Sell and Finalise the Sale of Property by Private Treaty

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Sell and Finalise the Sale of Property by Private Treaty


Sell and Finalise the Sale of Property by Private Treaty (CPPDSM4022A)

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Sell and finalise the sale of property by private treaty

Assessment activities

The assessment consists of the activities outlined below.

Part A: Short-answer questions

• This part consists of five (5) questions.

• Question 2 & 4 consist of multiple parts.

Part B: Scenario based questions

• This case study consists of twenty-two (22) questions based on a short scenario provided about
Mr. and Mrs. Cummings.

• Question 22 consists of multiple parts.

• Each question builds on this scenario providing additional information where required with each question.

• Read the information provided carefully ensuring you take this information into account when responding to each question.

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Part 1: Short-answer questions

Question 1

Describe the requirements in your state regarding notifying the tenant and gaining access to a rental property to sell it by private treaty and how you would take these requirements into account when marketing and selling the property.

Legislative requirement for providing notice to tenant of sale

Legislative requirement for gaining access to show new prospective buyers

New South Wales

A reasonable notice is supposed to be issued to the tenant. However, it should be within the last 14 days before the existing tenancy is due to end.

Regarding the access, it has to be between 8 am and 8 pm and not on Sundays and public holidays.

Question 2

Explain any procedures for agents handling the making an offer to a seller, as well as any relevant legislative requirements, including:

(a) the documentation of the offer

In the documentation, it is important to ensure that lower offers are raised to a reasonable amount. The documentation is critical since buyers are prone to making changes in their offers and altering the terms and conditions of the offer. Therefore, the documentation acts as a binding article between the parties.

(b) handling multiple offers

In handling multiple offers, a deadline should be set to ensure all expressions of interest are submitted to the seller for consideration.

(c) the receipt and holding of payment of money paid as a deposit on the purchase of property, including when and how the money is paid out to the vendor.

This should strictly adhere to the Trust Account requirements of the Agency legislation. Besides, the agents have to be aware of the nature of the instalment contract and the restrictions it places on the seller’s rights to deal with the property. It is important to ensure that the deposit is 10% the amount as stipulated by the contract.

Question 3

(a) What prescribed documentation is involved in your State/Territory with regards to a Contract for Sale of Land? List these prescribed document(s).

1. a section 149 certificate

2. a property certificate and a copy of a plan for the land issued by Land and Property Management Authority

3. Copies of all deeds, dealings and other instruments lodged or registered in the Land and Property Management Authority

4. A property certificate for the lot and the common property

5. A copy of the strata development statement

(b) Explain the procedures in your individual State/Territory legislation relating to exchanging contracts for sale, particularly with regards to what may make the contract invalid.

During the exchange, a contract is invalid if the exchange of contract and the payment of a deposit has not been completed.

(c) What disclosures must be made to the buyer before a contract can be enforced?

Terms and conditions of the sale and valuable information about the land

(d) What is the cooling off period for the exchange of contract, if applicable?

5 business-day cooling-off period

Question 4

Explain your state’s legislative requirements regarding:

(a) beneficial interest

The process of obtaining a beneficial interest includes purchasing property, obtaining an option to purchase property, and being granted a general power of appointment in respect of property. However, real estate agents can be prohibited from obtaining a beneficial interest if their clients do to give written consents, the agent does not act fairly and reasonably in obtaining interest. Also, if the client does not consent in writing to the commission or other reward being paid if the commission is payable to the agent by the client.

(b) disclosure of conflicts of interest

Agents have to disclose conflicts of interest to make sure that the clines can make informed decisions and also get alerts on any potential conflict of interest the agents ma have in their dealings with them.

Question 5

Explain how the trust account ledger entry should identify the break-up of payments with respect to the sale of the property by private treaty.

  1. the amount of deposit paid and whether it is invested in a special interest-bearing

  2. trust account or the general trust account

  3. the gross commission payable to the agent from the transaction

  4. commission payable to a conjuncting agent, if applicable

  5. commission payable to a sales agent

  6. commission payable to the listing agent

  7. authorised expenses to be deducted from the deposit being held

  8. the balance of deposit payable to the seller

  9. termination penalty fees where applicable

  10. GST payable by the seller on the commission.

Part 2: Scenario based questions

Question 1

When meeting with a new customer for the first time, you must use open probes to quickly gather information and encourage the customer to guide the direction of conversation. Assume that you are at an open for inspection and greeting a couple, Mr. and Mrs. Cummings, as they arrive to inspect the property. Once you have introduced yourself, what might you say next? You are required to draft two (2) open probes that you would use in this situation.

