In the hot Sydney property market, neighbours are now joining
together to offer to sell their properties as a group, with the
view of maximising their sale price by becoming part of a larger
site offering to submit to developers. Often, real estate agents
approach the parties individually, or as a group, with a suggestion
that they sign up with the real estate agent to sell their
What came first - the chicken or the egg?
This is a typical scenario we often encounter with clients -
should we sign an agreement with the real estate agent first and
then enter into a Deed of Agreement to Joint Sale, or, should it be
the other way around?
We recommend that a Deed of Agreement to Joint Sale be put in
place between the neighbours before entering into
any real estate agency agreement.The purpose of the Deed of
Agreement to Joint Sale is to set up a structure and rules by which
the group will operate.This is important as there needs to be a
unified approach by all neighbours as to the terms and conditions
that will establish their actions in relation to any offers
submitted by the real estate agent to the group. For example, there
should be some agreement in place in the Deed of Agreement to Joint
Sale about the minimum offer the group would be prepared to accept
for their properties, as well as how that split should be divided
between the members of the group (based upon each lot owner's
land size or an equal split between all parties)?
Issues in relation to real estate agency agreements
The following issues need to be considered, amongst other
matters, when reviewing the real estate agency agreement:
Whether the agency agreement will be exclusive or
How long the agency agreement will be for. For example: three
The commission the agent will charge;
The type of agency agreement being used - even though the
properties will be earmarked as a development site, the agreement
used should still be for residential as opposed to
commercial/industrial sales; and
The sale should, in general terms, be described as GST free as
residential houses that are still used as residences are GST free
(under GST Ruling 2012/5) regardless of the fact that it may be a
Speak to a lawyer before signing anything
Group sales can be complex and for this reason it is best to
speak to a lawyer before signing on the dotted line!
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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