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2 Get More and Do More at Dummies.com Start with FREE Cheat Sheets Cheat Sheets include Checklists Charts Common Instructions And Other Good Stuff! To access the Cheat Sheet created specifically for this book, go to s p p A e l i Mob Get Smart at Dummies.com Dummies.com makes your life easier with thousands of answers on everything from removing wallpaper to using the latest version of Windows. Check out our Videos Illustrated Articles Step-by-Step Instructions Want a weekly dose of Dummies? Sign up for Newsletters on Digital Photography Microsoft Windows & Office Personal Finance & Investing Health & Wellness Computing, ipods & Mobile Phones ebay Internet Food, Home & Garden There s a Dummies App for This and That With more than 200 million books in print and over 1,600 unique titles, Dummies is a global leader in how-to information. Now you can get the same great Dummies information in an App. With topics such as wine, Spanish, digital photography, certification and more, you ll have instant access to the topics you need to know in a format you can trust. To get information on all our Dummies apps, visit the following: from your computer. from your phone. Find out HOW at Dummies.com

3 Australian Edition Selling Your Home FOR DUMmIES

4 THE INFORMATION IN THIS REFERENCE IS INTENDED TO OFFER GENERAL INFORMATION ON THE TOPIC OF SELLING REAL ESTATE. ALTHOUGH THE GENERAL INFORMATION ON SELLING REAL ESTATE CONTAINED IN THIS BOOK HAS BEEN REVIEWED BY SOURCES BELIEVED TO BE RELIABLE, SOME MATERIAL MAY NOT BE SUITED FOR EVERY READER OR THEIR INDIVIDUAL CIRCUMSTANCES. READERS ARE STRONGLY ENCOURAGED TO CONSULT WITH APPROPRIATELY QUALIFIED PROFESSIONAL ADVISERS BEFORE ACTING ON ANY ADVICE CONTAINED IN THIS REFERENCE.

5 Australian Edition Selling Your Home FOR DUMmIES by Karin Derkley Wiley Publishing Australia Pty Ltd

6 Selling Your Home For Dummies, Australian Edition Published by Wiley Publishing Australia Pty Ltd 42 McDougall Street Milton, Qld Copyright 2012 Wiley Publishing Australia Pty Ltd The moral rights of the author have been asserted. National Library of Australia Cataloguing-in-Publication data: Author: Derkley, Karin Title: Selling Your Home For Dummies / Karin Derkley Edition: Australian ed ISBN: (pbk) Notes: Includes index Subjects: Housing buying Australia. Housing selling Australia. Real estate investment Australia. Dewey Number: All rights reserved. No part of this book, including interior design, cover design and icons, may be reproduced or transmitted in any form, by any means (electronic, photocopying, recording or otherwise) without the prior written permission of the Publisher. Requests to the Publisher for permission should be addressed to the Contracts & Licensing section of John Wiley & Sons Australia, Ltd, 42 McDougall Street, Milton, Qld 4064, or auspermissions@wiley.com. Cover image: sjlocke/istockphoto Typeset by diacritech, Chennai, India Printed in China by Printplus Limited Limit of Liability/Disclaimer of Warranty: THE PUBLISHER AND THE AUTHOR MAKE NO REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE ACCURACY OR COMPLETENESS OF THE CONTENTS OF THIS WORK AND SPECIFICALLY DISCLAIM ALL WARRANTIES, INCLUDING WITHOUT LIMITATION, WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE. NO WARRANTY MAY BE CREATED OR EXTENDED BY SALES OR PROMOTIONAL MATERIALS. THE ADVICE AND STRATEGIES CONTAINED HEREIN MAY NOT BE SUITABLE FOR EVERY SITUATION. THIS WORK IS SOLD WITH THE UNDERSTANDING THAT THE PUBLISHER IS NOT ENGAGED IN RENDERING LEGAL, ACCOUNTING, OR OTHER PROFESSIONAL SERVICES. IF PROFESSIONAL ASSISTANCE IS REQUIRED, THE SERVICES OF A COMPETENT PROFESSIONAL PERSON SHOULD BE SOUGHT. NEITHER THE PUBLISHER NOR THE AUTHOR SHALL BE LIABLE FOR DAMAGES ARISING HEREFROM. THE FACT THAT AN ORGANISATION OR WEBSITE IS REFERRED TO IN THIS WORK AS A CITATION AND/OR A POTENTIAL SOURCE OF FURTHER INFORMATION DOES NOT MEAN THAT THE AUTHOR OR THE PUBLISHER ENDORSES THE INFORMATION THE ORGANISATION OR WEBSITE MAY PROVIDE OR RECOMMENDATIONS IT MAY MAKE. FURTHER, READERS SHOULD BE AWARE THAT INTERNET WEBSITES LISTED IN THIS WORK MAY HAVE CHANGED OR DISAPPEARED BETWEEN WHEN THIS WORK WAS WRITTEN AND WHEN IT IS READ. Trademarks: Wiley, the Wiley logo, For Dummies, the Dummies Man logo, A Reference for the Rest of Us!, The Dummies Way, Making Everything Easier, dummies.com and related trade dress are trademarks or registered trademarks of John Wiley & Sons, Inc. and/or its affiliates in the United States and other countries, and may not be used without written permission. All other trademarks are the property of their respective owners. Wiley Publishing Australia Pty Ltd is not associated with any product or vendor mentioned in this book.

