Should the transaction between the original buyers and new buyers fall through, the onus will be on the original buyer to complete the property purchase, she adds.
Some buyers purchase property with the intention of selling it a few years later for capital gains. Peter Thng, executive director of Reapfield Property Consultants, notes that capital appreciation in Australia sometimes moves at a steady and moderate pace, so it is advisable to hold properties there for more than four years to see decent appreciation.
Capital gains tax laws will also influence how long you hold on to your property.
The New Zealand government recently introduced measures against speculation, so anyone selling a residential property that is not their main home within two years of purchase will face a tax on capital gains.
In Malaysia, the longer one holds a property, the lower the property gains tax will be.
Sellers also need to pay close attention to developments in the domestic property markets and the state of the economies. Peter notes that returns may well depend on where the market lies in the property boom-bust cycle.
Exchange rate movements can also be a big factor to watch out for, adds Savills’ head of international residential sales, Gavin Sung. Something as innocuous as the passing seasons can influence your decision as well. Camilla of Black Brick observes that most sellers in the UK typically put their properties on the market in spring – that is, in March, April and May.
“The days are longer and, generally, properties look better when the weather is better, while very quiet periods tend to be around Christmas and New Year,” she explains. But this varies for different markets.“The prime central London property market is so short on supply that you can’t really go wrong putting your property on sale any time between March and November”, she adds.
As you prepare to sell, you need the right real estate agency to evaluate the property and market it at the right price. Be clear on the valuation process of each real estate agency.
For instance, Black Brick ensures at least three estate agents will evaluate the property and report their estimates on what the property could sell for. The agency then checks these recommended asking prices with comparable sales data.
Rather than simply relying on figures relayed by agents, Peter of Reapfield Property Consultants said it is “best to do your own homework” by observing recent transactions of similar properties. Marketing the property at the right price is crucial. Camilla cautions: “Often, the properties that end up sitting on the market for months on end are overpriced.”
Every seller wants to find a buyer, and this means appointing a real estate agency to undertake the marketing. The foreign ownership laws in each country will determine who your potential buyers will be, which will affect your marketing strategies.
In Australia, resale homes can be bought by only Australians or permanent residents.
It might be best to engage a local real estate agent to source for local buyers, says Peter. No such foreign ownership restrictions apply in the UK, Japan and New Zealand.
Andrew McCasker, head of property finance for South and South-east Asia at the National Australia Bank, notes that sellers in such markets may choose an offshore agent to market the property to international buyers as well.
Before selecting a real estate agent, find out more about the agent’s marketing plans.
Typically, the agents should list your property on their website and other mainstream property portals, conduct viewings of the property and, in some cases, an auction of the property.
Sellers should also make their properties as attractive as possible. This can be as simple as making sure the place is clean and all lights are working. Even the aroma of freshly brewed coffee during viewings is said by some to make a difference. Camilla says: “First impressions count for a lot and buyers can be easily put off by a dirty house full of clutter.”
After finding a potential buyer and engaging a lawyer, the seller then needs to negotiate with the buyer. Initially, the seller needs to agree on the terms of purchase with the buyer. These include the purchase price, transaction timeline and whether furniture is to be included in the sale.
And unless it is a new development, the buyer will normally make an offer subject to a full physical examination by a surveyor. The buyer may also negotiate a period of exclusivity, during which the seller cannot market the property. Caspar Harvard-Walls, a partner at Black Brick, says: “You should try to agree on all key terms at the outset so that there is less scope for argument later on.”
This initial agreement is non-binding for both parties. Both are entitled to walk away at any point until contracts are exchanged. After that, lawyers of the sellers and buyers will enter into correspondence.
During this period, the buyer may engage a surveyor to examine the physical condition of the property. Your lawyer will aid in the negotiation of terms until both sides are satisfied.
He second stage involves the exchange of contracts. Before this exchange, both sides must agree on a completion date – the date when the full purchase price must be paid.
If you are selling a property that is still being built, the completion date is delayed until the property is ready for occupation. A deposit, usually 10 per cent of the total purchase price, is paid during the signing of contracts. Once contracts are exchanged, the buyer is committed to the purchase and must pay the rest of the purchase price on the completion date.
The last stage is at the agreed time of completion. By this date, the buyer is required to pay the remaining balance. Usually, no cheques are allowed and the lawyers are tasked with making sure payment is received.
At the closing of the deal, the seller will sign a document that transfers ownership to the new buyer. The general process is similar for most countries such as Australia, the UK and Japan, although each country has different terms and slight variations in the process.
In Japan, when preparing a real estate sales contract, the seller needs to notify the buyer of the condition of the property. The seller is required to hand over the property in the condition reported in the contract.
The mode of payment also differs across countries. Conveyancing lawyer Tan Seow Peer from Joseph Tan Jude Benny LLP says that in countries such as Malaysia and the US, the money is put in an escrow account with a stakeholding company. Lawyers ensure that certain processes are completed before releasing the documents that register the buyer as the new owner.
Sellers also need to take note of different taxation systems across countries. Before the completion date, sellers must usually settle any fixed asset taxes, capital gains tax and any other property management fees. There are also additional fees, such as land registration cost and agent’s commission. Real estate agents typically charge between 1.5 per cent and 3 per cent of the final sales price.