smartguide

Property smart

A pocket guide to buying and selling real estate in Queensland

Office of Fair Trading

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© The State of Queensland, Department of Justice and Attorney-General, 2012.

The State of Queensland is to be recognised as the owner of copyright but has no objection to this material being reproduced or made available online, or electronically. However, the material must remain unaltered and must not be used to endorse a product or service.

DisclaimerThis publication aims to provide consumers with a general understanding of their rights and responsibilities in the Queensland marketplace. It is not a comprehensive statement of the law.

The laws referred to in this guide are complex and various qualifications may apply to the provisions in different circumstances. You are encouraged to obtain independent legal or financial counselling advice if you are unsure of how these laws apply to your situation.

Legal adviceThe Office of Fair Trading can not give you legal advice.

We strongly recommend you seek independent legal advice before signing any contract. Ensure your solicitor is independent of any other party to the transaction.

When choosing a solicitor, shop around and compare different solicitors’ experience, service and costs. Before you appoint your solicitor, ask for a detailed written quote for the work you want done.

Solicitors must carry professional indemnity insurance, which protects you if something goes wrong because of action the solicitor takes or does not take.

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ContentsBuying a home . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

What to do before you buy, appointing an agent, getting finance, finding a home, making an offer, managing the sale and settlement and paying off your mortgage.

Selling a home . . . . . . . . . . . . . . . . . . . . . . . . . . . 18When selling your home, you should consider appointing an agent and a solicitor. You should also understand sales contracts, methods of sale, costs, and settlement.

Claims for financial loss . . . . . . . . . . . . . . . . . . . 25If you suffer a financial loss because of certain actions of a licensed property agent, you can make a claim for compensation against the Claim Fund.

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Buying a homeBefore you lookPrepare a budget

When you decide to save for a house, always prepare a budget. Doing a budget can help you understand your financial situation. You can download the budget planner from www.fairtrading.qld.gov.au

The budget planner helps you track your income and expenditure, list your savings goals and calculate savings. Understanding your financial health may help you see problems before they get out of control, giving you time to change your lifestyle and avoid bigger problems.

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Save a deposit

If you are thinking about buying a home, start saving now. The largest initial cost of a home is the deposit, which is usually at least five per cent of the purchase price. A savings plan is great practice for paying off a mortgage. Financial institutions may also be more willing to lend you money if you have a strong savings history. When saving your deposit, shop around for the best interest rates. Make sure you understand all the conditions, fees and charges connected to your account.

Research the market

To start: • lookatpropertylistingsatrealestateagencies,onthe

internet and in newspapers • findoutwhichpropertieshaverecentlysoldin

the area and how much they sold for by using the Department of Natural Resources and Mines SmartMap. SmartMap is available for a fee at www.qld.gov.au

• getinformationonupcomingdevelopmentsinyourarea from the Department of State Development, Infrastructure and Planning website at www.dsdip.qld.gov.au

• attendopenhouseinspectionstocomparevaluesandsee if your expectations are realistic

• talktofriendsorfamilywhohaverecentlyboughtahome and talk to a reputable real estate agent.

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The real estate market is affected by economic trends, as well as changes in the balance between housing supply and demand.

Find out if:• theReserveBankisexpectedtochangeinterestrates.

You can check this by visiting www.rba.gov.au• therearemorehousesforsalethanbuyers(prices

should be falling or steady), or more buyers than houses(priceswillberising)

• thecurrentcostofbuildingishighorlow• youareeligibleforanygrantsorconcessions,suchas

a first home owner grant.

Understand the costs

You will have to pay a number of costs when you buy a property, as well as before and after you buy. Here are some costs you can usually expect to pay in addition to the purchase price of the home.

Before you buy, expect to pay:• professionalvaluation• propertyandpestinspections.

When you buy, expect to pay:• stampduty• realestateagentfees• legalorconveyancingcosts

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• searchfees• bankormortgagefees• exitfeesfromyourexistingmortgageorpenaltiesto

break your current rental agreement• homeandcontentsinsurance• movingcostsandutilityconnections• smokealarmsandelectricalsafetyswitchesifnot

already installed.

After you buy, expect to pay:• councilrates• bodycorporatefees• ongoingmaintenance.