7 About the Author Karin Derkley began as a journalist in 1992 writing up the property listings for local paper The Melbourne Times. She went on to write for various sections of The Age, The Sunday Age and several other magazines. For five years she worked as a senior writer and then as deputy editor at Personal Investor magazine. She is now a regular contributor to the Domain section of The Age, and writes on property investment for AFR Smart Investor magazine. Karin writes extensively about the ups and downs of the property market; about the art of unearthing the perfect home; about negotiating through the mortgage maze; about the ordeal and occasional delights of renovating; and about how to present your house to sell in a difficult market. Living through the experience of purchasing and renovating her own home, and being regularly solicited for advice by friends and family on the purchase and sale of their properties, she is all too familiar with the pitfalls and pleasures of home ownership and investing. She is also the author of Buying Property For Dummies.

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9 Dedication To my friend Lisa who has been a constant personal and professional support. Author s Acknowledgements The idea for this book was enthusiastically supported by Dummies acquisition editor Rebecca Crisp and developmental editor Hannah Bennett. Together Rebecca and Hannah have kept me on deadline and within Dummies guidelines, while giving me the flexibility to adapt and evolve the structure of the book. Thanks to editor Jenny Scepanovic who saw what I was trying to say and so efficiently massaged my paragraphs into Dummies style, and offered helpful suggestions along the way. The input and support of many friends has been invaluable, both in volunteering their own experiences and in providing encouragement throughout the process. Special thanks to my parents-in-law who so conveniently allowed me to experience first-hand the challenges and pitfalls associated with the selling process, as well as to Jenny M who so generously volunteered her insights. I also acknowledge the many people I have interviewed in my years as a property writer, who have given me their personal perspectives on selling property. Thanks also to my family who have watched the process of putting together another For Dummies book unfold.

10 Publisher s Acknowledgements We re proud of this book; please send us your comments through our online registration form located at Some of the people who helped bring this book to market include the following: Acquisitions, Editorial and Media Development Project Editor: Jenny Scepanovic Acquisitions Editor: Rebecca Crisp Editorial Manager: Hannah Bennett Production Cartoons: Glenn Lumsden Proofreader: Catherine Spedding Indexer: Don Jordan, Antipodes Indexing

11 Contents at a Glance Introduction... 1 Part I: The Great Australian Dream... 7 Chapter 1: Assessing the Dream: Aspects of Selling Property...9 Chapter 2: Deciding If You Should Sell...23 Chapter 3: It s All In the Timing...33 Chapter 4: Using a Real Estate Agent or Going It Alone...43 Part II: Getting Ready to Sell Chapter 5: Setting the Right Price...71 Chapter 6: Dressing (Your Home) to Impress...85 Chapter 7: Renovating Before You Sell...99 Part III: Putting Your Property on the Market Chapter 8: Choosing a Method of Sale Chapter 9: Selling Through a Private Treaty Sale Chapter 10: Going, Going, Gone: Selling at Auction Chapter 11: The Legal Processes of Selling Chapter 12: Selling When It s Not Your Main Residence Part IV: The Part of Tens Chapter 13: Ten Ways to Sell Your Home for the Best Price Chapter 14: Ten Items for Your Inspection Day Checklist Index

