Buyer's agents will soon be legally included in a Contract for Sale and Purchase of Land that will come into effect over the coming months.
The new Contract for Sale will replace the existing 2005 edition of the contract, but will run in tandem for the foreseeable future.
Legal author and contributor to the redraft of the Contract for Sale Tony Cahill said it is just one amendment to the Contract for Sale.
Today’s Contract for Sale, according to Mr Cahill, is already problematic for agents.
Mr Cahill warned that agents, solicitors and conveyancers are all dealing with the problem of different Contract of Sales and attention needs to be paid to ensure potential buyers are all given the same opportunities.
“Auctioneers don’t say 'These potential buyers will sign one contract if they succeed, but that other potential buyer will sign another with extra clauses',” Mr Cahill said, adding that it is at the heart of every auction that people are bidding on the same deal, but that isn’t always the case.
“There are a number of agents who believe the most important thing to do is to get a signed contract," he said.
“One way to get that signed contract might be to maximise the number of bidders in the room by allowing certain concessions.
“Often solicitors or conveyancers write letters saying ‘Can you please confirm that if our client is the successful bidder there will be these changes’.”
Rich Harvey, chairman of the Buyer's Agents Chapter Committee of the Real Estate Institute of New South Wales said the Contract of Sale can often be muddied when a solicitor attempts to justify their position by creating a contract in their terms, which are sometimes unrealistic or concentrate on petty or minor issues.
Mr Harvey said often solving any disputes relating to signing on the dotted line can be solved prior to a place going to auction.
“If certain markets are tight an agent might have to prepare a vendor for the fact they might have to be flexible on settlements and work with a potential buyer regarding the market conditions they are in,” Mr Harvey said.
“Dealing with different bidders at auction means some will turn up, bid and then say they need a 90-day settlement when this should be sorted before the auction and it's more down to bidders not being familiar with the process or unfamiliar with technicalities.
“In tight market times often you don’t get such conditions changed since vendors say take it or leave it – in a softer market vendors' solicitors are more willing to negotiate.”
Buyer's agent Robert Skeen of Skeen Property said most times changes can be made verbal and on the spot prior to auction, with agents usually saying it may become an advantage for a seller if there is one less person bidding at auction, and to a bidder there is one less person involved that will not push the eventual sale price up.
“Sometimes you need to get the vendor and potential buyer around the kitchen table but if a buyer is keen to, or has spent money on build and pest inspections as well as conveyancing fees, they show they are psychologically committed and a vendor will meet their contract terms if they are not unrealistic,“ Mr Skeen said.