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Real estate: A guide for buyers and sellersAs a buyer, you will not pay an agent forservices provided in selling the property.Buyers may deal with several agents oragent’s representatives, depending onwho is handling the sale of the propertythey are interested in.You can leave details with one or moreagents indicating the type of propertyyou are seeking and an approximate pricerange. The agent may contact you whensuitable properties become available.As a buyer, you can expect an agent to: take your details and provide adviceabout relevant properties for sale answer your questions about listedproperties arrange inspections provide you with a copy of the vendor’sstatement and contract of sale whenavailable communicate genuine offers from youto the seller organise the signing of the contractof sale.Buyer’s advocatesA buyer’s advocate is a licensed estateagent who, for a fee or commission, actsfor a buyer instead of a seller. They cansource properties, bid at auction andgenerally represent a buyer throughoutthe buying process.12AdvertisingAn estate agent must not misrepresentthe price of a property for sale or lease.The advertised price must be fair andreasonable and reflect the instructions ofthe seller and the opinion of the agent ofthe property’s selling price.Any changes to the seller’s instructionsor agent’s opinion during a marketingcampaign likely to affect the selling pricemust be reflected in the advertised price.For example, if a higher offer is made for aproperty and rejected, the advertised pricemust be updated unless the seller changestheir mind.The agent-principal relationshipThe relationship a seller has with anagent is different to the relationship theagent has with a buyer. Agents mustact responsibly and ethically whendealing with both buyers and sellers.But buyers should be aware that themain responsibility of the agent sellingthe home is to the seller.

Conveyancing, vendor’s statement (section 32),owners corporation and buying off the planConveyancing, vendor’s statement(section 32), owners corporationsand buying off the plan13

Real estate: A guide for buyers and sellersThe transfer of ownership of land from theseller to the buyer is called a conveyanceof land. This is usually undertakenwith the help of a legal practitioner orconveyancer. Buyers and sellers shouldengage their own legal practitioner orconveyancer.ConveyancersA conveyancer is someone, other thana legal practitioner, who is licensed toundertake property conveyancing workand to do legal work or give legal adviceabout the transfer of title.Conveyancers can be engaged by a sellerto prepare the vendor’s statement andother legal documentation, such as thecontract of sale. They can be engaged bya buyer to check the vendor’s statement,advise on the terms and conditions in thecontract of sale and conduct searches.Licensed conveyancers must haveprofessional indemnity insurance.Get written quotes before choosing a legalpractitioner or conveyancer.If you use a conveyancer, makesure that they are licensed. Youcan check if someone is licensedby contacting the Business LicensingAuthority on 1300 13 54 52 or bysearching the public register of licensedconveyancers at bla.vic.gov.au.14Legal practitionersA legal practitioner must hold a currentpractising certificate and have professionalindemnity insurance.Legal practitioners can perform generallegal work and provide legal advice.Some legal practitioners specialise inconveyancing and property law.Sellers can engage a legal practitioner toprepare all the required documentation,including the vendor’s statement and thecontract of sale. Legal practitioners canalso be engaged by buyers to review andadvise on the vendor’s statement andthe contract of sale, and ensure that thetransfer of title is done correctly.SELLER’S TIPMake sure all charges includingdisbursements (additional administrativecosts) are discussed and understoodbefore you engage a legal practitioner orconveyancer.

Conveyancing, the vendor’s statement (section 32),owners corporation and buying off the planThe vendor’s statement (section 32)Before a property is sold, the sellermust provide the buyer with a vendor’sstatement or section 32.BUYER’S TIPBefore you make an offer on a property orbid at an auction, have a legal practitioneror conveyancer carefully check thevendor’s statement. You should alsoconsider getting a building inspectionfrom a qualified building inspector.This is usually prepared by the seller’slegal practitioner or conveyancer. It is thensigned by the seller and made available toprospective buyers, usually by the agentbefore the sale or auction. The buyer maythen have the statement checked by his orher own legal practitioner or conveyancerprior to purchase.Owners corporationsThe vendor’s statement containsinformation about the property’s title,including mortgages, covenants,easements, zoning and outgoings such asrates. It does not include any informationabout the condition of buildings, whetherthey comply with building regulations orif measurements on the certificate of title(or similar documents evidencing title) areaccurate. It is the buyer’s responsibility tofind out about anything not covered in thevendor’s statement.Where a plan of subdivision createscommon property, there must be anowners corporation. The owners arereferred to as lot owners or members.The information that must be includedin the vendor’s statement is outlined insection 32 of the Sale of Land Act 1962.This can be viewed online atlegislation.vic.gov.au.If you buy a unit, flat or apartment,you will be provided with your owncertificate of title. However, you are notjust purchasing the individual propertybut also the shared ownership of, and theright to use, common property as set outby the plan of subdivision.As a member of an owners corporation, youhave the right to vote on decisions about itsoperation. You will be required to contributeto costs for repairs, maintenance andinsurance for the common property sharedwith the other lot owners.The vendor’s statement is a legaldocument and must be factually accurateand complete. If the vendor’s statementcontains false, incorrect or insufficientinformation, a buyer may be able towithdraw from the sale or take legal action.15

