The final phase of selling your home requires the trading and signing of the contracts for sale, and settlement day.
Putting your Signature on the Contract of Sale
Before the sale you need to draft a contract for sale with the aid of your real estate agent and your lawyer or licensed conveyance. This will detail the terms of the agreement, including the settlement day. Terms are likely to be standardised but could be customised according to your specific home for sale and personal needs.
To make a formal offer, the buyer signs the contract for sale, or makes a counter offer to negotiate certain terms and conditions. Get the help of your legal advisor in check this process. Do it carefully because the contract becomes legally binding when it has been signed by seller and buyer. Counter offers are common during the negotiation process between the parties so don't let it put you off.
A deposit will be paid by the buyer to your agent or solicitor and must be paid for contracts to exchange – the standard is 10 percent of the purchase price. Buyers are given a cooling-off period, normally five days, in which they will forfeit a payment to the seller (normally 0.25 percent of the purchase price) if they have a change of heart. The parties can negotiate the terms or removal of the cooling-off period. With auctions, exchange is instant and buyers have no cooling-off period.
What Occurs During Settlement Day?
This is an important day – there is changeover of the title of the sold home, the buyer pays the rest of the money they owe the seller and the keys are turned over. The definite date for the settlement will be negotiated when the contract is exchanged. The normal period is four to six weeks from signing the contracts.
Typically, your legal representative and financial advisor will manage the settlement. It is your duty to maintain your home, including utilities and council fees, until settlement day.
The last payment of the buyer will be placed by your agent to a trust account. Following the deduction of their commission fee the agent is required to handover the sum owed to you. The law covering when this trade should take place differs between states and territories, so make sure to obtain information from your state’s consumer agency. In Queensland, for instance, the transfer period should occur within 42 days of settlement, or earlier if requested, whereas in New South Wales the transfer must be made as soon as realistically possible and within the terms laid out by your solicitor. Ensure that your agent gives you a detailed statement showing all moneys received and subtracted from the trust account.