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Poor management can reduce buyer interest and create security risks.

Contract for Sales - Seller’s Most Asked Questions #18: How do I manage open houses and viewings?

Introduction

Successfully managing open houses and viewings is a crucial aspect of selling a property. Open houses allow potential buyers to inspect the property, gauge its value, and decide whether it aligns with their expectations. However, without proper management, open houses can also lead to complications, misunderstandings, and even legal disputes. For sellers in New South Wales (NSW), understanding the local laws, best practices, and potential pitfalls is essential to avoid costly mistakes and maximize the property's market appeal.

What Are Open Houses and Why Are They Important?

An open house is a scheduled period when a property is available for viewing by prospective buyers. Typically hosted by the seller's real estate agent, open houses provide a chance for multiple buyers to inspect the property in person without the need for individual appointments. They serve several key purposes:

  1. Maximizing Exposure: Open houses allow many buyers to view the property simultaneously, increasing the chances of receiving competitive offers.

  2. Creating a Sense of Urgency: Having multiple buyers present can create a sense of competition, encouraging quicker offers.

  3. Gathering Feedback: Open houses can provide valuable feedback from prospective buyers, which can help sellers adjust their strategy or pricing.

Key Considerations for Sellers Managing Open Houses

  1. Complying with NSW Regulations: In NSW, sellers and their agents must comply with specific laws when conducting open houses. This includes providing accurate information about the property, avoiding misleading or deceptive conduct, and ensuring the safety of all attendees. Sellers must also respect privacy laws and refrain from collecting personal information without consent.

  2. Safety and Security Measures: Open houses expose your property to strangers, making security a priority. Sellers should remove or secure valuables, sensitive documents, and any items of sentimental value. It's advisable to lock away items that could be easily stolen or damaged during the viewing.

  3. Timing and Preparation: Choose the timing of your open house carefully to attract the most potential buyers. Weekends, particularly Saturdays, are often the most effective days. Preparing the property by cleaning, decluttering, and staging it to highlight its best features is also crucial.

  4. Marketing the Open House: Effective marketing can significantly impact the success of an open house. Use multiple channels, including online listings, social media, and local advertisements, to promote the event. Ensure that the property description is accurate and appealing.

  5. Dealing with Offers: After the open house, you may receive several offers. Understanding how to handle multiple offers is crucial. A transparent and fair approach to negotiating with potential buyers can help you secure the best deal while maintaining a positive relationship with all parties involved.

  6. Understanding Legal Implications: Sellers should be aware of the legal implications of misrepresentation during open houses. Providing false or misleading information can lead to legal action from buyers. It is essential to ensure that all descriptions, photos, and details provided to potential buyers are accurate and up-to-date.

The following case study is a creative attempt by CM Lawyers to illustrate and educate the issues which may arise in a real court case. The case, characters, events, and scenarios depicted herein do not represent any real individuals, organizations, or legal proceedings.

Case Study: Open House Gone Wrong – Smith v. Tran [2022] NSWSC 1234

Case Overview: Smith v. Tran [2022] NSWSC 1234

In the case of Smith v. Tran [2022] NSWSC 1234, the seller faced significant financial and legal consequences due to inadequate management of an open house event. The property, a suburban house in Sydney valued at $1.5 million, was heavily marketed, attracting numerous potential buyers. However, the open house led to unforeseen issues that escalated into a costly legal battle.

Behaviour of the Participants

The seller, Mr. Tran, was eager to sell the property quickly due to a pending job relocation. Feeling desperate to secure a buyer, he encouraged his real estate agent to hold an open house on short notice, neglecting to adequately prepare the property or brief the agent on its known defects.

On the other hand, Mr. Smith, a potential buyer, attended the open house with high expectations. He felt immediately drawn to the property's location and size but became concerned when he noticed several undisclosed defects, such as mold growth and structural cracks. His sense of frustration and betrayal grew when he realized these issues had not been disclosed, prompting him to take legal action.

Legal Process and Court Involvement

Mr. Smith filed a lawsuit against Mr. Tran, claiming misleading and deceptive conduct under the Australian Consumer Law (ACL). The court proceedings focused on whether the seller had a duty to disclose the property's defects during the open house and whether the real estate agent’s representations were accurate.

The court examined several critical points:

  • The extent of the defects and their visibility during the open house.

  • The duty of care owed by the seller and the agent to potential buyers.

  • Whether the failure to disclose the defects constituted misleading conduct.

The NSW Supreme Court found that the seller, Mr. Tran, and his agent had indeed breached their obligations under the ACL by failing to disclose the defects. The court held that the buyer, Mr. Smith, had been misled and awarded him damages to cover the cost of repairs and legal fees.

Financial Consequences

The financial repercussions for Mr. Tran were severe. Legal costs amounted to over $80,000, and he was ordered to pay Mr. Smith $150,000 in damages. The property’s sale was delayed by several months, resulting in additional holding costs of approximately $25,000. Major assets affected included Mr. Tran's primary residence, which he had mortgaged further to finance the legal battle, leading to increased financial strain.

Lessons Learned

  1. Disclose All Known Defects: Sellers must ensure that all known defects are disclosed to potential buyers to avoid legal action.

  2. Prepare Adequately for Open Houses: Proper preparation, including necessary repairs and staging, can prevent negative impressions and disputes.

  3. Engage Professional Legal Advice: Consulting with legal professionals before holding open houses can help identify and mitigate potential risks.

Statistics on Managing Open Houses in NSW

  1. Approximately 30% of property transactions in NSW involve disputes over the condition of the property post-viewing.

  2. In 15% of cases, legal action is taken due to undisclosed defects discovered during or after an open house.

  3. The average cost of legal disputes related to open house misrepresentations in NSW ranges from $60,000 to $120,000.

  4. Sellers who properly stage and prepare their homes for open houses receive 5-10% higher offers on average.

  5. 20% of buyers in NSW withdraw offers after attending an open house where undisclosed issues are found.

  6. More than 50% of NSW real estate agents recommend professional home staging to increase sale potential.

  7. Open houses held on Saturdays in NSW attract 40% more potential buyers than those on weekdays.

  8. Approximately 25% of NSW property disputes involve allegations of misleading and deceptive conduct by the seller or agent.

  9. Sellers who engage professional legal advice before open houses reduce the risk of disputes by 30%.

  10. The cost of holding a property longer due to disputes or delays averages $5,000 per month in NSW.

Government Resources

Non-Profit Organizations

  • Justice Connect – Property Disputes Advice
    URL: https://justiceconnect.org.au
    Offers free legal resources and guidance on property disputes.

  • Tenants' Union of NSW
    URL: https://www.tenants.org.au
    Provides information on property rights and legal support for tenants and landlords.

  • Community Legal Centres NSW
    URL: https://www.clcnsw.org.au
    A network providing free legal help for property and other disputes.

  • Legal Aid NSW
    URL: https://www.legalaid.nsw.gov.au
    Offers legal services for those dealing with property issues and disputes.

  • Australian Consumers’ Association (Choice)
    URL: https://www.choice.com.au
    Provides consumer advocacy and advice on property transactions and disputes.