Appoint a real estate agentChoosing an agent

When you buy a property, you may want to use a buyer’s agent. An agent will find suitable properties and negotiate purchases for you. They can do background checks on the property and area to make sure you pay the fairest price. An agent can also bid for you at an auction.

A real estate agent cannot act for a client until appointed in writing by the client. To use an agent, you must complete PAMD Form 22a—Appointment of real estate agent(salesandpurchase).Thisformisavailableat www.fairtrading.qld.gov.au

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The appointment documents the rights and obligations of both the agent and the client. The appointment sets out the terms for:• anylimitationsorconditionsontheagency• theservice(s)tobeprovided• theamounttobepaid(commission,feesand

expenses) for the services.

Real estate agents must be licensed to work in Queensland. They should display their licence prominently in their office.

Get financeChoose a home loan

A home loan is a debt you live with for many years. It is vital that you carefully research, compare and fully understand loan differences so that you can choose the best option for you.

There are many types of loans with different fees, conditions and charges. Loans are best compared using their comparison rate, which includes not only the interest rate, but other fees and charges as well.

Questions

You may need to ask a lot of questions before you properly understand any home loan offered to you.

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Visit www.fairtrading.qld.gov.au for a list of questions to ask your financial institution or mortgage broker.

Home loan facilities

Many loans can be tailored to meet your needs. However, most special features come with a cost, so carefully consider exactly what you need and how it will benefit you.

Visit www.fairtrading.qld.gov.au to learn more about:• offsetfacilities• redrawfacilities• mortgageprotectioninsurance.

Alternative home loan options

If you are having difficulty getting a standard home loan, you may need to consider other options. Remember, it is very important that you carefully evaluate any type of loan before signing. Some alternative home loan options include:• non-conformingloans• lowdocumentloans• low-depositorno-depositloans• long-termmortgages• vendorfinance• areversemortgage.

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Although these loans may help you break into the property market in the short term, they often:• havehigherinterestrates• havemorefeesorcharges• forceyoutotakeoutadditionalloaninsurance• leaveyouworseoffoverthefulltermoftheloan.

Visit www.fairtrading.qld.gov.au to learn more about alternative home loan options.

Find a homeGet a valuation

Understanding the true value of a property will help you avoid paying too much. It is important to do your own research and always use a valuer independent to the seller or their agent. Make sure that the valuer you use is registered. You can do this by checking the Valuers Registration Board website at www.vrbqld.com.au or the Australian Property Institute website at www.api.org.au

Visit www.fairtrading.qld.gov.au for a list of instructions to give your valuer and a list of what information to expect in a valuation report. There is no set fee for valuation advice. You should negotiate a fee with your chosen valuer before the valuation proceeds.

For help estimating the market price of houses, the Department of Natural Resources and Mines offers the SmartMap service for a fee. SmartMap is available at

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www.qld.gov.au and provides the latest property information including sales prices, dates and property dimensions for most Queensland houses, units and townhouses.

Buy at auction

You need to prepare before buying at auction. It is a good idea to go to a few auctions first to see how they work. The terms of a residential auction sale usually require the buyer to bid on an unconditional basis. The real estate agent can give you a copy of the terms and conditions before the auction date.

Rememberwhenbuyingatauctionthereisnocooling-off period. You need to view the property and do all the necessary checks before bidding. Getting an independent professional valuation is also a good idea. If you are the successful bidder at the auction, you will have to settle the contract even if the house is defective or you can’t afford it.

Visit www.fairtrading.qld.gov.au to learn more about what you need to do before the auction and on auction day.

Buy off the plan

Many developments are sold ‘off the plan’. This means the contract for the purchase of the lot is entered into before the title to the lot is created and a building is constructed.

Visit www.fairtrading.qld.gov.au to learn more about the benefits and risks of buying off the plan.

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Make an offerContract of sale

The contract outlines all the conditions of the sale. During the negotiations, the agent may ask you to formalise your offer by signing a contract. Real estate agents and developers in Queensland often prepare their own contracts. It is your responsibility to make sure any special conditions you agreed on with the agent are in the contract.

Before signing, take a copy of the contract away and discuss it with your solicitor. Independent legal advice is especially important if your offer is dependent on conditions such as finance or the sale of another property. Once you sign the contract and it is signed by the seller, it becomes binding.

