Have you ever taken an impulsive action, only to regret it later? Naturally! Most if not all of us have. There’s a built-in safeguard against spur of the moment decisions in the real estate process, known as the “cooling off period.” This helps protect buyers who sign a Contract of Sale on a whim, but may change their minds later. Writing a cooling off period into the contract gives the buyer a chance not to go forward with the purchase.
This cooling off period generally only lasts for 3 business days. The Contract of Sale is an important document that is drawn up using the help of a conveyancer or real estate agent. If you’re working with an agent to sell your home, you’ll want to discuss this cooling off period and how it may apply to your situation. This may be something that needs to be discussed during negotiations. You can find a qualified real estate agent to help you with this process by comparing agent fees and services at LocalAgentFinder. This free service allows you to compare agents upfront and find the right fit. It’s also helpful to look at the reasons why a purchaser might change his or her mind.
Purpose of the Cooling Off Period
One of the reasons that a purchaser might elect to change his or her mind is due to conversations with close friends or family members. They may realise that this decision is not right for them. A buyer may also change his or her mind after speaking to a conveyancer or solicitor and realising that there are unusual terms or conditions in the Contract. There may be encumbrances on the property outlined in the Vendor’s Statement which they weren’t initially aware of. After speaking to a conveyancer or solicitor, these encumbrances or unusual terms and conditions can come to light and cause buyers to change their minds.
How the Cooling Off Period Works
The cooling period usually lasts for 3 full business days. This countdown starts from the day that the purchaser signs their Contract of Sale. For example, if the Contract is signed on a Saturday, then the cooling off period would expire at the end of the business day on Wednesday. It would comprise the three clear business days of Monday, Tuesday, and Wednesday. In some cases, the period can be extended but this must be done with the agreement of the vendor. The extension period must also be clearly stated in the Contract of Sale for it to be legal and valid. If you’re thinking about adding an extension period, it’s best to speak to a conveyancer, solicitor, or real estate agent first. Find the right agent using the comparison tool at LocalAgentFinder to help negotiate your sale.
Although the cooling off period gives buyers one last chance to back out of an impulsive decision, it is not without consequences. In most cases, the buyer will end up forfeiting a certain percentage of the purchase price, which is usually limited to $200 or 0.1% of the property’s value. The greater the purchase price is, the more that the purchaser can expect to forfeit. This safeguard is built into place as a deterrent for buyers who would sign contracts rashly, relying on the cooling off period to change their minds. The cooling off period is designed more for purchasers who have a legitimate reason for withdrawing from the initial contract, such as after they have obtained legal advice. It is not there to promote fickle purchasing behaviour.
What’s next?
Both the buyer and seller can benefit from legal advice when it comes to the conveyancing process and signing a Contract of Sale. It’s also helpful to discuss how the cooling off period could affect your sale with a qualified real estate agent. Most Australian real estate agencies have provided their information at LocalAgentFinder, so you can compare agent fees and services and increase your chances of finding the right fit for your needs. Find out how it works and find the right agent for your needs, for free.
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