When you first agree to buy a property, your offer and the vendor’s acceptance of that offer is not binding until both buyer and seller have exchanged contracts, but you’re not finished until settlement occurs.
There are always technicalities during this “Cooling Off” stage so it helps to be aware of the process. It can be nerve racking for first home owners.
In a private treaty sale, once your offer has been accepted, you’ll be required to pay a small deposit — usually around 0.25 percent of the purchase price — and exchange contracts with the seller. This will push you into the cooling off period, unless you sign a Section 66W Certificate [Verbal and Email Offers Are Acceptable But Not Binding], waiving your right to a cooling off period.
There’s no cooling off period when you buy property at auction, so you’ll need to have the full deposit amount (10 percent of the purchase price is customary) and be prepared to exchange contracts with the vendor on the spot once the auction is over.
The difference here is that you usually don’t have an wriggle room to negotiate a lower deposit amount or longer settlement, as auctions are fairly heavily stacked in favour of the vendor. Be sure you’re prepared to pay the full deposit, exchange contracts, and agree to the customary settlement terms (between 30-45 days in NSW) before making a bid. You should have also already done your due diligence (pest and building inspections, etc).
During the settlement period — that is, the time between when the contracts have been exchanged and the cooling off period (if applicable) has lapsed to the day when the buyer collects the keys — the your conveyancer will work to get all of the documentation required to complete the sale. Meanwhile, you should spend this time packing and preparing to move, if you plan to live in the property.
Probably two weeks out from settlement day, you will need to pay your share of the water, council rates and strata fees. At least 24 to 48 hours before settlement day, you should inspect the property again, to ensure all of the “included items” are there, the property is clean and tidy, etc. This task can be very time consuming and tasks like this can be included in the Full Buyers Agent Service.
Finally, on settlement day, your conveyancer will attend the settlement meeting (you doesn’t have to be present if you don’t want to), and once the funds have cleared, you can collect the keys and move in.
Settlement doesn’t usually occur until late in the afternoon. The your conveyancer will advise of the time, at least a week prior. If it can be avoided, don’t move in the same day, in case there are unforeseen delays, but otherwise give yourself some breathing room.