A contract of sale must have a warning statement attached. PAMD Form 30c—Warning statement is available at www.fairtrading.qld.gov.au and advises you to get an independent property valuation and seek independent legal advice. Don’t be pressured into signing a contract without seeking legal advice first.

Afive-daycooling-offperiodapplieswithanyresidentialproperty contract, but not when buying at auction.

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Property inspections

It is a good idea to do building, pest and swimming pool inspections before you start negotiations so you know exactly what condition the property is in. You will then be able to factor in any future costs when you make your offer.

If you plan to undertake these property inspections after you have made your offer, make sure that any contract you sign includes terms that will allow you to cancel the contract if the property receives any unsatisfactory inspection reports. Visit www.fairtrading.qld.gov.au for tips on getting a property inspection.

It is also important that you personally inspect the property a couple of days prior to settlement to make sure it is in the same condition it was when you signed the contract. In particular, check any items that you had specifically included in your contract. Ask your solicitor whether all other conditions of the contract have been met before settlement.

Buy the homePay the deposit

When you find a property you like, you can make an offer to buy it. To formalise your offer, a contract of sale is drawn up for you to sign. The contract sets out the price you are offering for the property, details of when you will pay your deposit and details of settlement. This document only becomes a binding contract of sale once it is signed by both yourself and the seller.

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If the seller accepts your offer, they will sign the contract. If you haven’t already done so, you must then pay your deposit, according to the conditions set out in the contract (normallywithintwotothreedays).Youhavesecuredtheproperty once both you and the seller have signed the contract. Both parties must honour the contract.

In some cases you may be asked to pay a part deposit when you make your offer. Paying this deposit does not mean the property is yours. The property will only be taken off the market when both parties sign the contract. If your offer is not accepted, your deposit must be fully refunded.

Cooling-off period

Standard sales contracts for residential property have acooling-offperiodoffivebusinessdays.Thismeansif you’re not totally happy, you can cancel the contract withinthecooling-offperiod.However,residentialauctionsalescontractshavenocooling-offperiod.

Forstandardsalescontracts,thefive-daycoolingoffperiod starts the day you or your representative receive a copy of the contract signed by both you and the seller, providing that day is a business day. If that day is not a businessday(i.e.Sundayorapublicholiday)thenthecooling-offperiodwillcommenceonthenextbusinessday.Thecooling-offperiodendsat5.00pmonthefinaldayofthecooling-offperiod.

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Ifyouwanttocancelthecontractduringthecooling-offperiod, you must give notice to the seller or seller’s agent and deliver it before 5.00 pm on the final day. The seller must refund the deposit within 14 days of termination of the contract but may deduct a termination penalty of up to 0.25 per cent of the purchase price.

Home and contents insurance

Talk to your agent and solicitor to find out exactly when you are responsible for the insurance of the property. Generally, the purchaser will become responsible for the property from 5 pm on the first business day after the contract is signed by both parties. It’s strongly recommended you consider taking out insurance to cover the property from this date. You should also consider taking out contents insurance.

If you have a mortgage, your lender will expect you to have home/building insurance and have its interest noted on the insurance policy. This is important even if you have paid off your home because it covers damage or loss to the building and its fixtures. If you buy into a community titles scheme, the body corporate will generally have to take out insurance to cover common property but you are responsible for insuring your own property and contents.

Settlement day

On settlement day, the balance of the purchase price is paid to the seller in exchange for the title of the property.

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You then get the keys and take possession of the property, unless you have made other arrangements.

A settlement date is agreed upon in the contract and is usually between 30 to 90 days after the contract is signed.

The final payment is finalised by the legal and financial representatives of both parties. All other amounts, such as council rates, are adjusted between you and the seller. The seller must pay the rates up to and including the day of settlement. Your final payment for the property is paid to the seller’s conveyancing firm and placed in a trust account. You should receive a trust account receipt for this.

Register your land

Once the sale is finalised, check that the details lodged with the land registry at the Department of Natural Resources and Mines are correct. You can do this via their website at www.qld.gov.au

You can ask for a Registration Confirmation Statement from the land registry or from your solicitor. The statement confirms your title has been formally recorded in the land registry.

For peace of mind after settlement, you can carry out a title search to confirm the details held in the land registry.

The search will show details of any mortgage, easement, caveat or other interest registered against your property title.