  1. You mentioned you are not having a good experience with your current neighbourhood. If you live here, what are you hoping will be different?

  2. Given all we’ve talked about, what do you see as being different if you were to live here?

Question 2

When would you use closed probes when dealing with the Cummings? You should be able to raise at least three (3) points.

  1. When in need of quick answers

  2. When I want to keep control of the conversation

  3. When I want to give facts to the Cummings

Question 3

The property was not suitable for the Cummings. They have agreed to meet you back at your office to inspect more homes later in the afternoon. Draft five (5) key questions that you would ask to uncover essential information before showing them properties.

Note: Your five (5) questions should relate directly to the essential qualifying elements discussed in Topic 2. Please identify (in brackets) the element being covered in each of your questions.

  1. What are the things that the property must have? (Wants and Needs)

  2. Is there anyone else involved in making the final decision? (Authority).

  3. When do you plan to move in should you find the suitable property? (Timeframe)

  4. Are you looking for new property because of life changes? (Dominant buying motive)

  5. Have you investigated any financial needs apart form that of acquiring the property?(Financial Capacity)

Question 4

Read the following sentences and then identify the needs of this young couple. You should be able to uncover at least six (6) needs.

We are interested in buying into an area that is close to the city because that is where we work. We also don’t want to spend a great deal of money on car parking, so would prefer something handy to regular public transport. We love entertaining at home so would like a property with a great outdoor area. We’re not fussy about the style of property but would like 3 bedrooms. A study is very important, so one of the bedrooms, apart from the master bedroom, would have to be quite large. However, we can compromise a bit if the property has some versatile space. We have a great flat screen home theatre and sound system, so would be keen to see the property accommodating this equipment easily. Obviously we’d like to make some money from the property, so would like an area that has good growth potential.

  1. Proximity to the city

  2. Easy access to public transport

  3. A 3 bedroomed house

  4. Spacious house

  5. A neighbourhood with good growth potential

  6. A home with enough space in the outdoor area

Question 5

In relationship to the situation above, what type of question would you ask to identify if there are any other needs that have not been expressed? Please draft the question below.

Questions concerning the timeframe and author.

If you find the property that suits your needs, when will you occupy it? Is there anyone else involved in making the final decision?

Question 6

What do you think is the dominant buying motive for this couple?

They are an owner occupier

Question 7

This couple have already researched finance and they have a budget of $820,000 to work within. What price range will you select properties to show to the Cummings?

Please explain your answer.

$820,000 to $840,000

This is because buyers are always willing to spend 10-15% more than their initial budget

Question 8

If you had a highly suitable property for sale at $855,000 would you show it to the Cummings?
How would you handle this scenario?

Yes. I would first consider the selling motivation as well as the negotiation indicated by the sellers. Afterward, with the Cummings consent, I would go ahead to show the property to them.

Question 9

Before you leave the office to inspect the properties with the Cummings, what basic preparations would you undertake first? You should be able to raise at least five (5) matters that you would attend to first.

  1. Contact the sellers to seek permission to bring buyers to view the property

  2. Advise the seller about the appointment to inspect the property is subject to the final meeting and qualification of the Cummings.

  3. Collect the keys form the agency keyboard

  4. Confirm the timetable to ensure the residents know when to expect the Cummings

  5. Carry the printout of all the listings to provide additional information to the Cummings

Question 10

One of the properties that you think is ideal for the Cummings is tenanted. Can you show it today? Please explain your answer.

Yes. However, this will depend on the provisions of the state residential tenancies legislation in relation to notice periods and instructions from the tenant

Question 11

Before you leave the office with the Cummings to inspect the selected properties, you should summarise your objective and make a direction statement. What would you say to the Cummings?

I would tell the Cummings that am honoured to do business with them and hope that they will be satisfied with the property since I chose the one that best fit their wants.

Question 12

Please describe how you would manage an escorted inspection of the property with the buyers. You should describe where you would be positioned, what you would be alert to and how you would manage the security of the client’s property. You should be able to raise at least three (3) relevant points.

During the inspection, I would be positioned in front of the Cummings to direct them to the various rooms in the house.

I would be alert to their comments, both negative and positive and build on the positive comments from them.

The security of the client’s property will be managed by ensuring that I accompany them in the place around the house.

