Identify the legal and ethical requirements

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CPPDSM4008A
Identify the legal and ethical requirements of
Property Sales to complete agency work
MRT Training Pty Ltd
RTO Registration Number 21687
CPPDSM4008A – Identify the legal and ethical requirements of Property Sales to complete
agency work
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CPPDSM4008A – Identify the legal and ethical requirements of Property Sales to complete
agency work
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CPPDSM4008A – Identify the legal and ethical
requirements of Property Sales to complete agency work
This unit of competency specifies the outcomes required to meet the core legal and
ethical requirements associated with property sales.
This includes awareness of the legislation relating to property sales, the role and
responsibility of agency personnel in property sales, the administration of sales
transactions and the completion of sales documentation.
The unit may form part of the licensing requirements for persons engaged in real
estate activities in those states and territories where these are regulated activities.
This Unit of Competence (CPPDSM4008A) is one of the core units in the CPP40307
– Certificate IV in Property Services (Real Estate) qualification and an elective unit
in the CPP30207 – Certificate III in Property Services (Agency) qualification. These
participant notes also provide underpinning knowledge for other units in these
qualifications.
Assessment
Assessment for this unit includes tasks to be marked by your assessor, which may
include multiple choice questions, short answer questions, case studies, projects,
role-plays and / or demonstrations.
Assessment activities for this unit are provided in a separate assessment document,
which has been customised to meet the legislative requirements in your state or
territory.
You may apply for assessment through MRT’s recognition process whereby you
demonstrate your current competence through prior learning (RPL) by compiling a
portfolio of evidence to demonstrate your skills and knowledge. Your RPL will be
supported by interview questions and / or third party reports to confirm your skills
and abilities.
Competence in this unit will be demonstrated when you are able to show that you
can meet the Elements and Performance criteria, shown on the following page.
These have been extracted from the full Unit Descriptor which is available upon
request.
Tutorial Assistance
Should you require help, assistance or tutorial support at any time during your
study, a course facilitator is available to assist you. To request support send
an email to tony@myrealestatetraining.com.au with a brief outline of your
query.
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Introduction – The Business of Real Estate
Within the property industry the term “real estate” generally relates to the sale,
management and leasing of land and property.
The real estate sector is made up of many small businesses, which are often a part
of a Franchise group or a Marketing network. The best known franchise groups
include Ray White, LJ Hooker, Century 21 and Raine and Horne (amongst others)
whilst the Professionals and First National offices belong to marketing networks.
The vast majority of real estate businesses derive the vast majority of their income
from residential sales and property management. The commercial and industrial real
estate markets, as well as strata management, are specialist areas generally
serviced by fewer agents.
Real estate agencies vary considerably in size, from small husband and wife
partnerships who may service a small local area up to large international businesses,
with many specialist departments catering for all real estate functions and services,
as well as offering other business services associated with real estate (eg specialist
accountancy / removals / conveyancing etc).
This unit applies to urban real estate – which is town or city real estate, however,
many of the concepts and principles carry over into other specialist areas.
Generally urban agencies have one licensee (principal or owner), a property
management department, a sales team, administrative staff and a receptionist.
The sales department creates substantial revenue for real estate agencies. However
income from the sales department can fluctuate between highs and lows. On the
other hand, the income from the property management department is more stable
and tends to be more regular without extreme peaks and troughs.
In order to provide a stable income base with potential for growth, most agencies will
have both sales and property management departments
Whatever the business type, a fee (or commission) is charged to clients that covers
the cost of paying the salaries and commissions of staff members, the fixed costs of
the business (eg rent, rates and insurances) and the running expenses (overheads)
of the business (marketing, advertising, utility accounts, etc, etc).
Business owners (office principals and directors) have invested in their business and
are seeking a return on their investment, so the total income needs to be sufficient
to run the business profitably, by covering all fixed costs, salaries and expenses and
leave a net profit.
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Winning Real Estate Business
A real estate sales business is one in which the salespeople need to be proactive
and actively look for new business. Salespeople that wait for business opportunities
to walk through the door will find their business short lived.
“Prospect or Perish” is a motto that a good business should live by. Finding, nurturing
and building a strong, active “leads” database is critical to success.
The most effective way of building business is referrals from satisfied clients and
customers. Word of mouth is very important in a ‘people-focused industry’ like Real
Estate. If someone knows and respects the skills of the agent and / or agency
business, this is an important recommendation that can be used to great effect.
Reputation plays a significant role in this process.
In the competitive world of real estate consumers have been exposed to a variety of
practices by some less than scrupulous agents over the years that have led to a
perception of mistrust and lack of confidence in the provision of services.
Often, current affairs TV programs have been able to draw ratings from their
“exposure” of agents involved in less-than-reputable practices. Therefore, the first
thing that agency employees need to do is to overcome this perception (if it exists)
by establishing rapport and empathy with clients and potential clients.
In the case of referrals, this has been largely done by the person that referred the
business. However, there is still a need to reinforce the perception that led to the
referral. That is good for both the referrer and the referred!
So how does an agent obtain referrals? The old saying goes: “If you don’t ask, you
don’t get!” It is essential to build a client database and ask for referrals from satisfied
clients to continue to build that database.
For new starters in the field of sales, a list of contacts such as family, friends and
acquaintances is a good starting point. A brief note or card, letting them know a new
career is underway and asking them to mention your name if the topic of real estate
comes up in conversation, is a good strategy for “getting your name out there”.
Referrals can also be obtained from a business referral network of professionals who
work in related fields. Agents and Property Managers need to comply with the rules
of disclosure regarding their relationship when referring people to other
professionals.
(Note: There are specific provisions in the Rules of Conduct, Estate Agents Act, on
the disclosure of relationships, which will be discussed later).
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Prospecting in Real Estate
Building a client base is one of the most important functions of a Real Estate Agent.
This section looks at some of the more productive activities that can be undertaken
by Salespeople to build their database.
Having a database, where the potential clients have given you permission to
maintain contact is going to be a vitally important consideration for the future.
Already, consumers complain about “cold calling” activities such as telephone
canvassing and door knocking. There is little doubt that future legislation will further
restrict activities such as these, making it harder for agent to be able to add contacts
to their databases.
However, whilst these opportunities still exist, canvassing and the development of a
database should be considered the agents “savings account”. Every contact on the
database represents a future business opportunity.
Door to Door Canvassing
Typically, real estate sales agents are allocated a dedicated marketing or “farm”
area. The number of properties in your farm will vary according to the area, the type
of properties and the characteristics of the property owners.
“Door knocking” in your marketing area is a great way to meet homeowners and
introduce yourself to them.
Door knocking is often known as “cold calling”. You will be knocking on home owner’s
doors and introducing yourself and the services of your agency. Whilst you are
unlikely to list property this way, you will increase their awareness of you and your
agency.
One thing to remember about door knocking is that you should not be asking for
business – it is better to give something to people. Some ideas include calendars,
fridge magnets, children’s colouring books if they have kids, but what ever you leave,
make sure it features your name and your agency’s name and logo, so that the
people you speak to will have something to remember you by.
That way, next time you call on them, it will be a ‘warmer’ call because the people
you are door knocking may already know you.It is important to set aside time each
week for this activity (in sales, some new entrants will devote an hour or more a day
to doorknocking).
You will need to consider what time of day you call. It should be when people are
most likely to be at home, which could well be outside normal working hours.
Organising yourself, and being prepared to face rejection are two important qualities
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– there are many homeowners who will simply not want to speak to you – persistence
is important.
You never know who might be thinking of selling or leasing their home, but when you
bear in mind that about 5 – 8% of all property comes onto the market each year, the
chance is that out of every 100 door-knocks made there are likely to be at least 5
that are thinking of either buying or selling property in the next six months or so!
One of the better “reasons” to doorknock (or letterbox drop – see below) is to let local
residents know about property (for sale or lease) that has just come onto the market,
or has just sold or been leased.
Letterbox drops
People receive many offers through their letterbox so the material needs to spark
interest or it will quickly be consigned to the rubbish bin.
Letter box drops may consist of newsletters, brochures, invitations to seminars in
your office, personal introductions, almost anything at all. The idea is, like the doorto-door canvassing, to let people know you are around and are able to help them in
property matters.
If you are putting fliers and letters in residents’ letter boxes, make them something
worthwhile – something that people will want to look at and that help you to establish
your image locally. You need to make sure that whatever message you give is
interesting and eye-catching.
Have an organised system in place when letterbox dropping – don’t just throw
random material into random streets – and make sure that you have a system in
place to follow up afterwards. Use your marketing or farm area and plan to carry out
your letter box drop throughout your area on a regular basis – not just as a one-off
activity.
Take note and do not place material in any letterbox if the box is marked “No
unsolicited advertising material” or similar. Remember the idea is to create business
not to antagonise people so that they will avoid your services.
Advertising
Another well used area that must be carefully planned and spark interest to succeed.
Publicising your success works well. However, advertising is expensive and
deserves careful planning and preparation to be fully effective.
Sometimes agencies include “properties wanted” in their advertisements in the local
papers. This is an attempt to generate interest from prospective vendors. If you are
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doing this, make sure you do have genuine interest from purchasers in the type of
property you are targeting.
If you use newspaper advertising make sure you vary the copy each week and don’t
just use the same advertisements.
Another idea, which you have probably seen is the weekly real estate papers, is to
write a general interest column about real estate. You can get professional
journalists or copy writers to prepare this for you if you want. The purpose of this is
to raise the profile of your agency in the community.
Signboards
Obviously, the more “For Sale” signs you have in an area the better – “Sold By”
stickers on signs are better yet! If you are the most active agency in your area, the
chances are people will come to your agency for an appraisal or listing presentation.
A sign on a new listing in conjunction with letterbox drops and/or door knocking
neighbouring properties gives you an excellent profile and coverage.
A sign is a 24 hour salesperson – day and night, rain, hail or shine. The letterbox
drops and door knocking process can be repeated to invite people to open houses
and notify of your success when the property is sold.
Signboards do not only advertise your skills and success, but can also draw inquiry
from people about the price of the property if they are thinking of selling or leasing
themselves.
Open Homes
One of the better ways to obtain listings is the open for inspection. There are several
advantages, as potential purchasers or tenants are also potential vendors or
landlords.
The open house gives potential clients the opportunity to watch the agent “in action”,
and the visitor list increases the database and therefore more opportunities to make
contact with more people.
All visitors to open homes should be followed up to gauge their interest in the
property and establish their motivation for visiting the Open Home.
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Private Sales / Private Leases
Sometimes vendors try to sell or lease their properties without using an agent and
they are quite entitled to do this. The owners obviously want to achieve a real estate
goal, or they would not be trying to do so themselves.
People want to conduct their own transaction for a variety of reasons. They may
believe they can save money by not paying a fee to an agency, or think they can do
a better job. Sometimes they have had a bad experience with an estate agent in the
past.
Your approach is important, but don’t try to hide the fact you are an agent. If you ask
directly for the listing you will probably not get it. Offer to help them to sell or lease
privately by helping them create a catchy advertisement, or advise them of some of
the benefits of using a professional agent.
If you offer to help them, stay in touch and provide some assistance, they may well
give you the opportunity to do business with them if (or when) they don’t succeed
themselves. The greater proportion of land and property that is transacted is done
so with the use of an agent, so the odds are with you.
The Rent Roll
The rent roll itself is an underutilised resource for building the property management
department. Many landlords would welcome the opportunity to build their investment
portfolio. In order to help them achieve this good communication between the sales
and property management departments is essential – suitable rental properties
should be actively marketed to existing landlords and they should also be kept up to
date with current market information, such as re-appraisals of their current properties
that will encourage them to grow their personal portfolio.
We mentioned earlier that 5 – 8% of all property comes onto the market each year.
If an agency has 200 properties on the rent roll, it is likely that 10 – 20 of these may
come onto the market each year. If a lessor is selling it is better that they sell with
your company than with another agency.
If any of the agency’s landlords are considering selling, an annual review of the
potential value of their property may just prompt them to remind them to list with you
and / or your agency.
Telemarketing
Many agents undertake telemarketing within their marketing area. This works best
with practiced scripts and some agents leave this to the experts and employ
experienced telemarketing people to do this on their behalf.
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Office Walk-ins or Phone-ins
Sometimes you can obtain listings simply by people walking into your office and
asking you to sell their property. Don’t rely on these as you will invariably work with
other salespeople who will share in this form of prospecting. In many offices these
enquiries are shared on a rotational basis.
“Orphans”
An “orphan” is a term for those people (eg. customers, former clients or potential
clients) that have had a previous contact with the agency, but the relationship is
inactive.
Orphans could comprise:
1. Listing clients where the agency expired or the client withdrew their property. Reestablishing a relationship will take a concerted effort on your part as the people
are usually disappointed by their previous lack of success.
2. Potential buyers or tenants that showed an interest some time ago and who may
not been followed up for a long while. They represent another opportunity to “ask
the question”.
3. These could be clients that have previously had properties managed by your
agency, but currently no longer use your services. There could be many reasons
for this, but a friendly ‘keep in touch’ letter or phone call will remind them of you
and your agency.
4. Lost listings – where you have been called in to appraise a property for sale or
lease, but have not won the business on the first attempt. A follow up call a few
months after the appraisal to ‘see how they are going’ represents another
opportunity to “ask the question”.
Builders, Developers and Tradespeople
These are a great source of listings if they are active in your area. You should add
local builders, developers and tradespeople to your database and keep them
informed with local market information. They will also depend upon you for expertise
in marketing properties. Therefore, make sure that any information you give them is
up to date and useful to them.
Quite often, builders and developers may well retain one or two properties they have
built in a development in order to grow their personal property portfolio. Again the
old adage applies: “If you don’t ask, you don’t get!”
Conjunction Listings with Other Agents
Often agencies are reluctant to share a listing they are sure will sell. However, often
if agents are having difficulty selling a home they may be prepared to work in
conjunction with another agent to achieve a result for their client. It can do no harm
to ask, but don’t expect great results.
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There are many avenues to prospect for listings but the key is to build yourself a
profile in your market place. Everyone needs to recognise you. Advertising and
marketing material with your photo on it is a good way to achieve this. A profile will
build business quicker than experience.
Experienced salespeople who are not recognised may lose business to new and
enthusiastic ones who have spread their image far and wide in their marketing area.
In addition to prospecting undertaken by individual agents, many real estate
organisations promote their businesses in a variety of ways, in order to raise public
awareness of the agency, groups of offices or the organisation as a whole.
These may be local, regional or national and might include:
 Internet websites
 Displays and Exhibitions
 Phone books (White and Yellow
Pages)
 TV or radio advertising
 Periodicals and magazines
 Vehicle signage
 Sponsorships
 Corporate apparel
 Charities affiliations and auctions
 Community involvement
Think about
The various ways you could increase a ‘market awareness’ of your entry to the
real estate sector in your area.
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Appraising Property
If the salespersons prospecting activity is successful salespeople will be able to gain
appointments with homeowners to appraise their property.
An appraisal represents an opportunity for the agent to:


Build a relationship with the prospective client and
Demonstrate their skills and knowledge
Property owners request appraisals for many reasons – many are thinking of selling,
and are comparing different agents before making a choice as to who they will
appoint to sell their property.
On the other hand, the property owner may be thinking of extending, rebuilding,
renovating or just wanting to keep abreast of the marketplace. Whatever the reason,
preparation is the key to making the right impression and being able to meet the
owners needs for information.
Whatever the reason, preparation is the key to making the right impression and being
able to meet the owners’ needs for information.
Appraising a property (determining a current estimate of likely selling price)
requires skill and research on behalf of the real estate salesperson.
In order to determine an estimate of price in any market, extensive research and
knowledge of the target market is required
Homeowners expect agents to be able to demonstrate their local knowledge at an
appraisal. Having up to date information about recent sales, as well as extensive
knowledge about the facilities and services available in the local area, is vital. So
isthe ability to be able to identify the target market and the benefits and features that
prospective clients look for in particular properties.
Most real estate agencies have access to databases of recent property sales such
as Australian Property Monitors (APM), RP Data and Residex (probably the main
providers of such information). Council web-sites also provide data on average
prices for land and property within their local government area
Driving round the area, monitoring properties for sale and properties that have been
sold can provide agents with substantial local knowledge. Potential vendors may
already have this knowledge themselves – they will already have compared their
property to others that are for sale or have recently sold. A successful agent must
be more knowledgeable than their potential client.
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Other methods of gaining local knowledge include: Checking old office files and
databases – the property may have been appraised or even sold by the office
previously.
Agents can be liable for damages in a court of law for failing to exercise reasonable
skill, care or diligence when appraising property. It is important to remember that
agents need to be able to justify their appraisal to the Office of Fair Trading, should
a particular appraisal be challenged. (EAS s47 – Requirement to substantiate selling
price estimates). The price that is estimated at the appraisal should, be within 10%
of the expected sale price; any greater variance is likely to be considered misleading
and / or negligence by the agent.
The practice of over quoting to vendors to win a listing is also outlawed under the
EAA (s.47B – False representation to seller or prospective seller).
Many agents think that providing a higher selling estimate to the vendor of a property
will help them secure the listing. It may, but the chances of selling the property at an
inflated figure will be minimised.
The net result is more likely to be that the property takes longer to sell, and sells at
a price close to or even below the true estimate of value at the time of appraisal, due
to the fact that it has “gone stale” on the market.
The worst outcome is that the salesperson loses the listing to a competing agent
(who correctly estimated the selling price at the appraisal) and therefore loses out
on achieving a sale, the potential rewards available, as well as the time and effort
taken to achieve a negative result.
Consumer Affairs Victoria has numerous guides on line
including Property sales method and price
Comparative Market Analysis
The most common method of appraising residential property is by conducting a
“Comparative Market Analysis” (CMA) – some agents refer to this as a “Competitive
Market Analysis”. This is usually sufficient for a typical house, similar to others in a
neighbourhood or suburb.
A CMA involves researching property that has recently been sold or leased that
compares with the subject property.
The estimated value of the property is then determined by examining the results of
sales of comparable properties in the locality, as well as those properties that are
currently available for sale or lease and that are likely competition for the subject
property in the current market.
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The following elements should form the basis of the comparison:
1. Size of the property and living areas,
2. The number of bedrooms, bathrooms and toilets etc.
3. The land size (especially in inner urban areas).
4. Outdoor living space and the extent of ‘usable land and garden / yard
5. Entertainment areas.
6. Location of the property (in relation to schools, public transport and shops)
7. Outward appearance, design & standard of construction and finish.
8. Age of the building.
In some cases, however, it will be necessary to use more than one method of
appraisal, and these are typically used where, for instance, there are no direct
comparisons; for instance, the house or land may be totally unique in some way, or
there are other special circumstances, such as vacant land, subdivision, commercial
or semi-commercial properties.
Other methods of appraising property include:
Summation
This method entails adding the value of the various parts of the property such as
land, buildings and improvements such as landscaping, swimming pools, inclusions
etc., to calculate a monetary figure. You would also take into account any extra
improvements to the property, such as landscaping and fences.
Capitalisation
This method is commonly used with commercial property and is based on the net
income a property can generate.
The net income is the income received after all property expenses and outgoings
are deducted from the rent received. Therefore, the net rental income equals gross
rental less all expenses.
The capitalisation rate will depend upon a number of factors such as the property’s
location, lease term, lessee, and type of construction, economic conditions and many
other factors. This figure is again determined from historical comparative analysis.
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Hypothetical Development Method
In the case of projects and property development a “what if” or hypothetical method
may be used which incorporates factors such as:



Gross expected sales income (again based on comparable sales)
Costs of selling the project or development
Profit margin with a percentage included for any risks attached to the
project such as wet weather, labour strikes or delays and market
fluctuations etc.
Cost of the development including any holding charges, interest on
borrowings and contingencies as mentioned in profit margin risks.