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13 Table of Contents Introduction...1 About This Book...2 How to Use This Book...2 Who Should Read This Book?...3 How This Book Is Organised...3 Part I: The Great Australian Dream...3 Part II: Getting Ready to Sell...4 Part III: Putting Your Property on the Market...4 Part IV: The Part of Tens...4 Icons Used in This Book...4 Where to Go from Here...5 Part I: The Great Australian Dream...7 Chapter 1: Assessing the Dream: Aspects of Selling Property Selling a Home Isn t an Everyday Activity...10 Getting Psychologically Ready to Sell...11 Sussing Out Selling Methods...13 Buyers Drive Property Prices in Australia...13 Treating Your Home As a Product...14 Preparing your home for sale...15 Being aware of overcapitalising...15 Getting the Professionals In...16 Choosing a good real estate agent...17 Using an independent property valuer...18 Engaging a vendor s advocate...19 Finding professionals to handle the paperwork...20 Living Through the Inspection Period...20 Working Out What to Do After You Sell...21 Chapter 2: Deciding If You Should Sell Exploring the Costs of Selling...24 Renovating Might Be a Better Option...25 Renting Instead of Selling...27 Making Money from Your Home Without Selling Up...28 Using a reverse mortgage...28 Using a home reversion scheme...29

14 xii Selling Your Home For Dummies, Australian Edition Remembering That Prices Are Relative...29 Considering Downsizing and Tree- or Sea-Changing...30 Chapter 3: It s All In the Timing Understanding Supply and Demand...33 Selling in the Spring Or Any Other Season...36 Controlling the Weather You Can t...37 Selling First, Then Buying...38 Negotiating an extended settlement period...39 Renting while you look...39 Staying with friends or family...40 Buying First, Then Selling...40 Getting an extended settlement period...41 Finding the finance...41 Chapter 4: Using a Real Estate Agent or Going It Alone Understanding What a Good Real Estate Agent Does...43 Researching Real Estate Agents...45 Checking out personal recommendations...45 Conducting your own research...46 Narrowing the Field...48 Interviewing the agent...49 Presenting your property to the agent...50 Assessing an agent s personality...51 Viewing the agent s presentation...53 Talking About Money with an Agent...54 Placing a value on your home...54 Paying an agent s fees and commissions...55 Marketing Your Property Through an Agent...57 Making Sense of the Agency Agreement...59 Listing with One Agent, or More...61 Cancelling a Listing Agreement...62 Complaining About a Real Estate Agent...62 Deciding to Sell Your Property Privately...64 Marketing your property...64 Showing prospective buyers around...66 Taking offers on your home...67 Part II: Getting Ready to Sell...69 Chapter 5: Setting the Right Price Understanding What Determines Property Prices...72 Supply and demand...72 The value of land and location...74

15 Table of Contents xiii Individual property features...75 Changing times...76 Fluctuating interest rates...77 Researching Sales in Your Area...78 Comparing your property to other homes...79 Understanding your buyers...80 Getting the Price Right...81 Deciding On a Pricing Style...82 Setting a Reserve Price for Auctions...84 Chapter 6: Dressing (Your Home) to Impress Putting Yourself in Buyers Shoes...86 Cleaning to Perfection...88 Bringing in the Light...90 De-cluttering Your Life...90 Making Repairs...91 Glamorising the Garden...92 Using Professional Home Presentation Services...93 Counting Down to Inspection Time...93 Sussing out the street appeal...95 Opening up the place...96 Creating an inviting atmosphere...96 Making yourself scarce...97 Chapter 7: Renovating Before You Sell Doing a Makeover: What s Worthwhile, What s Not Discovering the wonders of a paint job Polishing or carpeting floors Refurbishing kitchens and bathrooms Maximising light Creating an outdoor entertainment area Going for open plan living Adding a bathroom Adding a bedroom Avoiding Overcapitalising Getting Professional Help Interior decorators and home stylists Interior designers Architects Permits and Regulations Building permits Planning permits and development approvals Getting your application through council Doing the Work Yourself Deciding whether you re up to the job Becoming an owner builder...115

