There are many things, people and red tape included, that we’d be better off without. One of those things is Queensland’s Form 27c. In layman’s terms, Form 27c of the purchase contract must be completed and given to a buyer before they sign on the dotted line.
BY MICHAEL MATUSIK
It discloses all fees or favours incurred as the result of a property sale including commissions, marketing fees, management overriders and referrals. It even requires details of introductions to other parties (i.e. finance brokers and solicitors) who could assist the buyer, regardless of whether it’s verbal or written and with no fees paid.
In other words, any party to a real estate sale transaction must be identified and the remuneration or otherwise identified. The purpose of the form seems innocuous enough, but ultimately it can have some detrimental results.
Sales commissions are fixed in Queensland and agents may not charge more than the statutory maximum. The sales commissions are included on 27c. But there are also selling costs involved in marketing a property and those costs must also be detailed.
As an aside, in a buyers’ market, sellers should budget for marketing costs of about two per cent of the end sale price of the property. These days, an average budget (including commission, advertising and marketing costs) should be five per cent to six per cent of the likely sale price.
On a $500,000 sale, where the sales commission is $13,000, it wouldn’t be hard to spend another $15,000 on marketing and all other costs of the sale.
But here’s the kicker.
Valuers, on instructions from mortgage insurance providers and banks, are deducting from the end valuation of a property any amount an agent is paid in excess of the standard Queensland sale fee of 2.5 per cent. This means properties are being devalued by the amount sellers are paying to market and sell them.
Is this wrong, or is it just me?
Michael Matusik heads independent property advisory Matusik Property Insights and has helped over 550 new residential developments come to fruition. Michael authors the free Matusik Missive.