Until you have gained the essential local market knowledge, guidance and advice
should be sought from experienced agents when appraising a property, especially if
it is ‘non-standard’ in some way.
The policies and procedures used in the agency in which you are to operate must
be clearly understood. It is important, as well as a help in learning more about the
area, to draw on the experience of others before you attempt to undertake this
function without supervision.
Professional real estate agents would have pre-prepared “Listing Kit” to give to the
property owners at the appraisal.
Most real estate agencies have developed their own listing kits. The kit is a
presentation document or folder that you will leave with your prospective client, and
should therefore reflect the professionalism of both you and your agency.
The listing kit should contain information about the agency and the services offered
by the agency and a sample agency agreement. It may also include details of
comparable properties & sample marketing schedules.
A high quality listing kit, that incorporates visual aids, will help you sell your services
and the services of your company to the property owner at the appraisal.
Naturally, you cannot sell your services unless you understand the owners’ precise
needs, expectations and motivation. Therefore, your communication skills
(questioning, listening, analysing and presenting) must be finely tuned.
When undertaking the appraisal, you should ensure that you collect all relevant
details as a record of your visit, information about the owners and the property.
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The details you collect will be used for maintaining your property database, to
prepare advertising and to advise prospective customers once the property is listed.
It should include at least the following information:




Owners details and property address
Vendors’ Solicitors’ details
Type of property, together with detailed features including room sizes
Inclusions (chattels) in the property that the owner is leaving in the
property
Exclusions (chattels) in the property that the owner is taking from the
property
Access arrangements
Clients expectations in respect of the property
Agent’s estimate of the selling or letting price.




Very often, a clients expectation of a property’s value may well differ from the agents
estimate, and their figure may or may not be realistic in the market at that moment.
Once again, the agents’ communication skills will be one of their essential tools.
Further information in conducting appraisals (both sales and property management) are
covered in the Unit of Competence: CPPDSM4003A – Appraise Property.
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Listing Property
The listing of property is the “product” or “stock” that the agency has to offer
customers. Unless the agency has a portfolio of listings there will be nothing to offer
for sale. Nor will there be any properties to be marketed, further diminishing the
profile of the agency.
Without listings, a salesperson will have nothing to sell, other than colleagues
listings. Relying on your peers listings is unwise – not only will you only benefit from
the “selling” proportion of the fee; they may well begin to resent your taking “their”
business. Many agencies have internal rules that govern the circumstances under
which salespeople can sell others’ listings.
Agency managers and principals therefore place a lot of emphasis on prospecting
and lead generation activities to secure listings.
Prospecting generates Appraisals – Appraisals generate Listings
An agent cannot list a property for sale without first having undertaken a physical
inspection of the property prior to entering into the agency agreement. The contract
would be considered unenforceable if the property had not been inspected prior to
the clients’ signature.
As you will see in the section entitled “Provision of Information to Buyers”, agents
can be liable for any misstatements made about the property, or any false
information provided to buyers of the property.
It is important, therefore that you collect as much information as possible about the
property at the listing meeting. Vendors have an obligation to reveal to the agent all
material facts that may affect the property, and as an agent you are obliged to
disclose these to potential buyers.
One aspect of listing property that is important is that as the agent you have to be
sure that all owners have agreed to list the property for sale.
Therefore, before accepting the listing you must verify ownership, and all joint
owners must be party to the agency agreement. This would be a part of your due
diligence, to ensure that you represent all owners and all have agreed to the sale.
In addition, you should be sure that you are not mis-describing the property. There
are many properties that are being used incorrectly – property zoned non residential
being used as a home, properties without building compliance certificates etc etc.
Whilst you might think that these are matters for the buyers solicitors to sort out once
a purchase has been agreed, you do not want to find yourself investigated as a result
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of a mis-description, simply because you did not establish the facts before accepting
instructions.
The agency agreement is a legally binding contract between the client and the
agency, which creates rights and obligations upon both parties.
Listing property is fully covered in the Unit of Competence: CPPDSM4012A – List
Property for Sale.
Agency Agreements
The agency agreement is a legally binding contract between the vendor and the
agent, which creates rights and obligations upon both parties.
By signing an agency agreement, clients are effectively handing over some of their
control and freedom to the agent – the freedom to sell, lease or manage their
property themselves. The different agency agreements represent varying loss of
freedom for the client.
The EAA creates a strict set of rules regarding the information which must be
included in agency agreements, specifies many terms that must be included and
procedures that must be followed.
Non-compliance with any of the requirements will render the agency agreement null
and void and the likelihood that the agency will be unable to legally claim a fee,
commission or expenses in the event of a sale under defective agreement, as well
as make the agent and agency liable to penalties such as fines and / or loss of
license for non-compliance.
In all cases a physical inspection of the land or property must be undertaken and an
agent cannot act on behalf of a principal (client) unless the agent has done so.
An agency should have a written authority to sell a property before it is offered for
sale. The agent loses any entitlement to the fee as well as any other incurred
expenses without an agreement.
This section states that an agency agreement must be:



In writing,
Signed by, or on behalf of, the person
Signed by the licensee (or their nominated person, i.e. The salesperson)
and
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Generally, where an agreement is signed and all parties are present, a copy is
immediately given to (served on) the client. However, where remote transactions
occur (eg an overseas vendor) the agent MUST send the client (by mail or fax) a
fully signed copy of the agreement. Section 53 of the Estate Agents Act states Copy
of contract etc. to be delivered to person signing
In Victoria the forms to be used are not prescribed, but they must contain certain
information as stipulated in the Estate Agents Act:
Entitlement to commission
An agent cannot claim or sue for commission or expenses for a property or business
transaction unless they:

have a written authority that includes all of the information and statements required
by the Estate Agents Act 1980
give the client a copy of the signed authority
inform the client that the commission and expenses are negotiable, before they sign
an authority.


An authority to buy, sell, lease or manage is the document that is given to a client
(seller, landlord or other person) to appoint an agency to act on their behalf.
An agent may:



draft their own authority
engage a legal practitioner to draft an authority for them
use a standard form authority available from the Real Estate Institute of Victoria
(REIV), if they are a member
purchase an authority from a commercial publisher.

Contents of an agency authority
An agent must include the following information and statements in all authorities:


details of the commission and expenses agreed with a client
the agreed commission and expenses stated as a dollar amount or a percentage (if
a percentage is stated, an example of the dollar amount it represents must also be
given)
a statement, using the wording approved by Consumer Affairs Victoria, advising
where a complaint about commission or expenses can be made
a rebate statement using the wording approved by Consumer Affairs Victoria.


An agent who uses an authority that does not include this information risks losing
the commission and being fined.
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Additional information must be included in particular authorities:

an authority to sell must state the agent’s estimate of the selling price, in the wording
approved by Consumer Affairs Victoria. This price can be a single figure or a range
of up to 10 per cent.
a sole or exclusive authority must have a statement advising that, unless otherwise
agreed, the authority ends:
30 days after the date of an auction, or

o
o 60 days after the date an authority is signed for a private sale.
Download a copy of the Director approved form for use in agency authority –
estimated selling price (PDF, 31KB).
Download a copy of the Director approved form for use in agency authority – making
a complaint concerning commissions and/or outgoings (PDF, 22KB).
Rebates
An estate agent or agent’s representative must complete the rebate statement in an
authority, to indicate whether or not they will receive any rebates or discounts. These
might be received for advertising, maintenance or other expenses paid on behalf of
or by a client.
Consumer Affairs Victoria provides two approved rebate statements. Choose the
statement that suits your agency’s practices, based on whether you receive rebates
or not.
It is illegal for an agent to keep a rebate, either monetary or non-monetary. It must
immediately be paid to the client except if in anticipation you have already paid the
amount or reduced the expenses charged.
If an agent receives a non-monetary rebate, the equivalent dollar amount must be
paid to the client.
When calculating a client’s expenses, any rebates the agent receives or expects to
receive should be factored in. If the exact expense is not known, it should be
estimated. If the actual expense is less than the estimate, the difference must
immediately be paid to the client.
A client may recover any rebate they are entitled to but have not received.
An agent who illegally keeps a rebate is liable for a fine of up to 60 penalty units. If
this occurs on three separate occasions over 12 months, the fine is up to 240 penalty
units. For more information, view our penalties page.
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Download a copy of the Director approved form for use in agency authority – rebate
statement (PDF, 40KB).
Download a copy of the Director approved form for use in agency authority – rebate
statement – no rebate will be received (PDF, 26KB).
Commission sharing
If an agent is sharing commission with anyone other than an estate agent or agent’s
representative who works in their agency, they must notify the client before the client
signs an authority.
A commission sharing notice must be in the wording approved by Consumer Affairs
Victoria. It may be a separate document or, for convenience, included in an authority.
Download a copy of the Director approved form for use in agency authority – notice
of commission sharing (PDF, 36KB).
http://www.consumer.vic.gov.au/businesses/licensed-businesses/estateagents/running-your-business/authorities-commissions-and-contracts/authoritiesrebates-and-commission
In practice, all real estate agencies will use pre-printed agency agreements that will
comply with this section of the Act. As a real estate operative it is essential to have
a comprehensive understanding of the agency agreements so that client’s rights and
obligations under the agency agreement can be explained to the seller (vendor) and
the salesperson needs to be able to fully answer their questions.
Types of Sales Agency Agreements
There are several different types of agency agreements.
The most common types of agency agreement are:

General agency agreement

Sole Agency agreement

Exclusive Agency agreement

Auction Agency agreement
Note: An auction forms part of an exclusive agency agreement if this is the method
of sale that is to be used.
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General Agency Agreement
Where land or property is given to more than one agent to sell and only the
successful selling agent is paid a fee. The owner can also sell the property
themselves, without having to pay a fee to any of the agents involved.
This is the least popular agreement with agents as they potentially spend time and
money and may not receive any remuneration in return for their efforts.
Agents have little control over open listings and therefore will generally not spend
advertising dollars on a property the vendor or a competing agent may sell. There is
no guaranteed commission even though the agency may put in a lot of work trying
to sell the property.
However, some agents use open listings as a tool to demonstrate their commitment
to the vendor and later convert the agreement to an exclusive listing.
Sole Agency Agreement
A Sole Agency is when the property is listed with one nominated real estate agent
for a designated period of time. The vendors retain the right to sell the property
themselves, and not pay the agent a fee, if they do so.
Sole agency agreements are generally not widely used either. Many agencies will
not accept sole agency agreements, but some agents use sole listings as a tool to
demonstrate their commitment to the vendor, and later convert the agreement to an
exclusive listing.
Developers often choose sole agencies, as these allow the developer to market and
sell their properties themselves as well as through an agency.
Exclusive Agency Agreement
An Exclusive Agency is when the property is listed with one nominated real estate
agency. The vendors DO NOT retain the right to sell the property themselves.
This listing agreement is for a designated period of time. If the vendors sell privately
during the listing period or subsequently to a buyer introduced to the property during
the listing period, they are still liable to pay the fee to the agent.
Exclusive agency also allows the agent to choose to conjunct with other agents
without the vendor’s permission.
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Auction Agency Agreement
Under an Auction Agency agreement, the property is listed for sale by public auction
with one nominated real estate agency. Typically, the auction is set to take place
between 4 – 6 weeks after the start of the agreement.
In the event that the property does not sell at auction, the agency agreement
continues for a set time as an exclusive agency.
Conjunction Agency Agreements
A Conjunction agency occurs where one of the following applies:
1. Two or more agencies are selected by vendor to jointly handle the sale of
their property. The agencies decide on the commission split between them.
2. An agreement is made where an agent with an exclusive agency
‘subcontracts’ another agent to jointly perform the service for a principal and
share the fee.
Conjunctions are also take the form of Multiple Agencies, where groups of offices
where all offices in the network conjunct with each other under a written internal
agreement.
By law, agencies must have a written conjunction agreement between them.
Occasionally, client may wish to co-list their property. Under this arrangement, the
client lists their property exclusively with 2 or more specified agents, who will have a
commission sharing arrangement between them.
Often, the successful agent may receive, say, an 80% share of the total commission;
the unsuccessful agent receives 20%. Under a co-listing arrangement both agents
receive some reward for the efforts they have made on behalf of the client.
Co-listings are relatively rare – occurring usually in rural areas, where the subject
property is situated between two towns, each of which would be a source of enquiry
and interest for the property.
Listings of these types are normally fall under the banner of exclusive listings, where
the agent(s) have exclusive selling rights for the agency period.
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Agency Fees
The agency agreement you enter into with a seller must specify the fee that you will
charge the vendor for your services, and specify any additional charges that the
vendor will be liable for, such as marketing and advertising.
Typically, agency fees are represented as a flat percentage fee based on the
eventual sale price of the property. e.g. If the fee is expressed as 2.5% and the sales
price achieved is $560,000, the fees payable including GST will be $14,000.
Fees must always be quoted including GST. Therefore, in the above example the
GST component is $1272.72 and the net fee to the office is $12727.28.
Some agents try to build in an incentive fee, and this is permissible as long as it is
fully and unambiguously expressed in the agency agreement. Under the Estate
Agents Act this must be negotiated.
For instance, let’s assume that the agent’s opinion for a property (based on the CMA)
is in the range $550,000 – $580,000. The vendor and agent may agree an incentive
based agency fee: 2.5% if a sale price of up to $565,000 is achieved and
10.0% for every dollar achieved above that.
If this property goes to auction and the bidding takes the sales price up to $588,000,
the agency fee would be calculated as follows:
a. 2.5% on $565,000 = $14,125
b. 10% on $23,000 = $ 2,300
Total Fee $16,425 (incl GST)
Agents Commission
In Victoria, real estate salespeople who hold an Agent’s Representative qualification
& have an Authority to Sell issued by the Officer-In-Effective Control of the agency,
must be paid a salary (payable at least monthly) in accordance with the provisions
of the Real Estate Industry State Award. Current pay rates can be found at this
website:http://www.fwc.gov.au/
Unfortunately, the individual salesperson will not receive the full agency fee earned
on a property sale, but a proportion, based on their commission structure, if there is
one in place. Different offices have different ways of calculating incentive payments,
and salespeople can negotiate different arrangements depending on their skill and
experience.
Generally speaking a proportion (typically 30% – 50%) of the net office commission
(i.e. the commission earned by the office less GST, franchise costs or listing fees) is
credited to the person who lists the property, and a proportion of the net office
commission is credited to the person who sells the property (often these will be the
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same person). The proportions may vary according to the state of the market, or the
type of agency agreement.
An agent is not entitled to, or paid their commission until the sale is completed or
settled, and this can be many months after the property is listed, and usually 6-8
weeks after the contracts for sale are exchanged. The salesperson’s proportion of
the commission is not usually credited to their ‘account’ until the office physically
receives their commission, and is paid to them on the next payday.
There are various models used to calculate individual commissions, but the two main
systems are “Debit / Credit” and “Target”.
Debit / credit: The cost of the salesperson’s wages and allowances is debited to an
internal account, and their share of the office commissions (which could vary
between 30 – 50%) are credited to the account. At the end of each month, if the
account is in credit this amount is paid to the salesperson. If the account is in debit,
the debit balance is carried forward to the beginning of the next month. A debit
balance is never a debt to be repaid to the employer – salaries can never be “clawed
back”.
Target: An agreed target is set for the value of commissions to be earned by the
salesperson each month, quarter or year. Once those targets have been exceeded
a proportion of the excess is paid to the salesperson, often on a sliding scale.
When the Agency Fees can be in Dispute
An agent’s obligation is always to act in the best interest of their client and obtain the
best possible outcome for them. In the sales department, this is usually represented
by achieving the highest price in the shortest possible time on terms and conditions
favourable to the vendor.
Agents may jeopardise their fee if they:






Breach the agency terms and conditions
Breach their fiduciary obligations
Breach any specific instructions
Breach contracted obligations
Have more than one agreement operating
Do not have a correctly completed agreement
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If the client can provide evidence that the agent did not adequately execute their
duties and obligations of good agency practice and legislative compliance, the client
could seek redress against the agent.
The receipt of a secret commission is one of the most common breaches of an
agents’ duty to act in the best interests of their principal.
Secret commissions are gains (whether financial or beneficial) made by an agent to
which they are not entitled. This could be in the form of a gift or consideration made
by a third party (such as a buyer) that may influence the agent from acting in the best
interests of the principal (vendor).
An example could be a buyer offering an agent a financial bonus to enable the buyer
to purchase a property below a certain figure. This would quite clearly be acting
against the interests of the client.
Occasionally, vendors withdraw from the sale after contracts have been exchanged.
Under these circumstances, the agent has introduced a “ready, willing and able
purchaser” within the terms of the agency agreement, and therefore the agency
should be entitled to fees & commission.
Methods of Sale
As the agent must act in the best interests of their principal (the vendor) the method
of sale which is recommended during the listing presentation must be the one which
is going to achieve the best outcome for their principal, taking into account:



Location of the property
Current market conditions, and
Characteristics of the land or property.
The method of sale to be used should be determined by a combination of the above
factors, with due consideration given to the express wishes of the client.
There are three main methods of sales used by agents in Residential Real Estate:

Private Treaty

Auction

Tender
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Private Treaty
Private treaty is a method of sale whereby the vendor sets an asking price for the
property (this may be done with or without an agent).
Prospective purchasers view the property and interested parties may place offers to
the vendor. Negotiation may or may not occur after offers are made.Once an offer is
accepted the parties enter into a Contract of Sale.
Buyers often prefer the fixed price method of purchasing property rather than
competing in an auction, but the seller of the property must effectively commit to a
maximum price when the property goes onto the market.
It is important to base the asking price on a figure which represents the value of the
property as there is little scope for obtaining a price greater than the asking price
unless there is exceptional competition for the property from multiple buyers, as is
the case with a public auction.
Agents should be very aware of their obligations under the EAA when putting a figure
on a property. There is nothing to stop a vendor asking more for a property that it is
worth, but the agent MUST ensure that their recommended selling price on the
agency agreement can be justified.
However, asking too much for a property is another matter altogether and the agent
will have to suffer the consequences associated with trying to sell an overpriced
property.
Auction
Auction is a method of sale whereby prospective purchasers congregate in a public
place – real estate agent rooms, a specific venue or at vendor’s property – at a
specified time and competitively bid for the property.
The vendor discloses to the agent a pricethat he or she will accept – usually on the
auction day – called the reserve price. The reserve price is generally derived from
the feedback of purchasers during the auction campaign. The reserve is not
disclosed to purchasers, and the desired outcome is that the purchasers will exceed
the set reserve.
A sale occurs if the reserve is reached or exceeded during the auction and is
immediate from the sale of the auctioneer’s hammer. If the vendor’s reserve is not
reached on the conclusion of bidding the property is “passed in” in favour of the
highest bidder. The highest bidder has the first right to negotiate with the vendor.
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Properties that are intended for auction can be sold before auction if the vendor is
presented with an offer that is acceptable. The sale then is a private treaty sale, but
the vendor may stipulate that the sale is subject to auction conditions, and that the
‘cooling off’ period is waived.
Once the hammer falls at an auction, the contract is made, and the buyer has
committed to purchase the property on the vendors terms (unless other terms have
been negotiated beforehand). A deposit (normally 10%) is paid at the fall of the
hammer and settlement then takes place
Auction selling is a specialised field in real estate sales.
There are statutory requirements relating to the conduct of Auctions contained in the
Estate Agents (Professional Conduct) Regulations. The following information is from
the Consumer Affairs Website
If you buy property at auction, you cannot make the contract subject to conditions
(for example, getting finance) and there is no cooling-off period.
Before you bid:

research the market, search the internet, attend auctions, speak with several estate
agents and monitor auction results
get independent, expert help on legal, finance and building matters.