16 xiv Selling Your Home For Dummies, Australian Edition Taking out home warranty insurance Calling in qualified tradespeople Acting as project manager Living Through the Renovation Process Moving out until the dust settles Staying put during renovations Part III: Putting Your Property on the Market Chapter 8: Choosing a Method of Sale Assessing When a Private Sale Works Best Knowing When an Auction Works Best Weighing up whether an auction is best for your property Advantages of selling at auction Disadvantages of selling at auction Selling Using Another Method Sale by set date Listing without a price: EOIs and POAs Off-market sales Chapter 9: Selling Through a Private Treaty Sale Understanding Private Treaty Sales Pricing a Private Treaty Sale Dealing with Offers Negotiating on price Getting more than one offer Agreeing on special conditions and other clauses Cooling Off: When Buyers Change Their Minds Watching Out for Gazumping Closing the Sale What If Your Property Doesn t Sell? Selling low or hanging in there Hotting up the action with a sealed bid Taking your property off the market Chapter 10: Going, Going, Gone: Selling at Auction Planning Your Auction Finding the right date for an auction Thinking about the time of day Promoting Your Auction...153

17 Table of Contents xv Setting Your Reserve Price Devising Your Selling Price Strategy Dealing with Pre-auction Offers Accommodating Requests from Buyers How Auction Day Works Failing to Sell at Auction Chapter 11: The Legal Processes of Selling Understanding Your Legal Obligations When Selling Selecting a Specialist Preparing the Contract of Sale Listing what has to go into the contract Specifying all your goods and chattels Preparing a contract for an apartment or unit Knowing What Happens After You Accept an Offer Exchanging contracts To-ing and fro-ing with the buyer s solicitor Discharging the mortgage Sidling up to settlement day Making final settlement Allowing a Buyer to Move In Early Chapter 12: Selling When It s Not Your Main Residence Selling a Holiday Home Timing your holiday home sale Making a holiday home appealing Tax issues on a holiday home sale Selling an Inherited Home How much doing up should you do? Taxing issues for inherited properties Selling a Rental Property Deciding how much making-over to do Selling with tenants or as vacant possession Getting tenants to cooperate during the sale Tax and selling a rental home Part IV: The Part of Tens Chapter 13: Ten Ways to Sell Your Home for the Best Price Understanding Your Buyers Removing Personal Clutter Adding Value with Cosmetic Changes...195

18 xvi Selling Your Home For Dummies, Australian Edition Building More Storage Finding an Enthusiastic Real Estate Agent Targeting Your Marketing Pricing Your Home Properly Dressing to Impress on Inspection Days Being Prepared to Negotiate Ensuring a Smooth Transaction from Contract to Settlement Chapter 14: Ten Items for Your Inspection Day Checklist Clean, Clean, Clean Repairing Obvious Problems Sprucing up the Garden Arranging Furniture and Furnishings Artfully Locking Up Valuables Freshening Up Smells Bringing in Light Making it Warm, Or Cool Placing Flowers and Personal Touches Making Yourself Scarce Index...207

19 Introduction So, you re thinking about selling your home. If you re like many others, you may be finding this thought very daunting. Just the prospect of dealing with real estate agents can fill many sellers with apprehension: How do you choose the right one? Making sure you get a good price on your home can be another source of anxiety especially if you ve already bought another. And what about all the preparation in getting your home ready for sale, not to mention the paperwork involved in getting contracts drawn up properly and legally? This book aims to arm you with the knowledge you need to help dispel many of the fears and anxieties associated with selling your home, and equip you with the confidence you need to walk smoothly through the process. Knowing as much as you can about what s involved in the process of selling your home can, for example, help you choose the right real estate agent who will successfully sell your property under your watchful eye; and understanding what determines the value of a home can help you price your property to ensure it appeals to the right buyers. When you realise that you need to look at your property as a product you understand why you need to present it to maximise its emotional appeal to buyers. And knowing what improvements are more likely to pay off when you come to selling helps you avoid overcapitalising by wasting money that you might never get back. In Selling Your Home For Dummies I take you through every step of the selling process, including the financial and legal aspects involved in the transaction. I also give you information and ideas you need to ensure your property sells for the best possible price.