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Repay your mortgageVisit www.fairtrading.qld.gov.au for some practical tips on:• minimisingtheoverallcostofyourloan• refinancingyourloan• gettinghelp.

Checklist

To buy a home, you need to:prepare a budgetsave a depositresearch the marketunderstand the costsappoint a solicitorappoint a real estate agentget financefind a homemake an offerbuy the homerepay your mortgage.

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Selling a homeAppoint a real estate agentWhen you sell your property, you may want to use an agent. An agent can advise you on the best price for your property, locate prospective buyers and facilitate the sale.

A real estate agent cannot act for a client until appointed in writing by the client. To appoint an agent, the agent will ask you to sign a PAMD Form 22a—Appointment ofrealestateagent(salesandpurchase).Thisformisavailable at www.fairtrading.qld.gov.au and details your arrangement with the real estate agent.

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It includes details of how much the agent will charge for their services and what costs they may incur on your behalf (forexample,advertising).Makesureyouchecktheformthoroughly before signing it to ensure you are happy with the arrangement. Visit www.fairtrading.qld.gov.au to learn more about agent appointment types and commissions.

Real estate agents must be licensed to work in Queensland. They must display their licence prominently in their office. Real estate agents must follow a strict code of conduct and have a complaint handling process to resolve disputes.

Appoint a solicitorIt is strongly recommended that you get independent legal advice when selling property.

Solicitors must carry professional indemnity insurance, which protects you if something goes wrong because of action that a solicitor takes or does not take.

When choosing a solicitor, shop around and compare different solicitors’ experience, services and costs. Choose a legal firm recommended for its conveyancing skills. Ensure your solicitor is independent of any other party you are dealing with in the property transaction. Before you appoint your solicitor, ask for a detailed quote for the work you want done. Some conveyancing solicitors may provide a set price.

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You can ask your solicitor to:• draftthecontractofsaletoensureitcontains

conditions of sale that are appropriate to your needs • checkthecontractofsalebeforeyousign.

Visit the Queensland Law Society website at www.qls.com.au for a list of solicitors in your area.

Sell privatelyIf you wish to sell your own home yourself rather than engage a licensed real estate agent, do some homework so you understand what is involved. You still have to meet certain legal requirements when you market your property to potential buyers.

It is strongly recommended that you use a solicitor to prepare the contract of sale for your property.

You must attach PAMD Form 30c— Warning statement to the contract. This form is available at www.fairtrading.qld.gov.au

The buyer must read and sign it before they enter into the contract.

Youmustalsoprovideafive-daycooling-offperiod.Consider getting an independent valuation to set a realistic price. Also research the market by visiting open houses and checking the recent sale prices for similar properties. Remember to get a building and pest

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inspection report so that you can carry out any necessary repairs before the sale.

Selling methodsThere are several common ways to buy and sell real estate. Your agent will recommend a selling method based on the property’s type and location, the nature of the market and how quickly you need the property sold. Ensure you understand all the pros and cons before deciding on a method of sale.

Private sale treaty

The most common method is where the seller advertises the property and invites offers from prospective buyers. The buyer and seller negotiate the sale, usually with the assistance of an agent. The sale is concluded with a written contract.

Public auction

An auction is a public sale conducted at a specific date, time and place. Prospective buyers bid and the property is sold to the highest bidder.

Sale by tender

A sale by tender invites competitive tenders from potential buyers where all the offers are considered at a specified time.

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CostsYour agent is entitled to be reimbursed for expenses they incur on your behalf while selling your property. Discuss and agree on expenses in advance. Your agent can ask for payment from you only if you had authorised them to incur the costs. Get a detailed statement of all expenses.

If you give money to an agent in advance for advertising or marketing, they must place it in their trust account. Do not give an agent, auctioneer or developer money for advertising or marketing until they show you a marketing plan with a schedule of how and when they will spend the money. An agent is fully accountable for how they use your money.

Contract of saleWhile your property is listed for sale, ask your agent for frequent written activity reports that show who has inspected the property, buyer feedback and general market updates. Instruct your agent to inform you both verbally and in writing of all offers.