An auction is a public sale, usually conducted by an estate agent acting as an
auctioneer, and governed by strict rules.
The auction is advertised for a specific place, time and date. Prospective buyers bid
and the property is offered to the highest bidder.
There is an advertising campaign with open house inspections for several weeks
leading up to the auction date. In the lead-up, the agent may contact you to gauge
your level of interest.
On the day of the auction, the property may be open for inspection, generally half an
hour before the bidding starts. This gives you a chance to have a final look at the
property, the relevant paperwork and the auction rules.
By bidding, you accept the terms of the contract on display before the auction, so
you will not be able to negotiate matters such as a longer settlement period.
Pre-auction offers
If the seller has agreed to consider pre-auction offers, you can make an offer through
an agent prior to an auction.
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Your offer will usually be in the form of a signed contract and the process of
negotiation is the same as buying by private sale.
If your offer is accepted less than three clear business days before the auction date,
you do not get a cooling-off period (time to change your mind).
Auction conduct
There are strict rules about how an auctioneer runs an auction, and how people
attending must behave.
The auction rules and the auction information statement outlining Victoria’s auction
laws, must be on display:


for at least 30 minutes before an auction starts
at the place where the auction will take place.
The auction rules, information statement and announcements the auctioneer must
make are set out in the Schedules to the Sale of Land Regulations 2005. Substantial
penalties may apply to anyone who breaks the auction rules.
Before bidding starts, the auctioneer must tell bidders:




the auction will be conducted according to the auction rules
the rules prohibit bids being accepted after the fall of the hammer
bidders will be identified on request
it is against the law to make a false bid, hinder another bidder, or in any way
intentionally disrupt an auction
substantial fines apply to anyone who engages in illegal auction conduct
whether or not there will be vendor or co-owner bids
any additional conditions that apply to the auction.



It is illegal to disrupt an auction, but you can still ask questions. During the auction,
anyone can ask the auctioneer a reasonable number of questions about the
property, the contract, or the auction.If you are bidding, you can also ask the
auctioneer to indicate who else made a bid.
Bidding at auction
Auctioneers have different ways of conducting an auction. Generally, they aim to
encourage as many bidders as possible to compete, to achieve the highest possible
price.
The auctioneer can set the amount by which bids increase. These are called rises
or bidding advances.
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You can bid at the amount stated by the auctioneer or offer an alternative amount.
The auctioneer may choose to accept or reject that bid.
Be clear about your bidding limit. To bid successfully:


bid confidently
ask relevant questions of the auctioneer, including who made a bid.
Generally, the amount the bidding advances will decrease as the auction draws to a
close.
The auctioneer may:

refuse a bid at any time during the auction, including when the auction hammer is
falling
if there is a dispute over a bid, resume the auction at the last undisputed bid or start
the bidding again
refer a bid to the seller at any time before the conclusion of the auction
withdraw the property from sale at any time.



Vendor and co-owner bids
Vendor and co-owner bids are allowed at auctions in two circumstances:
Vendor bid:
The auctioneer bids on behalf of the seller because the seller is not satisfied with the
amount of the last bid. This type of bid:


can only be made by the auctioneer
must be announced by the auctioneer when the bid is made.
Co-owner bid:
When a property is jointly owned, one or more of the owners who genuinely wants
to buy the property may bid from the crowd.
Co-owners may bid themselves or through a representative in the crowd but not
through the auctioneer.
The arrangements for making vendor and co-owner bids must be:
 set out in the rules displayed before the auction starts
 announced by the auctioneer at the start of the auction.
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Dummy bidding
All dummy bids are illegal. A dummy bid is either a:


false bid made up by the auctioneer
bid accepted by the auctioneer from a non-genuine bidder from the crowd.
Auction language: ‘on the market’ and ‘passed in’
On the market
The auctioneer may halt proceedings and say they are ‘going inside’ or ‘seeking
advice or instructions’ from the seller. They use this time to discuss the progress of
the bidding with the seller.
If the bidding has reached or is close to the reserve price (the lowest price at which
the seller will sell), the auctioneer will ask the seller if they will sell at the highest bid.
If so, the auctioneer will say the property is ‘on the market’. Bidding will continue and
the property will be offered to the highset bidder, at the seller’s discretion.
Passed in
If bids do not meet the seller’s reserve, the auctioneer will seek more bids. If bids
still do not meet the reserve, the property may be ‘passed in’ or ‘withdrawn from
auction’.
The highest bidder then gets first right to negotiate with the seller.
When is the property sold at auction?
There is no legally binding contract until both buyer and seller have signed the
contract of sale.
If you are the successful bidder at the auction, you:


will be asked to immediately sign the contract
cannot make the contract subject to conditions and there is no cooling-off
period
sign the contract before the seller, to make your formal offer to buy the
property. The seller accepts your offer by also signing the contract
have to pay the deposit specified in the contract (unless otherwise agreed).


When you and the seller have signed the contract and the deposit has been paid,
the sale is binding and enforceable.
The sale is finalised at settlement when:
 all checks have been made
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 the title and transfer documents have been exchanged
 the balance of the purchase price has been paid.
Paying a deposit at auction
When you sign the contract of sale after an auction, you will need to provide a
deposit. There are no laws about the amount of deposit but it is usually 10 per cent
of the purchase price.
If you are using a bank cheque to pay the deposit, your cheque will be for 10 per
cent of the amount you are prepared to pay for the property. This means that if you
buy the property for less than you expected, your deposit will be more than 10 per
cent.
Before the auction you can ask the seller if they will accept a part deposit with the
remaining amount due on a specified date. This would require a change to the
contract. The seller may or may not agree to this arrangement.
The deposit is held by the seller’s estate agent, conveyancer or legal practitioner in
a trust account until the settlement date. The deposit can be released to the seller
before settlement, if you agree.
A seller who does not have an estate agent and takes your deposit directly must
either:


pay it to their legal practitioner or conveyancer
bank it in a special purpose account in an authorised deposit-taking institution in
Victoria. The account must be in both the seller’s and your name (Division 4-Public
auctions Sale of Land Act 1962).
Tender
This method of sale is mostly used for commercial, industrial, large development
projects and luxury homes. Very few residential homes are offered for tender. In the
tender process purchasers provide a confidential written offer by a set date. Unlike
an auction the purchaser bids as high as possible in the hope that other purchasers
will not bid as high.
The vendors (or their agents) prepare a tender document setting out the conditions
of the tender which is sent to interested parties. This document would include a
closing date and time for tender submissions, as well as any conditions that the
person placing the tender would be required to meet, such as settlement dates.
The purchasers are also able to offer their terms and conditions, which may help
make the bid successful. Therefore the successful tender may not be the highest
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price offered but the most attractive to the vendor. A ten percent deposit is usually
required along with the bid.
The Contract for Sale of Land
Estate Agents (Contract) Amendments Regulations 2011
The Contract for Sale would include:
1) A schedule (cover page) – which identifies:
a) The vendor’s agent (if any)
b) The names of the parties and their respective solicitors
c) The purchase price
d) The deposit and who will hold it
e) Property description including improvements
f) Title details
g) The settlement date
h) The inclusions and exclusions
2) The standard conditions of the contract
3) Any special conditions
4) Plus the following documents that are legally required under the
Conveyancing (Vendor disclosure and warranty) Regulation 1986.
They are:
a) Copy of registered folio that identifies the Lot (Title Deed)
b) Zoning – Section 149 Certificate,
c) Drainage diagram issued by local water authority,
d) Copy of plan of sub-division that the lot is part of,
e) Strata plan if applicable,
f) Copies of all documents creating easements and covenants that
may affect or benefit the lot.
5) Important notice to vendors and purchasers
“Before signing this contract you should ensure that you understand your
rights and obligations some of which are not written in this contract but implied
at law.”
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Owner Warranties
Within the standard conditions of the contract there are a number of owner
warranties (or disclosures) that must be made. These are in place to protect the
buyers, and
The Owner warrants that the property is not affected by:

Proposals from government authorities such as:
o Any public transport corridors (real or proposed),
o Energy Australia (or other statutory authorities)
o
Department of Education, etc