Real estate: A guide for buyers and sellersBUYER’S TIPBuying in an owners corporation meansliving with common property– andcertain rights and responsibilities apply.Get more information at consumer.vic.gov.au,download the Guide to owning, managing andliving in an owners corporation.Before buying, make sure you carefullycheck: the cost of being a member of anowners corporation how the owners corporation operates,including whether it uses an ownerscorporation manager the vendor’s statement the owners corporation certificate,attached to the vendor’s statement,which states whether there are anyproposed works, fee increases orpotential or existing legal claimsaffecting the property the plan of subdivision, to determinelot boundaries and common property the contents and conditions of thecontract of sale the owners corporation rules any leases or licencesof common property minutes of previous annualgeneral meetings.16Property schemesProperties can be held under differentschemes. For example, if you’re buyinga unit, flat or apartment, you could bepurchasing a share in a company titlearrangement, a stratum title or a stratatitle. Get advice from a legal practitioneror conveyancer about how the type oftitle will affect your ownership, rights andresponsibilities.BUYER’S TIPObtain independent legal advice beforeyou buy a unit, flat or apartment tofind out about the advantages anddisadvantages of holding a title underthe different property schemes.If you are buying an investment property,check with your accountant, financialadvisor or the Australian Tax Officeabout allowable deductions for rentalproperties.

Conveyancing, the vendor’s statement (section 32),owners corporation and buying off the planBuying off the planBuying a house or unit before the buildingworks have been completed is knownas buying off the plan. In some cases,construction may not have started whilstin others it may only be partially built.The design of the building and sketchesof its final appearance may be includedin advertising material well beforeoccupation is possible.People are often attracted to off-the-plansales as there is a reduced amount ofduty (formerly stamp duty) to pay. Theamount depends on how advanced theconstruction of the building is and itscurrent value. If construction is close tocompletion, the duty is likely to be higher.You can get more information about dutyby visiting sro.vic.gov.au.Other benefits for buyers include moreinput into the design and a price at today’smarket value that is locked in at the timethe contract is signed.BUYER’S TIPIf you intend to buy off the plan, get afirm completion date in writing from thedeveloper. You should get legal advicebefore signing a contract.Buying off the plan without being ableto observe the finished product has risks,including: being unable to inspect the actualproperty. You have to rely on an artist’simpression, floor plan and advertisingmaterial for information about whatyou are paying for differences in the expected and actualquality of the final finishes unexpected changes to the plans orspecifications an uncertain completion date complex contracts limited recourse with the builder ifthere is a dispute. This is because thedeveloper, not the buyer, enters intoa major domestic building contractwith the builder property market volatility causingthe value of an off the plan homeat settlement to be less than thecontract price.If you buy off the plan and the plan ofsubdivision is not registered, the law protectsyou by requiring that the deposit is no morethan 10 per cent of the contract price.If the plan of subdivision is not registeredby the time specified in the contract or thedefault time of 18 months, you have theright to end the contract.17

Real estate: A guide for buyers and sellersThe estate agent’sresponsibilities to the seller18

The estate agent’s responsibilities to the sellerIf you list a property for sale with an agent,you are engaging that agent to help sellyour property. The agent must act in yourbest interests, including following yourlawful instructions and engaging in goodestate agency practice.The agent will charge you a fee for thisservice, usually in the form of a commission.The commission is negotiable and caneither be a percentage of the sale price, afixed fee or a combination of both. You canalso expect to pay an additional cost foradvertising associated with marketing yourproperty.You can expect the agent to: advise you about a method of sale provide you with a marketing planand market your property give you an estimated selling price orprice range based on their experienceand skill advertise an up-to-date price for theproperty reflecting rejected offers orchanged market conditions (althoughit is not compulsory for a price to beadvertised) communicate all verbal and writtenoffers from prospective buyers to you,unless you instruct the agent in writingnot to do so organise and attend open house andother inspections organise and conduct an auction ifapplicable arrange the signing of the contract receive and hold the full deposit.Selecting an agencyFor the seller, choosing an agency is animportant part of the selling process.To help you make this decision: check the internet and local papers tofind agencies, the services they offerand sale price information speak to friends about their experiences read promotional material from arange of agencies (including localagents who may be more familiar withthe local market) talk to agents.Ask the agent to provide writtenquotes, clearly detailing therate of commission they chargeand any additional charge for marketingyour property. Do not sign anything,including an authority, unless you areprepared to engage their services.Points to discussWhen you talk to agents, importantpoints to discuss include: their knowledge of the market andexperience selling homes in the areacomparable sales in the areatheir marketing plan for your propertypreparing your property for saletheir estimated selling pricetheir commission or feethe cost of advertising and otheroutgoings.19