Question 13

The Cummings appear to be very comfortable with the home for $855,000. They are particularly taken with the great outdoor entertainment area. The home has very advanced gardens with a terraced BBQ setting and has recently been renovated.

Draft a support statement to introduce a benefit about this feature. Your support statement must relate back to the Cummings initial needs identified in Question 4.

I am glad that you chose this property because it is ideal for you. It is close to the city and allows quick access to public transport just as you wanted. In addition, the house is spacious and will allow you to set aside a room for study and engage in a business venture to earn you some significant revenue.

Question 14

The Cummings agree with your comments. What would you do now? Draft a suitable question to use in this situation.

I would congratulate them for choosing the property and ask them if they would like to review the various agreements for the sale.

Would you like to review the terms and conditions of our agreement?

Question 15

The Cummings respond that they like the home very much, but feel that it is slightly more than they can afford and they are concerned that it will really extend their finances. They want to know if there are cheaper properties offering similar features. What is happening here? How would you respond to this comment?

At this point, the Cummings are trying to negotiate the price indirectly. However, I would respond to their comments by saying that the property is worth the amount because of its features and that they should consider acquiring it since there are no cheaper properties offering the same features.

Question 16

You know that this is the ideal property for the Cummings and that there are no more properties similar to it in a lower price range. How would you respond to the Cummings in this situation? You are required to draft a closing statement that incorporates a summary of the customers’ needs, the benefits of the property and requests a commitment to purchase.

I would advise the Cummings to consider taking the property because it is the only one with the features that they want. It is close to the city and they can save on parking fees when they use public transport. Besides, they will enjoy ample space from the property and for business ventures.

Question 17

The Cummings agree that the property is ideal for them, but are concerned about the price as it is above their budget. They ask you whether they might be able to buy it for less than the list price. How will you respond, and what tools might you use to support your comments?

I will tell them that their offer has to be presented to the agency to confirm whether it can be reduced or not.

Question 18

You have done your job well and the Cummings appear satisfied with your response. What will you do now?

Present him with the expression of interest form

Question 19

The Cummings are ready to make an expression of interest and ask you to explain how they should go about this. You are required to explain the essential steps for making an expression of interest to the seller, including the payment of an initial deposit and any associated documentation that must be given to the Cummings.

After receiving the expression of interest form the Cummings, it is essential that this is presented to the seller. Afterward, the seller will be aware of the deposit that will be made regarding the sale of the property. Among the documents to be issued to the Cummings include Notice of offer to purchase residential land, statement section, and the contract.

Question 20

The Cummings agree to submit the expression of interest as described above. Another licensed agent in your office, however, also has an offer on contract for the same property. How would you manage this situation? You should be able to raise at least 5 points here. Your answer should be guided by best practice provisions contained in your states legislation and Rules/Code of Conduct (if applicable in your state) and the agent’s Fiduciary duty to the client.

  • First off, I would acknowledge and reassure the client that such scenarios do happen and are resolved in the most amicable way.

  • Promptly responding to the conflict is another priority. Here, much time should not be wasted because issues could escalate to detrimental levels.

  • I would ask the other agent in a polite way in a bid to establish whether he was aware of my deal or not.

  • Depending on the response the agent gives, I would use giraffe language where I call for a private talk and try convincing him into conceding.

  • If things get out of hand, I would use mediation from our senior staff and other relevant authorities.

Question 21

The sellers appear to be more interested in the Cummings’ offer to purchase, but have asked the agent whether the Cummings would consider raising the price by $5000. What stage of the negotiation have we reached and what should the agent do now? You should be able to raise at least three (3) relevant points.

This is stage 5. The agent seeks commitment from the buyer and indicates a further plan of action for the buyer to consider and approve. The agent also takes control of the process and directs the clients on the steps to be followed. In addition, the agent should express himself/herself so that the client can understand that they need to do business apart from showing the houses.

Question 22

(a) The other buyers are still interested in the property. Even if the Cummings agree to raise their offered price by $5000, can they be guaranteed of being the successful buyer at this stage of negotiations? Please explain your answer.

Yes. The reason for this is that the seller has been informed about the Cummings interest and has requested that they raise their amount by $5000 and in this case, they have accepted to do so.

(b) The Cummings eventually agree to the client’s price offer. How would you manage this final stage of the negotiation with regards to documenting agreement?

After this stage, the Cummings will be presented with the relevant documents that will require them to pay the deposit.

End of Assessment

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