Breaches of the Public Health Act
Fencing disputes or encroachments on adjoining properties
Notices from the local council in relation to any illegal or unapproved
building work
At the time of listing you should be advising the vendor about the contract and the
need to have a contract prepared before marketing starts. At the listing appointment
you should talk to them about special conditions, as well as about specific
disclosures that should be made to potential buyers.
The vendor’s solicitors prepare the contract, but it is the agency’s responsibility to
ensure it is complete. It is not sufficient to have a draft contract in the office. The test
is that the contract must be adequate to affect an Exchange of Contracts.
Presenting the Property
Before the listed property is made available to prospective buyers, you should look
at the property through the eyes of the buyers that will come through. This will make
it easier to discuss property presentation with the sellers, in the event that some
work, maintenance or attention to detail is required in order to present the property.
Another way you can overcome this issue with vendors is by having presentation
guides for homeowners to read (and there are examples on the industry websites)
Other owners may request your opinion, and in such situations, the recommendation
of minor renovations or services of a home stylist may be appropriate. Other clients
however are sensitive on topics such as cleanliness, colour schemes, pets and
gardens. In these circumstances examine the problems and offer solutions that are
specific to the type of buyer you are trying to attract to the property.
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Marketing and Promoting Property for Sale
Typically, the marketing of a property will comprise a mix of the various methods
outlined below. However, marketing and advertising is not the easy answer to selling
property.
Developing a specific marketing plan for the vendor is a skill in itself, but many
agencies have standard plans that can be basis for a personal campaign. The
campaign that is negotiated with the client must be consistent with the agreed
method of sale if it is to be successful in achieving the objective of selling the property
in the shortest possible time.
It is important to determine the target market – the “audience” at which the
advertising will be directed. The target market will determine the how, when, where
and why of the promotion and advertising campaign for a particular property.
Few people buy property without an inspection or the “sales” input of the agent.
Marketing and promotion will create enquiries but will not “sell” anything – ultimately,
it is down to the skill of the agent in matching property to the needs of customers.
When advertising a property the key task is to build an expectation in a customer’s
mind, and perception is very important when developing marketing and advertising
materials. Therefore, the clever marketer needs to consider what expectations will
be uppermost in the target market and those reading or viewing the picture or
advertisement.
Different agencies have different policies on whether, and when, the client pays for
the advertising and marketing of the property and you will need to be conversant
with your offices policies and procedures.
There is no definitive guide as to the amount of money that a vendor might invest
into the marketing of their property. Typical marketing plans might vary from 0.2% of
the property value up to 1.0% for high end exclusive properties. Auction marketing
campaigns, due to the high exposure needed, often require a greater marketing
investment than private treaty sales.
What you don’t want is to be left with unpaid marketing expenses that become your
liability – it is easy to overspend on advertising and marketing, or to agree to run “just
one more advertisement”.
Typically, the marketing of a property will comprise of a mix of the various methods
that follow. Developing a specific marketing plan for the vendor is a skill in itself.
However, many agencies have standard plans that can be basis for a bespoke
campaign. The campaign that is chosen with the client must be consistent with the
agreed method of sale if it is to be successful in achieving the objective of selling the
property in the shortest possible time.
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One of the skills of successful agents is to know their buyers and use their buyer
database to generate “matches”, of buyers to property, to follow up on visitors to
open homes and continually add to the database of buyers (who may well become
your future vendors if they can see the efforts you are putting in to try to sell property).
In addition, effective negotiation skills are just as important as the marketing and
advertising campaign that is undertaken.
Everyone involved in marketing property needs to ensure that they have adequate
skills and knowledge of the legal requirements. They must know and understand
their obligations in relation to false and misleading advertising under Competition
and Consumer Act, Fair Trading Actand the Estate Agents Act .
It is also important to be conversant with the advertising policies and procedures of
the agency in which you work before embarking on the development of any
marketing and advertising materials and campaigns.
Some real estate agencies have specific departments to handle this part of the
process, but in most instances the drafting of marketing materials will be part of the
individual agent’s duties.
Sign Boards
The sign board is a 24 hour salesperson, notifying the passing public that a property
is for available. Signboards range from the simple “For Sale” or “For Lease” sign to
large colour photo boards.
Window Display
Many passers by inspect agents windows to see what is available, and therefore the
window card needs to be attractive and show the property in its best light. Many
agents make the mistake of allowing window cards to fade in the sun, and diminish
the potential of the property to viewers.
Internet Advertising
It’s said that 30% or more of buyers now find their property through the internet. As
well as company specific websites there are industry wide sites such as
www.domain.com.au,www.realestate.com.auand www.homehound.com.au
Letterbox Drops
Serve the dual purpose of advertising the property for sale to the local area as well
as raising your profile locally.
Advertising
May be placed in the main newspapers, or in the local colour weekly papers, such
as: Most communities have a newspaper that features real estate advertising in their
area.
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Editorial
Wherever possible, available properties should be submitted to the local
newspapers as editorial features. Again this provides you with profile building
opportunities, and will help you promote the features and benefits of the property to
a wider audience.
Open Homes
Open Homes are one of the best methods to bring potential customers to the
property, when they are well promoted, advertised and are supported by pointer
boards to help buyers find the property. Open homes should not replace viewings,
but should supplement inspections by appointment, as it is not always possible for
customers to attend open homes.
When presenting the property at open homes, you should stress to the client the
importance of not being present during inspections. Purchasers may feel intimidated
by the vendor’s presence and will offer opinion and comment more readily when they
are not being judged or monitored.
Brochures for the Property
A well designed and well written brochure will help those that have viewed the
property remember the key features and benefits. Including a floor plan is considered
by many buyers an integral part of the sales brochure. Brochures should also be
given to customers that visit the office.
Direct Mail & Telephone Selling
Successful agents maintain an up to date database of potential customers, together
with their property requirements. Each time a property is listed the salesperson
should contact their database to arrange appointments to view or invite them to the
open house.
Providing Property Information to Buyers
As a salesperson, you are not contracted to purchasers. You do however have
obligations to purchasers in terms of your duty of disclosure
Under the Competition and Consumer Act, as well as the Estate Agents Act (s.42 –
Advertising) it is an offence to deliberately mislead or make false statements in order
to entice someone to enter into a contract. This includes withholding information
which they may be aware about.
Firstly advertising must not be misleading and may not deceive (also prohibited
under the Fair Trading Act). Advertising material must be appropriate and accurate,
although, as discussed, puffery is permitted
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The price quoted to prospective buyers of the property must not be misrepresented
(EAA s.47C – False representation to prospective buyer). This section also states
that is not permitted to advertise a price which is lower than the agent’s opinion
established at the appraisal, and noted on the agency agreement (without the written
authority from the vendor). This section is taken to include sales by auction (or
tender) as well as those by private treaty.
Price ranges are also considered by this provision (under EAA s.47A) –is that
minimum and maximum range is not to exceed 10% of the lower amount.
Where a property is to be sold by auction, and the agent has estimated a price of,
say, $600,000 to the vendor, and this is the figure entered on the agency agreement,
the agent must tell prospective buyers that they expect a figure of $600,000 to be
achieved. This restricts agent from underquoting prices to bidders with vague
statements such as “bidding from $…..”
All measurements, such as block sizes, quoted distances to transport or facilities
must accurate and given in metric units – imperial measurements may be added as
well as metric measurements, but it is not permitted to quote just imperial
measurements.
(For further information refer back to the section in the unit CPPDSM4080 – Work in
the real estate industry, that discusses Consumer Protection.)
Photographs of the property should not be digitally enhanced. Agents have been
known to remove power lines and other undesirable features from property photos
– this is misleading and deceptive. Area or location shots should be identified as
such, and not left to buyers to assume that they are actual views from the property
If the property is owned by the salesperson, any member of the agency staff or their
family, then this must be disclosed to potential buyers. If an interest exists it must be
made clear in all marketing material that there is an “agent’s interest” (EA
regulations)
Honest and transparent communication with purchasers ensures efficient and
effective outcomes. When buyers ask technical questions about a property an agent
must answer with facts. If you are unsure of the answer you should seek information
and answer when the facts are known or refer to another authority. Agents must
never assume or guess information, nor be misleading or deceiving, Remaining
silent about known material facts is also considered to be deceptive.
Finally, agents must ensure that customers understand that their ultimate
responsibility is to their client, the vendor, as this may not be clear to all purchasers.
Registered & licensed agents are, in law, considered to be more knowledgeable than
buyers (and for that matter vendors) of real estate. If a false or misleading statement
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is made, the contract for the purchase could be rescinded, and undoubtedly, the
agent would find themselves in court.
Not only might the agent be found liable, the agency itself, as well as the agency
principal, may be liable for disciplinary action and damages under the EAA. In court,
the agent is judged upon the information provided. Agent obligations are thoroughly
covered under common law, in the Competition and Consumer Act and Fair Trading
Acts as well as Real Estate Legislation.
Security of Client Properties
Salespeople are usually entrusted with the keys and alarm codes to their clients
properties. It is important that the security of the property is not compromised and it
is recognised that the agent has a legal liability to protect their clients’ property.
Agents must ensure that the owner’s property is secure. They should advise their
owners to secure valuables for open homes and inspections, and ensure that
properties are securely locked when leaving. This includes windows, doors, garages,
and sheds. It is vital to spend time to check the premises are secure before leaving.
At open houses or inspections, agents should try to ensure that they don’t leave
people to wander around without supervision if the home is occupied and furnished.
Ideally, there should only be one open entry and exit point with any others kept
locked. The home should never be left unattended whilst showing people around the
outside. If people are keen and want to talk at an open house, arrange a later, private
viewing, or appointment, for them. That way, people won’t be in and out of the home
unattended, while the agent is stuck in a long conversation.
If the home is large, or more than one storey, the consider having someone else
present to help control visitors. No keys to any locks should be visible during
viewings, and agents should check this is the case, as some owners inadvertently
leave keys around for easy access or just sitting in the lock.The agent also has a
“duty of care” in relation to keys in their possession, to ensure that these are secure
and not identifiable for opportunists to take advantage of.
Rooms should be checked before inspections to see that small valuables have not
been left lying about, and steps taken to remove these from view where possible.
Real estate offices usually have keys for all properties in their care. They should
keep these keys in a securely locked box or safe, and coded with no identifying
address attached. The codes should then be kept in a key register book, which is
also kept separately and secure, as it will generally have the property addresses
noted in it.
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To provide additional security for properties in their care, each office should
implement a key signing in & out system, so that at any time, the whereabouts of the
keys to clients’ properties can be ascertained.
Security is an area of great importance. Each salesperson will need to check and
understand the agency security policy where they are employed. This should form
an integral part of their induction when they commence work.
Negotiation
During the initial meeting with the prospective buyer a salesperson needs to “qualify”
the buyer to ensure that when they get to the stage of negotiating the sale the buyer
is willing and able to purchase.
Qualifying the buyer involves asking questions to ascertain what they want, what
they can afford to buy, what assistance they require in order to put themselves in a
position to be able to buy, when they will be in a position to buy and many other
aspects of their needs, wants and desires in their next property.
The process of qualifying a buyer is a skill that needs to be developed. It is best to
acquire this skill through practice, through role plays with experienced sales staff,
and by regular rehearsal.
Excellent marketing is the most successful way to avoid unnecessary negotiating.
Properties that are well priced and marketed to the correct target group require very
little negotiation.
However, not all properties are the same nor are the buyers, so developing excellent
negotiating techniques will help you create win / win solutions for vendors and
purchasers.
Negotiating is a critical component of sales and requires the salesperson to be
diplomatic, tactful and able to negotiate the best offer possible.
All negotiations should be recorded in writing to protect the agent in the event that
there is a future dispute about who said what. When purchasers make offers or
request items the agent should document this information. Therefore all buyer
requests and offers must be scrutinised and verified by the agent prior to submitting
them to the vendor.
The salesperson is also required to ensure that the vendor has all pertinent facts in
relation to the offer being submitted. Estate Agents (Professional Conduct)
Regulations states that all offers must be submitted to the principal.
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Salespeople need to know more than just the number of dollars someone will pay
for a property. The best offer may not always be the best price, and agents should
expect to negotiate on other aspects of the sale in order to obtain the best possible
outcome for their client, the vendor.
Agents need to know:
1) The price the buyer will pay.
2) How the purchaser will pay for the property.
3) How firm is the purchaser’s finance? Is the finance approved?
4) How much deposit will be paid, and how and when?
5) What conditions the buyer may want to include in the contract?
6) When does the purchaser want to settle?
7) What chattels and / or fixtures are to be included or excluded?
8) Any unusual terms or conditions that the buyer or seller requires?
Buyers may also want to move into the property under license or insist that any
unapproved structure be approved before settlement of the sale, for example. Other
factors that may require negotiation include access arrangements, price variations,
settlement terms, etc.
Negotiation is so much more than just knowing the dollars! All the above points
contribute to the overall ‘deal’. Negotiation is about getting the buyer and the seller
to reach a successful outcome.
Negotiation skills are covered in the Unit of Competence CPPDSM4017A –
Negotiate effectively in property transactions. This unit is a component of the Real
Estate Licence in some states and territories.
Agents also need to understand the role of the solicitor in the transaction. Solicitors
examine and execute contracts; therefore all information concerning the sale must
be divulged to both the vendor’s and buyer’s solicitors if the sale is to proceed
smoothly.
Any withheld information could delay the exchange of contracts or settlement, and
jeopardise the sale, your fee and your reputation.
It is important to remember, that whilst agents have contractual duties and
obligations towards their clients, the sellers, they also have obligations towards the
buyers.
Those obligations include disclosure of material facts – any fact that may affect a
buyers decision to purchase the property must be disclosed – remember the
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Gonzalez case. They also have a duty of care towards their purchasers and should
recommend that they obtain building and pest inspections prior to purchase, and
satisfy themselves of the accuracy of the information you have provided to them.
During the negotiation process you may also be asked to recommend professional
advisers, such as solicitors, finance providers, valuers, building inspectors and
tradespeople.
If you do so you must disclose to the appropriate party any interest you may have
with anyone you are recommending (ie. family or business association) and whether
or not you will receive any commission or kickback as a result of the referral. Failure
to disclose either of these is considered a serious misconduct.
In the case of multiple offers, a salesperson has to be careful that they don’t play
one person off against the other to the extent that all parties become disenchanted
and break away.
Agents need to understand the role of the solicitor in the transaction. Solicitors
examine contracts not properties therefore all information concerning the sale must
be supplied to the solicitors. The solicitor does not do everything just as the agent
does not do everything.
Estate Agents Act 1980 – SECT 47C
False representation to prospective buyer
47C. False representation to prospective buyer
(1) This section applies to an estate agent who holds a written engagement or
appointment to sell real estate, and to any agent’s representative employed by the
agent.
(2) In making any statement while marketing the real estate, the agent or
representative must not state as his or her estimate of the selling price of the real
estate a price that is less than the estimated selling price, or in the case of a price
range, less than the lower limit of that range, stated in the engagement or
appointment.
Penalty: 200 penalty units.
(3) For the purposes of this section, a statement is made while marketing real estate
if-
(a) it is made in an advertisement in respect of the property that is published,
or caused to be published, by the agent; or
(b) it is made (whether orally or in writing) to a person as a prospective
purchaser of the real estate.
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Contract of Sale of Real Estate
When the terms of the sale have been negotiated to the satisfaction of both vendor
and buyer, the agent prepares a sales contract which outlines the terms and details
of the sale.
The prescribed ‘Contract of sale of real estate’ consists of two forms, which together
comprise the contract of sale.

