably. Auctions also bring with them a sense of urgency due to there being a set ‘end’ date, that compels the interested buyers to make a decision there and then on the day. Auctions open up the playing field and a true representation of interest can be gauged, whilst the seller is still protected through the reserved price. This means that the auctioneer will not let the property sell, unless it falls above a pre-agreed acceptable price by the vendor. However, as there is no price ceiling, for an auction, there is no limit and uncapped potential for what the property could sell for. If the owner desires an unconditional sale or has set terms like a particular settlement period, an auction is well suited.

 

Final Inspection – What are my rights?

A purchaser is entitled to the property being handed over at settlement in the same state it was when sold save fair wear and tear. You have a right as a purchaser to a final inspection in the week before settlement. This should be organised ahead of time and preferably a few days before settlement so any last minute issues can be sorted out before settlement. A purchaser does not usually have the right to hold up settlement because he/she is unhappy about the state of the garden nor the state of cleanliness of the property.
Trust account (and the importance of operating one now that electronic settlements are compulsory in Victoria):
It is not compulsory for a conveyancer or solicitor to operate a Trust account (two thirds of conveyancers do not operate a Trust account). Now that settlements in Victoria are electronic (more on that at the topic of “What happens at settlement”), it is important that your legal representative operates a Trust account. If your deposit is needed for settlement and your real estate agent is still holding your deposit, your agent can only transfer it to your legal representative’s Trust account for settlement. If your legal representative does not have a Trust account, then another firm needs to be instructed (usually at the last minute) causing you angst and extra fees.

 

How do I organise utility connection/ disconnection?

YourPorter offer free assistance with the disconnection and reconnection of your utilities. This is a complimentary service for Hodges customers. YourPorter have proven to deliver an excellent service during their time working with thousands of Hodges Real Estate customers, and we highly recommend them to anyone. They’re extensive range of services include…
Electricity, Gas, Water, Internet, Pay TV, Telephone, Health, Car, Home & Contents, Life, Home
Loans.
YourPorter have proven to deliver an excellent service during their time working with thousands of Hodges Real Estate customers, and we highly recommend them to anyone.
Get connected today or call your local Hodges agent for more information.
No tip required – the Your Porter service is completely free!

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What is Section 27 of the Sale of Land Act (Vic) 1962?

Section 27 (“s27”) allows for a mechanism whereby the deposit paid on a property can be released to the vendor/s before settlement. It is commonly referred to as an early release of deposit.
For this to happen, the contract must be unconditional, and the purchaser must be satisfied that the total amount of debts secured against the property does not exceed 80 per cent of the property sale price. A purchaser has 28 days to object to the early release of deposit. If the deposit is released early, the selling agent usually deducts his/her commission and fees and releases the balance.
It should never be assumed that the deposit will be released early as s27 provides for a mechanism only. There is no guarantee that the deposit will be released early so a vendor should not rely on the deposit monies to be made available early.

 

What is different about buying at auction?

Buying at auction is unconditional so make all your enquiries and have your finance in place. Think seriously about a building and pest inspection before auction day as, if you are the successful bidder, the property is yours no matter whether there is a family of termites living in it!

 

What is the “Cooling Off Period”?

Buying a property is likely the highest value transaction that you undertake in your life. It can also be a very emotional decision and, sometimes, you may buy a property without doing all due diligence. The cooling-off period is a consumer protection provision that gives you the chance to “cool off” from your initial decision after you have had a further chance to review. During the cooling-off period (within three clear business days of the buyer signing the
Contract), the buyer can change his/her mind and cancel the contract. There is a monetary penalty if a buyer chooses to “cool off”. Cooling off periods do not apply in some cases. One situation where you cannot “cool off” is buying at auction (or within 3 clear business days either side of an auction).
You have to be careful to “cool off” properly so speak to us please and we will advise you.

 

Why would you get a Pre-Purchase Building and/or Pest Inspection?

Once you sign a Contract to purchase a property, it is yours and the general rule of “caveat emptor” or “buyer beware” applies. Consequently, you should do your due diligence before you sign. An aspect of due diligence is a pre-purchase building and/or pest inspection.
If you don’t obtain building and pest reports, you may find that your dream house is infested with termites or in need of urgent repairs. Unfortunately, once the Contract is signed, those issues (as expensive as they may be to fix) are your problems as the buyer of the property.
A building and/or pest report is an inexpensive exercise compared with the cost of eradicating pests or fixing building issues.
You may not want to spend money on a building and pest report before you are the successful buyer. If so, you should ask for a Special Condition to be inserted into the Contract giving you a period to obtain a building and/or pest report that is satisfactory to you.
Ask us for help in drafting the Special Condition as some wording favours a buyer and some favours a seller.
Bear in mind that an auction purchase is unconditional, so any inspection reports will need to be done before auction day.

 

What is a Section 32 Vendors’ Statement (commonly called a Section 32)?

A Contract of Sale of Real Estate cannot be signed until the Section 32 has been prepared and signed by the Vendor.
The Section 32 discloses certain information about the property including but not limited to:

  • the Vendor’s details;
  • the Title details;
  • information regarding building works done in the past 7 years;
  • particulars of any mortgages over the land;
  • information regarding covenants, easements and any other restrictions on title;
  • planning information;
  • details of the amount of rates payable;
  • disclosure of any notices or orders issued by the authorities regarding fencing, road
    widening and sewerage;
  • access to the property by road; and
  • information on services not connected to the property

It is very important that the Section 32 is properly prepared as a defective Section 32 can allow a buyer to avoid a Contract penalty-free.
More and more, we are having our clients sign s32s electronically.

 

What does Disbursements mean?

Any costs that the conveyancer incurs on your behalf in paying a third party for goods or services used to help you are called disbursements. In a conveyancing transaction, the costs of conducting searches for information about the property are the most common disbursements. These include: a Title search, certificates showing things affecting the property such as proposals for roads and recent building permits and agent’s fees to attend settlement. If the property is affected by an Owners’ Corporation, a certificate from the Owners’ Corporation (formerly called a Body Corporate) is usually required and costs approximately $180.

 

What are the legal terms for a buyer and a seller?

A buyer is commonly called a purchaser and a seller is commonly called a vendor.