Real estate: A guide for buyers and sellersMarketing your propertyWhen you’re choosing an agency, one ofthe most important factors to consider ishow they plan to market your property.Ask for a comprehensive, written marketingplan. This will be based on the agent’sexperience, the type of property and itslocation and any specific wishes you have.The marketing plan should includeadvertising methods and costs, and theprice or range at which the property willbe advertised.The estimated selling priceBefore you sign an authority to sell, theagent must provide you with an estimateof the selling price of your property. Thisis the price the agent estimates yourproperty is likely to attract, based ontheir experience, skill and knowledge ofthe market. It must be recorded in theauthority to sell as either a single amountor a price range.If estimate is recorded as a range, thedifference between the top and thebottom figures must not exceed 10 percent of the bottom figure. For example, aquoted range of 400,000 to 440,000 is 400,000 plus 10 per cent.This price is not a sworn valuation or aguaranteed selling price and it does nothave to be the same as the seller’s askingprice or auction reserve price.Price misrepresentation– overquoting and underquotingThe practice of deliberately overstatingthe estimated selling price to encouragea seller to appoint a particular agent isknown as overquoting.It is illegal for an agent to mislead a selleror prospective seller about the estimatedselling price.It is also illegal for an agent to advertiseor advise (whether orally or in writing)a prospective buyer of a price that is lessthan the seller’s asking price or auctionreserve price if known, or if there is nosuch price, the agent’s estimated sellingprice. This is known as underquoting.An auction reserve price is not usually setuntil the day of the auction.CommissionsMost agents obtain their fee from theseller in the form of a commission payableafter the sale is completed. An agentcannot obtain a commission without anauthority to sell signed by the seller.The agent must advise the seller thecommission is negotiable, before the sellersigns the authority to sell.There is no set commission; the amountis negotiable between the seller and theagent, and can be set at whatever amountboth parties agree on.The commission can be paid as either afixed fee or percentage of the sale price,and must be recorded on the authorityto sell. If it is recorded as a percentage, itmust also be shown as a dollar figure.20

The estate agent’s responsibilities to the sellerIf you are selling through an agentwho uses a commission scale, ensureit clearly and accurately outlines howmuch you will pay. For example, theagent’s commission may be 3.3 percent (including GST) on a scale up to 500,000 and 3.85 per cent (includingGST) if the price goes above 500,000.You may interpret this as only the amountabove 500,000 having a 3.85 percent commission; however, if the saleprice exceeds 500,000, the agent mayinterpret this as the entire sale price havinga 3.85 per cent commission.SELLER’S TIPDo not choose an agent just becausethey give you the highest estimatedselling price. Have several agentsappraise your property. You can ask themto justify their price by showing you, forexample, similar properties sold at similarprices in the area. Take into account theagent’s overall marketing plan whenmaking your decision.Commission sharingThe agent must advise you in writingif they will be sharing the commissionwith someone outside their own agency,such as a legal practitioner, conveyanceror another agent. A statement must bemade listing the people with whom thecommission is to be shared, before yousign the authority to sell.SELLER’S TIPClarify with the agent the exactcircumstances under which thecommission must be paid, before signingthe authority. Do not sign withoutcarefully reading and understandingthe authority to sell. If you are unsure ofanything, ask for clarification from theagent, contact Consumer Affairs Victoriaor seek legal advice.The agent must provide you with a copyof the authority when you sign it. Retainthis as proof of what was agreed with theagent.If the agent enters a commission-sharingarrangement after you have signed theauthority to sell, they must update theauthority to sell (see below) with therelevant details and ask you to sign anddate the amendments.Advertising and other outgoingsThere will be costs associated withmarketing a property, separate from theagent’s commission. Even if the propertyfails to sell, you w

Real estate: A guide for buyers and sellers Licensed estate agents and agents’ representatives A person or company acting as an estate agent, advertising that they are carrying on the business of an estate agent or who holds themselves out as being ready to act as an estate agent for payment must be