20 2 Selling Your Home For Dummies, Australian Edition About This Book The information in this book is drawn from the knowledge I ve gathered over the many years I ve worked as a property writer, talking to real estate agents and reporting on the ups and downs of the property market both nationally and in my home city of Melbourne. I ve also drawn heavily on insights I ve gleaned as a result of listening to friends and family s experience of selling a home, as well as the recent experience of selling my parents-inlaw s home. For Dummies books are all about offering practical advice, so I give you information you can really use, like step-by-step information on how to present your home in order to maximise its emotional appeal to potential buyers, and the general rules as to which kinds of improvements are more likely than others to add value to your home when you sell. I also give you inside information about all the legal stuff that seems so mysterious to ordinary home sellers, like the rules on how contracts of sale need to be drawn up, vendor bidding, and cooling-off periods that apply to private sales. How to Use This Book Selling a property is a process rather than a one-off event. It involves a number of stages that can seem overwhelming if you think of them all at once. The order of the chapters in this book reflects the stages in the process, starting with the question of why you might want to sell at all, and then how you might get the best price for your home, how to find yourself an agent, what method you might want to use to sell it, all the way up to exchange of contracts. You could be at the beginning of this process; if selling your property is something you re only just thinking about, I suggest you read through from start to finish to see what s involved in each step in the process, and make yourself a to-do list. But you might be halfway through and find you re flailing in the unknown; just flick through the contents list and pick up anywhere in the book according to the stage you re at.

21 Who Should Read This Book? Introduction 3 This book is for people thinking of selling their property who need to arm themselves with the knowledge and information necessary to navigate through the process. You could be in any or all of the following situations: 55 You need to sell your home because of a change in your financial circumstances, to relocate for work purposes or because the property you re in no longer works for your household. 55 You own a home and want to take advantage of high property prices in your area, or of a lull in the market to upgrade to a bigger home. 55 You re thinking about selling your home but you re wondering if it s the best course of action, or what work you need to do on the property first. 55 You may have sold a home in the past but it was in another country, another state or in the past and there were different rules and conventions associated with property sales. 55 You may have sold a property in the past, but your lack of knowledge meant it was not a great experience and you want to go into the process with more information this time. How This Book Is Organised This book is organised into four parts so you can head straight to the topic you need to know about right now. Here s a short overview of what each part covers. Part I: The Great Australian Dream Like buying a home, selling a property is something most people do only once or twice in their lifetimes which can make it a mysterious and scary proposition. In this part I help you decide whether to sell, when to sell and how to find the best real estate agent for you. I also look at whether it s worth taking the brave step of putting your home on the market yourself.

22 4 Selling Your Home For Dummies, Australian Edition Part II: Getting Ready to Sell This part is all about the preparation you need to do before you sell. I tell you how to price your property and all the factors that affect the price you set, cleaning your place in and out, fixing anything broken before inspection days, and the whys and wherefores of renovating; what s worth doing and what s not. Part III: Putting Your Property on the Market In this part I help you choose which method of sale you use to sell your property private treaty sale or auction or a variation of one of these. I talk about what happens once you ve found someone who is prepared to pay a price you re happy with and all the paperwork and legalities involved, and also the tax implications when you sell a property that isn t your main residence. Part IV: The Part of Tens In this part, you can dip into some really useful bite-sized information on how to make the selling process work for you, including ten invaluable tips on how to sell your property for the best price, and a checklist for preparing for open for inspection days. Get rid of the clutter, open the windows, farm out the dog and lock up your valuables. The buyers are coming! Icons Used in This Book In this book, I use icons as a quick way to go directly to the stuff that you need or want to read. Look for the icons in the margin that point out specific types of information. Here s what the icons in this book mean: This fine piece of art flags information of note to store in your memory banks. The Technical Stuff icon points out material that generally can be classified as dry as a bone. Although I think that the information is interesting, it isn t vital to your understanding of the issue. Skip it if you so desire.

23 Introduction 5 The Tip icon points out practical, concise information and insights that can help you make the right decisions when selling property. When you see this icon, enjoy reading about my own experiences and those of people I ve spoken to over the years. I ve learnt from every one of them. This icon cautions you about potential problems or threats to your financial health. Where to Go from Here For Dummies books are designed so that you can dip in anywhere that looks interesting and get the information you need. This is a reference book, so don t feel like you have to read an entire chapter (or even an entire section for that matter). You re not going to miss anything by skipping around. So, find what interests you and jump on in!

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