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8. Contracts signed, exchanged, deposit held with your solicitor or conveyancer

The next step in the private house sale process is the exchange of contracts, a legal necessity when selling a property. This is when both you and the buyer sign a copy of the Contract of Sale and then swap the contracts. Your solicitor/conveyancer will finalise everything, arrange for you and the buyer to sign the contracts and, together with the buyer’s solicitor/conveyancer, arrange the exchange. Upon exchanging contracts, it is compulsory for the buyer to pay a deposit, generally 10% of the total purchase price, but this may vary from state to state. The deposit is collected and held in a trust account by your solicitor/conveyancer. The sale is now lawfully binding on the buyer and the seller.

Contracts can be signed with or without a cooling-off period in most states.

A cooling-off period will give a buyer time to:

  • Consider whether they really want to go ahead with the property purchase.
  • Conduct all the relevant searches.
  • Liaise with their finance provider regarding the purchase.
  • Organise a professional building and pest inspector to establish the condition of your property and provide a detailed report. If a buyer discovers problems with the property they may reconsider their offer and ask for a reduced price, or may change their mind about buying the property and inform you in writing.

If a buyer changes their mind about buying a property the seller may be entitled to hold onto 0.25% of the purchase price. Consult your legal representative about this.

No cooling-off period means:

  • The buyer cannot change their mind about buying a property without incurring certain penalties once contracts are exchanged. Neither can the seller change their mind.
  • The buyer and their legal advisor will carry out any relevant searches, building and pest inspections and liaise with the finance provider before contracts are exchanged.
  • The property remains on the market until contracts are exchanged, and the seller can meanwhile accept further offers from interested buyers.

There is no cooling-off period in Western Australia and Tasmania or when buying a property at auction.

Tip: Depending on the level of interest a seller has about their property from other interested buyers, it’s beneficial when accepting an offer to ask the buyer to waive the cooling-off period. This means the property remains on the market until the buyer is ready to exchange contracts and allows the seller to continue marketing the property in the hope of a higher offer or in-case the interested buyer changes their mind about the property.

Tip: Should you receive another higher offer, go back to the first interested buyer with the opportunity to match or better the new offer. Usually if they’ve invested money in a building and pest report and the property appears to be sound, they will match the new offer.