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Real estate cooling off period: Everything you need to know

September 11, 2019 10:00 am by Upside

When buying a house, the cooling off period can give you peace of mind that you have the option to back out of the sale if you’re having doubts after you’ve signed the contract.

However, standard cooling off periods vary from state to state, and not all types of property sales have a cooling off period – so it pays to be informed before you put an offer on a property.

What is a cooling off period?

The cooling off period is a specified period after signing the contract on a property in which you can back out of the sale. This period starts on the day you sign the contract, and usually lasts five business days (Sundays and public holidays aren’t included), but this varies by state. Some states don’t have a mandated cooling off period, so it’s a good idea to ask your solicitor about what rules apply in your area.

Cooling off periods only apply to private treaty sales, not auctions. However, if you and the vendor personally negotiate a contract after the auction, a cooling off period may apply.

Cancelling a contract comes with a penalty, which is a percentage of the total selling price of the property. This percentage varies by state. Once the contract has been terminated, the seller must give back the deposit minus the penalty within 14 days.

Real estate cooling off period NSW

Cooling off period % of sale price you forfeit How much you lose on a $500,000 property
5 business days 0.25% $1,250

RELATED: How much are real estate agent fees and commissions in NSW?

Real estate cooling off period VIC

Cooling off period % of sale price you forfeit How much you lose on a $500,000 property
3 business days 0.2% $1,000

RELATED: How much are real estate agent fees and commissions in Victoria?

Real estate cooling off period QLD

Cooling off period % of sale price you forfeit How much you lose on a $500,000 property
5 business days 0.25% $1,250

RELATED: How much are real estate agent fees and commissions in Queensland?

Real estate cooling off period WA

Cooling off period % of sale price you forfeit How much you lose on a $500,000 property
No cooling off period is mandated by WA law, so check with your solicitor N/A N/A

Real estate cooling off period SA

Cooling off period % of sale price you forfeit How much you lose on a $500,000 property
2 business days Small holding deposit of up to $100 $100

Real estate cooling off period ACT

Cooling off period % of sale price you forfeit How much you lose on a $500,000 property
5 business days 0.25% $1,250

RELATED: How much are real estate agent fees and commissions in ACT?

What happens during the real estate cooling off period?

The cooling off period starts on the day you sign the contract and ends at 5pm on the last business day of the specified period. If there is a Sunday or public holidays during the period, they won’t be included in the cooling off period.

During the cooling off period, your solicitor or conveyancer can request additional information to ensure the agreement is sound. This could include a building and survey report to detect issues with the property, or a development compliance certificate. If there are any problems, you have the option to cancel the agreement during the cooling off period.

If you want to back out of the agreement, you have to write and deliver a letter of termination to the real estate agent during the cooling off period.

What happens if you miss the cooling off period?

If you want to back out of the agreement after the cooling off period, it could be costly. Your contract of sale will outline the penalties for withdrawing after the cooling off period. You’ll most likely have to compensate the seller for losses and pay default penalties. You’ll also lose the money you’ve put towards legal and conveyancing fees, pest inspections and other expenses.

Can you waive a cooling off period?

As a buyer, you can choose to waive the standard cooling off period in your state by giving written notice to the seller or their real estate agent. Some buyers choose to waive the cooling period as it could make an offer more attractive to a seller.

However, if you’re considering waiving a cooling off period, first make sure that all building and pest inspections have been carried out by your conveyancer and that your loan has been approved. If you waive the cooling off period, backing out of the contract is likely to be costly.

Whether you’re thinking of buying or selling, see why Upside has some of the most highly rated real estate agents in Australia. Check out our property listings, or start your journey with a free property appraisal.

Upside

Upside is an Australian-owned, full-service real estate agency with one low fee and no commission. Our standard is other agents’ ‘extras’, delivering vendors a complete agent managed service including a full appraisal, open home management, copywriting, photography, signage and advertising. It's the way real estate should be.

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