Form 1 – Particulars of sale – The form must completed with the details of
the particulars such as the parties, the property address, deposit, price,
settlement date and any special conditions.
Form 2 – General conditions – These are printed on a separate document

but the MUST be provided to the parties either before or at time of signing.
All terms relevant to the sale are in the contract, there are no implied terms.
Form 1 – Particulars of sale
Form 1 consists of details about the sale to be completed. it consists of an
introduction section that:
a) describes the essential agreement between the parties as the ‘vendor agrees
to sell and the purchaser agrees to buy the property, being the land and the
goods, for the price and on the conditions set out in this contract’.
b) sets out the priority for reading the contract as the particulars of sale followed
by any special conditions, the general conditions and lastly the Vendors
Statement.
c) the day of the sale as the date the contract becomes enforceable; that is, the
date it is signed by the vendor to accept the purchaser’s offer.
d) incorporates the attached Vendor’s Statement under section 32 of the Sale of
Land Act as part of the contract.
e) alerts prospective purchasers to the cooling-off rights.
The introduction also makes provision for the signing of the contract.
Once the contract has been drawn up to purchasers instructions and a Vendors
Statement has been given to the purchaser and signed by the purchaser, the
purchaser will then sign the contract.
At this time the purchaser will lay down an initial deposit which normally, not less
than 0.2% of the sale price.
The purchaser will receive a copy of this contract at time of signing.
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This contract is then presented to the vendor, if the vendor excepts all terms and
conditions presented to him, he will sign the contract. Once this is done, the contract
them becomes enforceable. The vendor retains a copy of the fully signed contract
for his records.
The purchaser will also receives a copy of the fully signed contract.
The agency then gives a copy to the vendors and purchasers solicitor for them to
instruct the sale.
A deposit (usually 5 – 10%) is paid normally within 14 days of signing the contracts
and once the contract becomes unconditional. Meaning that there are no conditions
placed on the contract that need to met, e.g.: building inspection.
Once the deposit has been received it must be deposited in a trust account with a
trust account receipt issued to the purchaser – Section 63 of Estate Agents Act. It is
usual for the deposit to be held by the agency in their trust account.
Where the salesperson is involved in collection and receipt of deposit monies he or
she must comply with trust account requirements of the Estate Agents (General
Accounts and Audit) Regulations and Section 59 of the Estate Agents Act 1980.
These requirements are covered briefly in the unit CPPDSM4080 – Work in the real
estate industry.
There is a whole unit devoted to Trust Accounting: CPPDSM4006A – Establish and
Manage Agency Trust Accounts, which is a mandatory unit of competence for Real
Estate Licence courses in every state and territory.
Cooling – Off Period
The cooling-off period is the period given to the purchasers in which they may avoid
the contract of sale they have signed. It is a period in which purchasers can think
about if they wish to proceed with purchase of the property.
The rights of the purchaser to cool off are set out in section 31 of the Sale of Land
Act. It only applies to contracts of sale for:


residential land
rural land that does not exceed 20 hectares.
Under section 31, purchasers can avoid a contract for the sale of land if th4ey notify
the vendor or the vendors agent in writing that they do not wish to proceed with the
contract. This notification must be signed by the purchaser and given to the vendor,
or the vendors agent, within three clear business days of the purchaser signing the
‘Contract of sale of real estate’ (section 31 (2). When counting three days, the day
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the purchaser signs the contract is not counted, and neither are Saturdays, Sundays
and Victorian public holidays.
Under section 31 (4) of the Sale of Land Act, if the purchaser takes advantage of the
cooling-off period, and rescind the contract, they forfeit $100 or (0.2%) of the
purchase price to the vendor.
This is to compensate the vendor who was contracted to sell (without a cooling off
provision) to the purchaser from exchange, whereas the purchaser had the right to
withdraw during the cooling-off period.
The cooling-off period does not apply under section 31 (1):

you bought the property at or within 3 clear business days before or after
a publicly advertised auction; or
the property is used primarily for industrial or commercial purposes; or
the property is more than 20 hectares in size and is used primarily for
farming; or
you and the vendor have previously signed a contract for the sale of the
same land in substantially the same terms; or
you are an estate agent or a corporate body.
if the purchaser is a company





The vendor cannot include a condition in a contract which attempts to remove the
purchasers right to the cooling-off period. Should such a condition be placed in the
contract of sale, the condition will be void and have no effect.
From Sale to Settlement
After the contract has been signed, the solicitor acting on behalf of the purchaser
prepares the ‘Transfer of Land’ document. This document is signed by the vendor
and the purchaser, usually before – but in preparation for – settlement.
Also at this time, the agent should coordinate and oversee the final stages of the
sale. A sale is not binding until the cooling off period has expired and the contract is
unconditional, and agencies are not paid until settlement.
The amount of time and effort that a salesperson actually puts into the parties after
the sale can determine who succeeds in the future and who flounders.
During the period leading to settlement the salesperson may be required to assist
by:
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Answering questions about the sale for the solicitors, vendors or
purchasers;
Organising entry to the property by professionals (e.g. Building or pest
inspectors, valuers etc.); and
Undertaking a pre-settlement inspection by the purchaser.


You should always keep in touch with both parties’ solicitors leading up to settlement.
That way you will be the first to know if a problem occurs and you may be able to
assist with the settlement process.
A friendly call to check how removal plans are going helps confirm that the
salesperson is interested in being of service to the parties involved – on both sides
of the transaction.
Vendors will remember the concern and “over-and-above” attention to detail and
believe they have got value for money in the fees they paid to you. Buyers will
remember that you were interested in their welfare too. These generate a good
reputation and, in time, repeat business and good referrals.
Ensuring the sale and / or the purchase process is as smooth and trouble free as
possible, and providing the required information at all stages of the process, is
important for someone who intends to become a sought – after real estate
salesperson.
Settlement
Settlement is the point in time when the title and ownership of the property passes
from the vendor to the buyer, all outstanding monies are paid, and the sale is
registered with the Land Titles department and a new Certificate of Title issued.
This is when the agent will be entitled to claim their fee for the service performed.
The agency fees and final charges are paid at settlement from the deposit monies,
paid by the purchaser to the vendor. However, agents may also receive, by
agreement, marketing and incidental costs if these were not paid up front or at
agreed times during the transaction.
When a sale nears completion the vendor or vendor’s solicitor will request in writing
details of all fees and charges due to the agency, so that permission to release funds
from the trust account can be given. This request for information is called an Account
Sale. Once notification from the vendors solicitor is given to the agency, they are
then able to withdraw their fees and costs, as per the account sales, from the trust
account and issue the any remaining funds to the vendor.
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However, under section 27 of the Sale of Land Act, allows deposit money to be
released earlier, provided certain conditions have been met.
Sometimes, however, buyers may try to pull out of the contract prior to settlement,
and settlement does not take place as planned.
There may be a number of reasons for this, but the most common are:




