EXPERT CONTRIBUTOR · 7 MIN READ
Ask a conveyancer: what South Australians get wrong when they sell privately
GST nobody thought about. A settlement date somebody invented. A deposit too small to hold anyone to anything. Ten questions for a licensed South Australian conveyancer.
The short version
Private sales in South Australia rarely collapse. When they do, it is almost never the price and almost never the finance. It is GST, an unrealistic settlement date, a deposit too small to matter, or a deck the council never approved.
Key takeaways
- GST is the number one mistake, and it lands after settlement when the money has gone.
- A $500 deposit is not a deposit. It is a gesture.
- Order the Form 1 once an offer is accepted, not when you list. Early searches expire and get charged twice.
- Send the contract to the buyer’s conveyancer, not the buyer. It comes back faster.
- Disclosure protects the seller. Hiding the unapproved deck is the version that ends badly for you.
Melissa Hayward is the principal of Your Choice Conveyancing in South Australia and has worked in conveyancing since 2001. She keeps private sale files in their own colour folder, which tells you something about how the volume has changed.
Are more people really selling privately?
There is definitely a lot more now than there was 20 years ago. I had a client this morning who is buying privately. She was quite confused, because she did not know what the process was, who to turn to or what to do. She had not bought anything for 27 years, and a lot has changed in that time.
Melissa Hayward, Licensed Conveyancer, Your Choice Conveyancing
The pattern is not uniform across the state.
It is not so much in the city. It is more the regional and rural areas, where people feel more comfortable advertising it themselves. And I would probably say more of the private sales are investors trying to sell it themselves. A few this year have been investors who used a buyer’s agent to buy two or three years ago, and when it came time to sell they wanted to do it themselves and recoup some of what they paid on the way in.
Melissa Hayward, Licensed Conveyancer, Your Choice Conveyancing
What is the single most common mistake?
GST. Not knowing whether they are registered for GST, or whether they should be.
Melissa Hayward, Licensed Conveyancer, Your Choice Conveyancing
It sounds like an accounting footnote. It is not. Get it wrong on a property that should have been treated as a taxable supply and the number involved is large, and it lands after settlement when the money has gone.
If you have ever run a business through the property, developed or subdivided it, claimed it as a business premises, or you are selling as a company or trust, that question needs an accountant before you sign anything.
And the second?
Timeframes. If somebody is selling privately, most of them are not familiar with what they are actually doing or what the procedures are. So they think, oh, we will settle in two weeks, or we will get finance approval and settle two days later. They do not understand the timeframes involved in getting finance, or how long the bank needs.
Melissa Hayward, Licensed Conveyancer, Your Choice Conveyancing
The settlement date is not a wish. It is a promise you make in a contract, and the person most exposed if it is unrealistic is you.
How big should the deposit be?
People do not understand why a deposit gets paid or what value it should be. Just putting down a $500 deposit, well, you might as well not put anything in there.
Melissa Hayward, Licensed Conveyancer, Your Choice Conveyancing
A deposit is not a fee. It is the buyer’s skin in the game, and the only practical thing standing between you and a buyer who decides in week three that they have found something better.
We do not have to be like New South Wales and go with 10 per cent. But be realistic about what kind of deposit you accept and have held in the trust account.
Melissa Hayward, Licensed Conveyancer, Your Choice Conveyancing
Deposits are held in the conveyancer’s trust account, and in Melissa’s practice that does not attract a separate fee.
Can I get the deposit released before settlement?
Generally not, in South Australian practice.
In South Australia we do not do early release of deposits. It is more of an interstate thing. Occasionally you get a vendor who has done a private contract and after it is signed they come back and say they want the deposit released. It is no, not until settlement has gone through, and they get a bit narky about it.
Melissa Hayward, Licensed Conveyancer, Your Choice Conveyancing
Worth knowing if you have sold interstate before, or if you are counting on that money to fund a purchase.
When should I start the contract and Form 1?
Later than most people assume.
Generally we wait until an offer has been accepted. The contract itself does not really have much information in it that is going to assist a purchaser. It is more the Form 1 document and the government searches, and it depends on the time of year and how quickly the vendor thinks they might sell. You do not want to be ordering searches and then finding out they are not going to sell for six months, and then having to do update searches, which costs more.
Melissa Hayward, Licensed Conveyancer, Your Choice Conveyancing
Turnaround on the searches is not the bottleneck people expect.
A lot of the councils these days, we can have their searches back within three to five business days.
Melissa Hayward, Licensed Conveyancer, Your Choice Conveyancing
How fast should the paperwork move?
Fast, and for a reason that has nothing to do with efficiency.
You do not want to leave it too long, because if you leave it too long people change their minds, get cold feet, or find something else.
