Upon exchange of contracts the buyer usually has a cooling off period of 2 – 5 days depending on the state your home is in.

The cooling off period allows the buyer to withdraw from the sale. Should the buyer withdraw from the sale during the cooling off period, you have the right to retain 0.25% of the deposit amount. In Victoria the seller is able to retain 0.2%.

Cooling off periods can also be waived, reduced or extended by negotiation. There is no cooling off period when purchasing at auction

The way the law stands at present, a vendor’s agreement to sell their home must be set out in a contract they and the successful bidder sign and then exchange between them. Until that happens a vendor can change their mind and for any reason, and a successful bidder will have no legal recourse.

The vendor could change their mind for any reason; they may have decided that they don’t want to move after all, or they would like a longer settlement than that which was offered in the contract, or they are unable to agree on terms with the highest bidder.

So the answer is no, a vendor cannot be compelled to sell to the highest bidder after the reserve is reached.

Fortunately, the likelihood of this technicality affecting the outcome of an auction is practically unheard of and in 99.99 per cent of auctions the fall of the hammer is followed by the signing and exchange of contracts. The REIV would like to see this legal technicality abolished so an enforceable contract is created on the fall of the hammer. This is the case in a number of other places and it would improve the auction process in Victoria if it were also the case here.

The laws in Victoria sensibly prevent an auctioneer taking any bids once the property has been knocked down to the highest bidder, but they do not compel a vendor to sell.

Source: www.reiv.com.au

Private treaty is when your home has an asking price and is sold by negotiation.

Benefits of this method of sale are:

1. You are able to consider buyer’s offers
2. The buyer doesn’t know what other buyers have offered
3. Not as stressful for sellers as an auction

Negotiation

When choosing to sell your home by private treaty, buyers will submit offers to your agent. As the seller you may choose to accept the offer or negotiate with the buyer by way of a counter offer. Your agent will act as a ‘go-between’ until you reach an agreed price.

Should the buyer wish to negotiate changes to the contract of sale such as settlement period, fixture inclusions and cooling off periods, you will need to advise your solicitor so that the contract of sale can be altered to reflect the agreed changes.

Exclusive agency agreement

Where a real estate agency gains exclusive rights to the sale of the property during a set time frame

Sole agency agreement

Similar to an exclusive agency agreement, although you have the right to sell your home as well as the agent. If you are successful in gaining a sale yourself, you do not pay agent’s commission

Open agency agreement

Your home is listed with numerous real estate agencies. The agency who secures the sale is paid the commission

Auction agency agreement

Your home is listed with an exclusive agent and put to auction, usually after four weeks of marketing

Multiple listing agency agreement

Your agent works with a co-operative network of agents to gain a sale

In making a choice between an auction and private sale you should consider a number of factors – namely, location, style of property, level of interest, timing of the sale and importantly the advice of your REIV estate agent.

The final choice should be guided by which method is more likely to provide you with the best return for your property.

In Melbourne, about 30 per cent of residential sales are conducted by auction. The proportion of private sales is higher in outer suburban and regional Victoria.

Auctions tend to be more popular in certain inner and bayside suburbs and more broadly in a stronger market. This has certainly been the case in the last two years. Up until this weekend there have been 9,738* auctions, with a clearance rate of 83 per cent. This compares to the same period in 2009, when conditions were cooler, when there were 5,134 auctions and a clearance rate of 77%

Homes with architectural and period features will attract different levels of demand, and an experienced agent is able to advise what level of demand a property is likely to receive.

Finally, it is important to consider the individual property in the context of other properties for sale and recently sold in the area. An REIV agent will be able to advise and show you the sales history for similar homes in your area.

I’m always surprised at how many of my friends and clients fail to take advantage of the ATO’s generosity of handing out free Tax Office funded income.

What is it and how does it work?

Simply put, depreciation is a non cash expense against your investment property. It is the write off of the cost of an asset over its estimated useful economic life.

Just like negative gearing the write off is claimed against your other income.

Essentially, there are 3 types of assets for Investment properties:

BUILDING COSTS (Construction costs) Can only claim if construction commenced after July 18 1985

CAPITAL WORKS (Items that don’t form part of the house itself, pool, driveway, water tank…)

FIXTURES AND FITTINGS ( Carpets, curtains, white goods…)

What % of the value can I claim?

For Building costs and Capital works you can claim 2.5% over 40 years.

For fixtures and fittings the rates vary depending on the item. Example, carpets 20%, furniture 15% and curtains 35%. There is also the low-value pool for all items under a $1000 at 37.5% and all items up to $300 can be fully claimed.

Click on this link for the rates from the ATO

http://www.ato.gov.au/content/downloads/NAT1729_07.pdf

The only downside to claiming depreciation is that when it comes to Building & capital works, if the asset was purchased or the cost incurred after May 13 1997 there is a recollection on the sale of the asset.

Remember, when you claim it’s at your MTR (marginal tax rate) . When you sell CGT (Capital Gains Tax) is based on half of the gain, so you are well in front.

CGT is only payable when you sell!

How do you get a depreciation schedule?

Have a chat to your accountant, I would always recommend a quantity surveyor, may cost around $800 approx.

At auction, buyers bid against each other in a public forum. As the seller, you will set a reserve price prior to auction. This is the minimum amount you will accept for your home.

Benefits of this method of sale:

1. Buyers bidding against each other can maximise your sale price. With the emotion on auction day, buyers can become very competitive
2. Provides a final date for sale, enticing buyers to act quickly
3. Stronger advertising campaigns to reach buyers
4. Allows you to negotiate with the highest bidder if your home is passed in on auction day

Prior to auction

Leading up to the auction day you should have a strong marketing campaign in place to attract as many buyers as possible. Usually an auction campaign will run for a period of 4 weeks.

Some buyers may try to secure your home prior to auction day by submitting an offer. You should discuss with your agent whether they feel the offer is in line with the market. If you are happy with the offer, your agent should have the contracts exchanged prior to the auction date.

If your home goes to auction, you will need to set a reserve price. This is the minimum amount that you will accept as the sale price of your home. The reserve price is set prior to the auction and is not disclosed.

Auction day

On auction day you have the right to a single vendor bid, as long as the right to bid is noted in the conditions of sale in the contract. When your bid is made the auctioneer must state that it is a vendor bid.

When bidding reaches your reserve price the highest bidder will be committed to purchase your home.

If bidding does not reach your reserve price, your home will be ‘passed in’. The highest bidder will then have first right to negotiate with yourself and your agent.

Contracts

The successful bidder must sign the contract of sale and pay the deposit at the end of the auction. There is no cooling off period for homes sold at auction or immediately after auction

The exchange of contracts is when you and the buyer each sign a copy of the contract of sale and then physically swap contracts. This process is completed by your agent, solicitor or conveyancer.

Upon exchanging contracts the buyer is required to pay a deposit

Deposit

Deposits vary depending upon which state your home is in. The deposit is usually 10% of the purchase price. However, this is open to negotiation and is commonly reduced to 5%. In some states the deposit is a set amount, usually between $500 and $1000.

Some buyers may request a reduction in deposit due to wanting to reduce the fees charged in gaining deposit bonds or they may require the funds for other purposes.

The deposit is usually held in a trust account by the agent or solicitor for the mutual benefit of the buyer and seller.