Selling a property
FOR PEOPLE LOOKING TO SELL PROPERTY
Selling a property is a process that can become difficult. It is also a process where people can make mistakes, sell too cheaply and be taken for a ride by unscrupulous people and real estate agents. It is very important to do this properly and seek advice from experienced professional people to ensure that you are satisfied with the result. This brochure which is produced by the Real Estate Industry Association Inc is designed to assist people PLAN the sale of their property prior to commencing.
LOCATE A PURCHASER
If you have a purchaser already identified who would like to purchase your property then you have made a good start. If you have not yet found a purchaser and you would like to find one then you can obtain the assistance of a real estate agent. You can ask any real estate agent to help you however we would recommend that you use a member of the Real Estate Agents Association because he has pledged to abide by the Code of Ethics of the Association. A copy of the Code of Ethics is available on request from any member’s office. Once you have selected a real estate agent he will assist you with marketing your property. There are several ways of marketing a property. Your real estate agent will advise you on the best method for your specific circumstances. You can use more than one agent if you wish to.
CHECK THE VALUE
Make sure that the asking price for your property is reasonable. If you are using a real estate agent ask him if the price is reasonable. If you are unsure if the asking price is reasonable then request a valuation of the property to be done by a registered valuer. Your real estate agent can arrange this for you. A valuer will charge a fee for doing a valuation but you will receive a certificate which will show how much the valuer believes the market value of the property is. If the valuation shows that the asking price is fair then you can proceed. If it doesn’t then you should reconsider your asking price. The real estate agent can help you here.
Once you have a purchaser you must engage a lawyer to act for you and look after your interests. Your lawyer will prepare the Contract for Sale. You will be required to pay your lawyer’s fee. Your lawyer will be able to give you a quote for his fees before he starts to act for you. Ask for your quote in writing.
Most real estate agents will require you to fill in a form giving them permission to sell your property. Sometimes this is an agreement giving the real estate agent SOLE RIGHTS to market your property for an agreed period of time. If you do agree to this then you cannot use another agent. You do not have to give sole agency to any specific agent. If you want to use more than one agent then do not sign a sole agency agreement. Request a multi agency agreement.
FEES / COMMISSIONS
Your agency agreement should specify the fees that the agent will charge. The standard base fee in PNG is
– 5% on the first K100, 000
– 3.5% on the next K100, 000
– 3% on the next K100, 000
– 2.5% on the balance.
If your agent is VAT registered then you may be required to pay VAT on the fee. You can negotiate a higher or lesser fee than the one above if you and the agent agree.
PLACE A DEPOSIT
The purchaser will be required to lodge a deposit on the purchase with the real estate agent or the lawyer acting for you. The deposit is usually 10% of the purchase price.
Sometimes the improvements located on properties are subject to GST. You should check if the property that you wish to sell is subject to GST before you commence marketing your property. You may be required to collect the GST and pay it to the IRC.
Sometimes where there is a sole agency agreement in place real estate agents will work together to sell a property. This is called conjuncting on a sale. If this is the case then you are not required to pay the other agent. It is up to the agent with whom you have the sole agency agreement to pay the conjuncting agent.
Sometimes an agent will advise selling a property by auction. This is a very simple system for marketing a property. The costs and fees for selling a property by auction are usually the same as for a standard sale.
Your lawyer will arrange the settlement of the sale of your property.