Steps to selling a property

You must prepare a contract before advertising property for sale. Learn about required documents, sale methods, deposits, cooling-off periods, settlement and land tax rules.

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Preparing a contract of sale

A solicitor or conveyancer should prepare the contract for sale. They will need to be involved in the transaction to represent you at settlement. In NSW, all property settlements are completed electronically through the eConveyancing platform and parties need to be represented by solicitors or conveyancers who are subscribers to this system.

What the contract must contain

If you fail to attach any of these disclosure documents to the contract, the purchaser may be entitled to rescind the contract within 14 days of exchange, unless settlement has already occurred. The conveyancing legislation also prescribes certain terms and warranties into the contract, so there may need to be some issues addressed in the conditions of the contract. This is why you should engage a solicitor or conveyancer to prepare the contract to make sure disclosure requirements are met.

The contract must contain:

a copy of the property certificate (title search), registered plan, and dealings (like easements) recorded on title to the land
a drainage diagram
a current Zoning Certificate (section 10.7) issued by the local council
a statement of the buyer’s cooling-off rights in the prescribed form.

A contract may also set out what is included and excluded from the sale.

For properties with a swimming or spa pool

If the property for sale has a swimming or spa pool, one of the following must also be attached to the contract:

a copy of a valid certificate of compliance
a valid occupation certificate (issued in the past 3 years) and evidence that the pool has been registered, or
a valid certificate of non-compliance.

This does not apply:

to a lot in strata or community schemes that have more than 2 lots, or
for any off-the-plan contract.

To check if the property with a swimming/spa pool has a valid certificate of compliance, visit the NSW Swimming Pool Register website.

Ways to sell a property

There are 2 main ways of selling a residential property: by private treaty and by auction.

Private treaty

When you sell your home by private treaty, you set a price and the property is listed for sale at that price.

Benefits

Benefits of a private treaty sale include:

greater control over the sale
time to consider offers by potential purchasers
the ability to extend the time for which your home is for sale indefinitely
potential purchasers must make offers for your property without knowing what other buyers think it is worth.

Risks

Risks of a private treaty sale might be:

if the price you set is too high, your property may not sell
if the price you set is too low, you may miss out on maximising the selling price.

Cooling off period

You should also be aware that when a residential property is sold by private treaty, the buyer has a 5 day cooling-off period during where they can withdraw from the sale. The vendor does not have the same cooling off period.

Waiving the cooling off period

The buyer may waive the cooling off period if they provide a certificate signed by their lawyer or conveyancer who has explained the effect of waiving the cooling off period. It is possible that a vendor will only accept the buyer’s offer if the cooling off period is waived.

Auction

To sell through an auction process, the amount you want for the property is generally not revealed to potential buyers. Buyers attend the auction and bid for the property against other potential buyers.

Auctions have become a popular way to sell or buy residential property. You should familiarise yourself with the process and what it involves.

Setting a reserve price

The reserve price is the lowest amount you are willing to accept for your property. Before bidding begins, you must instruct your agent in writing what you nominate as the reserve price. This is usually not told to the prospective buyers.

If the highest bid is below the reserve price, the property will be ‘passed in’. You will then either:

try to negotiate a price with interested bidders, or
put the property back on the market.

If the bidding continues beyond the reserve price, the property is sold at the fall of the auctioneer's hammer.

Successful bids

The successful bidder must sign the sale contract and pay you a deposit on the spot (usually 10% of the purchase price, unless a lesser sum or a deposit bond has been agreed before the auction.

No cooling off period

There is no cooling-off period for anyone who buys a property at auction. If the property is passed in at auction but contracts are exchanged on that same day, the cooling-off period still does not apply.

Contract exchange

Exchanging sale contracts is the legal part of selling a home. The buyer or seller is not legally bound until signed copies of the contract are exchanged.

There will be 2 copies of the sale contract: one for you and one for the buyer. These will most likely not be physical copies as most contracts are now exchanged electronically.

You each sign one copy before they are swapped or ‘exchanged’.

This is usually done electronically and is usually arranged by your solicitor, conveyancer or the agent.

If the agent arranges exchange of contracts, the agent must give copies of the signed contract to each party or their solicitor or conveyancer within 2 business days.

Paying a deposit

At the time of the exchange, the buyer will be required to pay a deposit. The deposit is 10% of the purchase price unless a lesser sum, for example 5%, is agreed. Because contracts are generally exchanged with a cooling off period, the buyer can pay 0.25% to exchange the contracts, with the balance (usually 9.75%) payable before the end of the cooling off period. This is because the buyer will forfeit 0.25% of the purchase price if they exercise their cooling off rights and withdraw from the contract within that time.

Cooling off period

Buyers of residential property by private treaty usually have a cooling off period of 5 working days following the exchange of contracts during which they can withdraw from the sale.

The cooling off period can be waived, reduced or extended by negotiation.

There is no cooling off period:

for sellers - once contracts for the sale of land are exchanged, the seller is legally bound to complete the agreement
for buyers when purchasing at auction.

Settlement

By law in NSW, settlement marks the conclusion of a property sale and typically occurs 6 weeks after contracts are exchanged, although a different timeframe may be negotiated between the parties.

Land tax considerations for sellers

When selling a property, be aware of any land tax liabilities you may have. Land tax is an annual tax imposed on property owners in NSW. It is based on the value of the land they own. If your landholding exceeds the land tax threshold, you may need to pay land tax.

Considerations include:

Outstanding land tax: if you have any outstanding land tax, it must be cleared before the property can be sold. Unpaid land tax could affect the settlement process.
Disclosures: during the sale process, land tax obligations may need to be disclosed in the contract of sale.
Settling land tax: if you have multiple properties or your land value exceeds the threshold, you may be liable for land tax.

Before selling your property, consult with a solicitor or conveyancer to confirm your land tax status. Ensure that you resolve any liabilities before the sale. This will help streamline the sale process and avoid complications at settlement.

For more information about land tax, visit the Revenue NSW website.

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