The buyer is unable to obtain finance
Solicitors advise against the purchase
The building or pest reports are unsatisfactory, or
The buyer simply changes their mind
Whilst you may not be able to stop these things from happening, if you are monitoring
the sale progress closely, you will be aware of any situations such as these
immediately and can take action, which must include keeping your vendor informed.
Once you become aware of something going awry you should be prepared to offer
some solutions, which could include:

Obtaining alternative finance

Finding an alternative buyer

Renegotiating the contract to reflect building work or pest treatment that
is essential.
You should never assume that the buyer and seller know and understand the sales
process. You should know more that them and be prepared to inform, guide and
advise them as required.
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After Sales Service
The same “customer service” philosophy should apply once a sale has been settled.
A Christmas card each year will not “buy” loyalty and repeat business but it does
provide the parties to the transaction with a reminder that the person who sold their
property for them or to them is still active in real estate sales.
Regular contact, with interesting information, does create an impression and helps
to ensure repeat business from clients in the future and who will provide a referral to
others.
Staff Property Transactions
When staff buy or sell property through the agency, there is an absolute obligation
to disclose this to both clients and customers who may be affected. Complete
transparency is required.
When the agency is selling a property for a licensee or a staff member, disclose all
information.
Where staff want to purchase property through the agency that has been offered for
sale by a client of the agency, the restrictions are far more onerous, and extend to
all staff and their relatives.
The agency can charge no commission, unless agreed to by the vendor in writing,
and full disclosure of the purchaser is required in writing and must be agreed to by
the vendor.
Estate Agents Act 1980 – SECT 55
Restriction on agent purchasing property
55. Restriction on agent purchasing property
(1) An estate agent must not obtain a beneficial interest in any real estate or business
that the estate agent has been commissioned by any principal to sell.
Penalty: 240 penalty units or imprisonment for 2 years, or both.
(2) An agent’s representative employed by an estate agent must not obtain a
beneficial interest in any real estate or business that the estate agent has been
commissioned by any principal to sell.
Penalty: 240 penalty units or imprisonment for 2 years, or both.
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(3) Without limiting subsections (1) or (2), a person obtains a beneficial interest if
any of the following circumstances arise-
(a) the person or an associate of the person-
(i) purchases the real estate or business; or
(ii) holds an option to purchase the real estate or business;
(b) a proprietary corporation of which the person or an associate of the
person is a member-
(i) purchases the real estate or business; or
(ii) holds an option to purchase the real estate or business;
(c) a corporation over which the person (either individually or jointly with
associates) or an associate of the person can exercise control-
(i) purchases the real estate or business; or
(ii) holds an option to purchase the real estate or business;
(d) a corporation of which the person or an associate of the person is an
executive officer-
(i) purchases the real estate or business; or
(ii) holds an option to purchase the real estate or business;
(e) if the person is a corporation, an executive officer of that corporation or
an associate of the executive officer-
(i) purchases the real estate or business; or
(ii) holds an option to purchase the real estate or business;
(f) the trustee of a discretionary trust of which the person or an associate
of the person is a beneficiary purchases, or obtains a beneficial interest in,
the real estate or business;
(g) a member of a firm or partnership of which the person or an associate
of the person is also a member purchases the real estate or business;
(h) in the case of real estate-
(i) the person or an associate of the person has, directly or indirectly, a right
to participate in the income or profits of a business carried on for profit or
gain; and
(ii) another person carrying on that business obtains a beneficial interest in
the real estate;
(i) in the case of a business (Business 1)-
(i) the person or an associate of the person has, directly or indirectly, a right
to participate in the income or profits of another business(Business 2)
carried on for profit or gain; and
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(ii) another person carrying on Business 2 obtains a beneficial interest in
Business 1.
(4) A person does not contravene subsection (1) or (2) if-
(a) the person-
(i) before a contract for the sale of the real estate or business is entered
into, obtains the principal’s written acknowledgment in the form approved
by the Director that the principal-
(A) is aware that the person is interested in obtaining a beneficial
interest in the real estate or business; and
(B) consents to the person obtaining the interest; and
(ii) acts fairly and honestly in relation to the transaction; and
(b) no commission or other reward is payable in relation to the transaction;
and
(c) the principal is in substantially as good a position as the principal would
be if the real estate or business were sold at fair market value.
(5) In this sectionassociate means-
(a) an employee of the estate agent; or
(b) a spouse, domestic partner, parent, brother, sister or child of the estate
agent or agent’s representative; or
(c) a child of the spouse or domestic partner of the estate agent or agent’s
representative; control has the meaning given by section 50AAof the
Corporations Act; executive officer means any person, how so ever
described and whether or not the person is a director of the corporation,
who is concerned, or takes part, in the management of the corporation;
obtain includes being in any way concerned in obtaining.
Buyers Agents
Buyer’s agency is a specialised field, and a buyer’s agent is a person who is engaged
by a buyer to locate and purchase land or property for them.
A buyer’s agent is contained in a real estate agent’s licence. It is that you are only
allowed to act as an agent specifically for the buyer.
Under a buyers agency the buyer is the client and engages the services of an agent
to find and / or negotiate the purchase of a property on their behalf.
Alternatively, the buyer could have found their own property they want to buy, and
want the buyer agent to negotiate the best possible price and terms of purchase.
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It is a growing sector of the market, and often buyer agents are asked to select a
shortlist of suitable properties to save buyers time.
Typically, buyers will pay the agent a fee (of between 1% and 2%) to source and
negotiate their purchase.
Buyer agents are prohibited from acting for both the buyer and seller in a transaction,
and so if the agency in which the buyer agent works has a property suitable for the
buyer for sale, only one fee can be charged (this could be from wither the buyer or
seller but not both)
The Rules of Conduct for any sector of the real estate industry need to be understood
and applied by persons working in that sector – including buyer’s agents.
Commercial, Retail and Industrial Sales
This is a specialised area of real estate and must be treated as such. Whilst there
is no separate Agents Representative Qualification or Licence for the commercial,
industrial or retail sectors, and salespeople are required to hold the same
Registration or Licence as those in the residential sector, there are significant
differences in that additional legislation applies in the commercial sector.
Where the sale of commercial property also includes the business, then this again
is a separate specialised area of real Estate.
There is a diverse range of investors and large institutions involved in this sector,
which is often referred to as the “Big End of Town”.
The major difference between selling residential real estate and selling commercial
property is the “emotional” component of the purchase. People buy homes based on
a “lifestyle” choice. This also applies to residential property purchased for investment
purposes as investors frequently buy particular investment property because they
feel they could comfortably live there themselves.
With the purchase of commercial real estate, the basis upon which the purchase is
made tends to be more clinically based on financial analysis. The decision to buy is,
usually, a simple economic one. The decision is grounded in the achievement of
sound financial advantages.
When it comes to high-rise commercial buildings, with multiple tenancies, the “net
lettable area” is important. The net lettable area is the area which excludes the
common areas of the building (lifts, passageways, building entrances, etc). The
decision to purchase is then based on how much space there is to rent – and the
likely return on that space in the form of rent per square metre.
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The clients that you are likely to encounter in the commercial and industrial sector
are more likely to be professionals who sell and buy for investment, or to enhance
their business property portfolio.
Commercial, retail and industrial property can be appraised by comparative market
analysis, although in most cases a capitalisation method based on percentage return
to investor will be applied for comparison purposes.
Commercial investors are looking to operate their property at a profit – the two
potential sources of profit in the sector are capital appreciation and the rental returns.
Commercial & retail sales can involve the sale of:







Entire Strata Plan developments
Factory and Light industrial premises
Commercial office space
Vacant land zoned commercial
Retail premises, and
Large shopping centres
Transport infrastructure (eg Toll motorways)
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Conclusion – Real Estate Sales
Real Estate dynamic sector of the property industry – enjoying what you do is going
to be one of the keys to your success.
You will get to meet a diverse range of people who will be relying on your skill and
expertise so you are required to learn the correct work practices. Honest and ethical
real estate people earn respect whereas the dishonest or unethical ones do not enjoy
a long career in real estate.
All legislation is reviewed, changed and updated periodically to reflect consumer
concerns or changing work practices.
You owe it to your clients (who will be relying on your knowledge and skills) to keep
yourself up to date by reading media articles, press releases, announcements and
being fully aware of economic factors that have an impact on the industry.
Get involved with professional organisations whose role is to represent the industry.
They are a great source of information and ideas.
If you want to keep up with your competition (or get ahead of them!) carefully follow
the innovations and advances in technology, especially related to marketing. Always
look for new ideas, and be the leader rather than the follower (who has to copy
others).
Remember that the legislation, in particular, the Estate Agents Act and Regulations
have varying provisions that may need to be interpreted with reference to other
sections rather than in isolation. E.g. one section may need to be read in conjunction
with another to fully understand it.
Above all, you need to be positive and enthusiastic to achieve success in real estate.
The market may have its ups and downs, but you should concentrate upon working
towards the future. That is really what the real estate industry is all about.
Estate Agents Act 1980
It is advisable for all real estate offices to have a copy of the Act and Regulations
available at all times. This could be a “soft copy” – with a link to Consumer Affairs
Victoria website or to the Victorian Parliament (Legislation) website on your
computer at: www.legislation.vic.gov.au
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Useful Links
Estate Agents Act 1980 –
http://www.legislation.vic.gov.au/Domino%5CWeb_Notes%5CLDMS%5CPubLawT
oday.nsf
Estate Agents (Professional Conduct) Regulations –
http://www.legislation.vic.gov.au/Domino%5CWeb_Notes%5CLDMS%5CPubLawT
oday.nsf
Estate Agent (General Accounts and Audit) Regulations –
http://www.legislation.vic.gov.au/Domino%5CWeb_Notes%5CLDMS%5CPubLawT
oday.nsf
Sale of Land Act –
http://www.legislation.vic.gov.au/Domino%5CWeb_Notes%5CLDMS%5CPubLawT
oday.nsf
Transfer of Land Act –
http://www.legislation.vic.gov.au/Domino%5CWeb_Notes%5CLDMS%5CPubLawT
oday.nsf
Land Act –
http://www.legislation.vic.gov.au/Domino%5CWeb_Notes%5CLDMS%5CPubLawT
oday.nsf

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