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Authorities

Authorities

Property Sales
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Purpose

This procedure details the procedures applying to Authorities.

Procedure

Exclusive Private Treaty

  • When Authority is signed, Private Sale rules apply
  • All Sales Consultants and Listing Consultant must ensure their initial’s, purchaser’s name and contact number are written on the front of the file prior to acceptance of an offer to be entitled to make a claim for commission unless sold at auction, and the buyer registered in system with the viewings recorded.
  • No name shall be written on file until an inspection has been conducted with the purchaser.
  • A Sales Consultant may notify that a property is under offer by writing in (red pen) the day book the address of the property, proposed settlement date and that a deposit has been taken (minimum of $1,000 deposit and balance on acceptance), Section 32 and Contract Note prepared.  Property may still be inspected while under offer.
  • When an offer is acceptable all sales consultants listed on the front of the file must be contacted.  If they are absent then an independent consultant must have consent from all interested parties.

Otherwise the following alternative applies

  • When an offer is acceptable to the Vendor then the acceptable offer must be written in the daybook by 5.30pm that day.  If not then all consultants must be notified by 8.00pm that night.  If all sales consultants are unable to be contacted then the closing time for offers is held over for a further 24 hours.  All sales consultants must contact their buyers for offers by 5.00pm the following day.  Offers  taken over the weekend can be closed until the next day, unless Public Holiday.  If offers are to be closed in less than 24 hours it requires 100% acceptance by the sales team. All offers considered by listing agent and/or vendor.  All offers must be signed up by 5.00pm unless       otherwise agreed.
  • Listing Consultant not to ratify alone if an interested party and close offers possibly contentious and selling sales consultant may attend ratification unless manager decides to the contrary.
  • All losing buyers are not to be notified until after sale is ratified.
  • If agents do not follow these procedures, they may forfeit their commission entitlement.

Non Exclusive Private Treaty

  • The sale may be ratified immediately by any sales consultant. 
  • All effort to contact other interested parties should be undertaken, however ratifying the sale is a matter of urgency. Advise Sales Manager of any issues with buyers.
  • The sales consultant may or may not notify that a deposit has been taken in the day book.  If notice of deposit is written in the day book their buyer has first right of refusal as per Exclusive Private Treaty.

Audit Requirements for Authorities

The Auditor has picked up some areas we need to address when completing the Authority. We have also noticed recently there have been a number of situations which we could avoid by making some modifications to the way we complete certain areas of the authority and the contract note.

  1. Authority period – Some files recently have needed a further authority signed after the sale as the period had expired. We cannot take our funds without a current authority.

  1. The auditor advised that when we complete a new authority that this overrides the first one. Up until now we have been adding the two together in terms of additional advertising. This is incorrect. We must only use the information provided on the most recent authority regardless of the previous ones. This means we must have all the information correctly recorded on the current authority. We should not be getting the client to resign the first one we should complete a new one.

  1. Property is being sold upon payment of……..The only box we should tick in this section is “full deposit”. The reason for this is these are binding clauses and if vacant possession or full purchase price are ticked this means we cannot take any funds until settlement, regardless of a S27 being received we have not fulfilled the other requirements of vacant possession or full purchase price.

  1. Commission including GST – In this box we must always show the amount including GST and we must never cross out the words at the bottom of the box saying including GST. If you feel you need to show the calculation you can but the only figure the auditor/ACCC is interested in is the one including GST. For example if the commission is 2.5% plus .25% GST the total is 2.75% including GST. If we cross out the words including GST we can be fined $50,000 per offence from the ACCC.

  1. We must advise clients the amount of advertising including GST also. You will need to refer to your advertising schedule at all times for the cost of each component of advertising. You need to make it very clear to the client the advertising is an expense they are agreeing to pay which is not dependant on the sale of their property. They become liable for the advertising expenditure as soon as we have expended this money; although we allow them to pay from settlement funds should it sell.  The number of clients who withdraw their properties and think we have a” no sale no pay” policy is alarming.

  1. Also the clients believe it is OK to withdraw from us and list with another agent and we should wait until the other agent sells and settles before we get our advertising. We do not and can not legally make money on our advertising expenditure. We have to pay our advertising accounts within 30 days, so it is the company who is carrying the cost of advertising which is not paid. We are about to introduce a caveat on their property should they not pay the advertising costs.

  1. Contract notes – Legally we are obliged to refund any deposit made where the sale is not proceeding. To do this there are a number of other requirements we must have. Firstly we need to be given the file with clear directions to say NPW. Secondly if you have written on the contract $1000 then you must have taken the $1000 deposit. An auditor will not accept a document that says deposit paid without seeing a corresponding deposit having been receipted and banked into our trust account. Legally as part of trust funds we are required to bank within 24 hours of receiving funds. It would be preferable if agents did not advise clients they can have their cheque or cash back; if this situation arises then accounts should handle the enquiry. I say this because generally we bank at a certain time but depending on staff absences or meeting etc this may not be the case and has caused problems in the past.

  1. Amount of Deposit – We currently have two situations where clients have pulled out of deals and needed to pay the .2% cooling off fee. The deposit we took was not enough to cover this and the clients have not been forthcoming in providing the difference. The auditor suggested we have a standard policy where the deposit is .2% or greater of the purchase price and this will overcome any future concerns.

  1. The auditor has advised me must not quote more than a 10% range on the authority. This is different to the 15% range we can quote on Auction ESR.

  1. When we complete the manual Sales receipts we must never put the Bank Cheque details in the first line that asks “Received From, this is the actual person that the money has been  received from.