If you are a first home buyer real estate terminology can be confusing. Often I am asked what is exchange of contracts. This legally completes the property sale process. It means the seller has accepted your offer on the home and you both have signed your individual Contract of Sale at your solicitors office (when possible). Then these two Contracts are exchanged.
At the time of the exchange you will be required to pay the deposit which is usually 10% of the purchase price or 5% if both solicitors have agreed with this lower amount, for the home you are buying.
Your may have waived your cooling off period which many sellers vendors and their solicitors do request, but usually you have already have had around five days doing your due diligence with pest and building inspections plus sometimes the solicitors take time to review and request some amendments to the contract so this time takes up the five days anyway.
Private treaty sales in NSW have however an option of a 5 business day cooling-off period after contracts are exchanged.
The cooling-off period starts as soon as you exchange contracts and ends at 5pm on the 5th business day after exchange.
During the cooling-off period, you can withdraw from the sale as long as you give written notice. Usually there are financial penalties if you do this and it’s worked out as a percentage of the sale price.
There is no cooling-off period for homes bought at auction. The Contract of sale must be finalised after the auction is completed. I strongly recommend you consult a solicitor or conveyancer before you attend an auction as once that hammer goes down, and if you are the successful bidder, the sale is final.