Accepting an offer

When the buyer signs a sales contract, do not accept it unless:• youhavereadandunderstoodallitstermsand

conditions

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• thebuyerhasproperlysignedit• youacceptallthetermsandconditionsoftheoffer• youcanfullycomplywithallitsrequirements• youhavemadetheappropriateconditioninthe

contract to pass any covenants or agreements onto the buyer

• theaddressanddescriptionofthepropertyarecorrect

• thedepositpaymentdateisstatedinthecontractandis within a few days of the contract being finalised. This deposit is generally paid into the real estate agent’s trust account

• askyouragenttotellyouimmediatelyiftheydonotreceive the deposit.

When a buyer makes an offer you can:• accepttheofferbysigningthecontract• rejecttheofferbynotsigningthecontract• respondwithacounteroffer.

Counter offers

Be aware that it is common in Queensland to conduct negotiations on the sales contract. You make a counter offer by altering and signing the contract to suit your terms of sale. If the buyer accepts the counter offer by initialling the changes, the contract becomes binding.

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If either party alters a contract of sale in any way, ensure all parties to the contract initial the changes. Failure to do so may void your contract.

Settlement dayOn settlement day you receive the balance of the purchase price in exchange for the title of the property. The buyer takes the keys and possession of the property, unless you have made other arrangements. Settlement usually takes place 30 to 90 days after you both sign the contract, but you can negotiate this period.

The legal and financial representatives of both parties organise the final payment. All other amounts, such as council rates, are adjusted between you and the buyer. You must pay the rates up to and including the day of settlement.

You must leave the house vacant and clean. Buyers will conductapre-settlementinspectionoftheproperty.Ifthey are unhappy with the property’s condition, they can seek legal advice about delaying settlement until you can fix the problem. Usually your agent will deduct their commission from the deposit and forward the balance to you after settlement.

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Claims for financial lossProblems with your agentIf you have a problem with a property sale or an agent, first try to resolve the problem with them directly. Real estate agents must comply with a strict code of conduct and have a complaint handling process to resolve disputes.

The agent can respond in two ways to a complaint:

• rejectthecomplaint(inpartorwholly)withinsevendays and give reasons for the rejection

• acceptthecomplaintandagreetofixthesituationormake restitution.

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If you are not happy with the agent’s response, visit www.fairtrading.qld.gov.au to explore your options. You can also make a complaint to the appropriate industry body and access dispute resolution services through the DepartmentofJusticeandAttorney-General.Youcanfindalist of industry associations at www.fairtrading.qld.gov.au. Visit www.justice.qld.gov.au to learn more about dispute resolution.

Making a claim for compensation

If you suffered a financial loss because of certain actions or inactions of a real estate agent, auctioneer, resident letting agent, pastoral house or their employees, you may make a claim against the Claim Fund, established under the Property Agents and Motor Dealers Act 2000.

Claims are grouped into one of three categories:• claimsfor$10000orless• claimsforover$10000• claimsrelatingtopropertymarketeering.

The claims process is different for each category.

Visit www.fairtrading.qld.gov.au to learn more about making a claim against the Claim Fund.

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Interpreting and relay servicesFor the national relay service for sight and hearing impaired phone 13 36 77. For interpreting services phone 13 14 50.

Arabic

13 14 50.BosnianZa prevodilacke usluge nazovite 13 14 50.DinkaK 13 14 50.GermanDolmetscherdienst unter Nummer 13 14 50 erreichbar.GreekΓια υπηρεσίες διερμηνείας τηλεφωνήστε στο 13 14 50. 13 14 50.Hindi

दभुाषीय से�ा� के िलए फोन कर� 13 14 50. 13 14 50.ItalianPer avere un interprete chiamare il 13 14 50.Japanese

13 14 50 .Korean

13 14 50 .SamoanMo auaunaga a faamatala’upu telefoni le 13 14 50.Simplified Chinese 13 14 50.Traditional Chinese 13 14 50.SpanishPara servicios de interpretacion llame al 13 14 50. VietnameseMuốn sử dụng Dịch vụ Thông Ngôn điện thoại số 13 14 50. 13 14 50.

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This smart guide contains essential information about buying and selling real estate in Queensland. You can find more information at www.fairtrading.qld.gov.au

There are other fair trading smart guides too:

• Buysmart A pocket guide to buying products and services in Queensland

• Carsmart A pocket guide to buying and owning a car in Queensland.

Office of Fair Trading www.fairtrading.qld.gov.au Phone: 13 QGOV(137468) Email: BrisbaneOFT@deedi.qld.gov.au

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