Melissa Hayward, Licensed Conveyancer, Your Choice Conveyancing
Her firm’s rhythm looks like this.
| Stage | Timing |
|---|---|
| Instruction form out to the seller | Same day |
| Instruction form returned | Within 24 hours |
| Contract drafted and issued | The following day |
| Sent to the buyer’s conveyancer for review | Immediately, not to the buyer |
| Worst case, start to signed | Three to four days |
Accepted offer to executed contract, in a well-run South Australian private sale.
That fourth row is the detail most private sellers would never think of.
We would send it off to the purchaser’s conveyancer to review, so they can make sure it is all okay with their client. By sending it to the other conveyancer you are more likely to get a better response, and faster, than if you just send it to the purchaser, because they are going to look at it and think, what is this, what do I do next? Involving their conveyancer straight away keeps things moving along a bit quicker.
Melissa Hayward, Licensed Conveyancer, Your Choice Conveyancing
Thirty days from accepted offer to settlement is standard. Forty-five is worth considering for a self-managed super fund or anything structurally unusual.
Ben’s insight: this is the gap most private sale websites leave wide open. They stop at the listing, so the moment a seller and buyer agree on terms the whole thing collapses into a chain of emails. We put the contract and disclosure documents in the platform and let both sides execute electronically, so the time between handshake and signature is measured in hours.
What is actually in a Form 1?
All your government searches. The title search, which tells you if there are easements or encumbrances. If there is an encumbrance we attach it so they can see the terms and conditions. The property interest report, which tells you the zoning and whether it is subject to any environmental assessments. The council search, which is generally one of the important ones, because it tells you the acts and zonings but it also tells you what improvements have received development approval and what has not. And then your rates and taxes certificates, so you know what the rates are for the financial year.
Melissa Hayward, Licensed Conveyancer, Your Choice Conveyancing
The council search is the one that changes outcomes.
If Joe Blow is selling a property and he has added on a bedroom, bathroom, kitchen and verandah, that is when people can get a bit of cold feet and not want to proceed. Decks have been a big one over the last six months. A lot of people have added decks that have not been approved, and they get a bit scared when the council says that should have been approved.
Melissa Hayward, Licensed Conveyancer, Your Choice Conveyancing
Do private sales actually fall over?
Rarely, and not for the reason most people fear.
Private contracts do not generally fall over unless there is a pretty valid reason. Finance clients and walking away during a cooling-off period, it is just not a common thing. I could not tell you the last time I have seen a finance decline.
Melissa Hayward, Licensed Conveyancer, Your Choice Conveyancing
The exception is the pest and building clause.
Unless you have a really solid pest and building clause in the contract, purchasers use it to get out wherever they can if they feel slightly scared. We had one last year where a garage roller door was not working, and the purchaser was out. Neither party was being reasonable, but you could also see each party’s point of view.
Melissa Hayward, Licensed Conveyancer, Your Choice Conveyancing
If you take one thing from that: the pest and building clause is the clause to get right, because it is the one that gets used.
Can a buyer walk away over an unapproved deck?
If it is disclosed in the contract then they have no grounds whatsoever. Basically once the cooling-off period has finished, unless it is a safety issue, if somebody has done an improvement and it has not received council approval, you do not have an option to just walk away from it. Not unless it has been hidden by the vendor and the agent.
Melissa Hayward, Licensed Conveyancer, Your Choice Conveyancing
South Australia gives a private treaty buyer two clear business days of cooling-off, running from receipt of the signed contract and the Form 1.
The rule of thumb runs through every answer above. Disclosure protects the seller at least as much as it protects the buyer. Hiding the unapproved deck is the only version of this that ends badly for you.
What do private sellers underestimate?
They still need to do those negotiations themselves. They do not have that third party to bounce between, and there is only so much we can guide them on. That is our challenge.
Melissa Hayward, Licensed Conveyancer, Your Choice Conveyancing
It is a fair criticism and we would rather publish it than dodge it. It is also the reason Unreserved holds a licence in every state rather than operating as a listing website. Sellers run their own campaign and keep their own money. When it gets to the pointy end, a licensed agent can step in and negotiate, without a percentage of the sale price attached to it.
The arithmetic is the part worth sitting with. On an $800,000 sale, a traditional agency charging two to two and a half per cent takes $16,000 to $20,000 in commission before GST. A flat fee does not move with the price.
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EXPERT CONTRIBUTOR
Melissa Hayward
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Melissa Hayward is the principal of Your Choice Conveyancing in South Australia and has worked in conveyancing since 2001. She has sat on the PEXA advisory council, where a change she proposed to the handling of transfers was adopted, and acts on private treaty and private sale transactions across metropolitan and regional SA. Her comments in this article are general information, not legal advice, and conveyancing requirements differ in every state.