Understanding Cooling Off Periods and more…
You may feel nervous with all the details regarding the negotiations to sell your home. Perhaps you are unsure about all the strange terminology that is used. Your agent manages the process of negotiations for you but knowing the process and the terms used will ensure you can stay informed.
Here are the most relevant terms used in the buying process that you need to be aware of.
What is a Cooling Off Period?
The cooling off period is the time between when contracts are signed and when the buyers are ‘locked in’. Sellers do not have a cooling off period.
Once both parties (i.e. you as the seller, and the buyer/s) have agreed on price and signed the contracts and the contracts have been ‘exchanged’ you as the owner are locked in. Only the buyer has a cooling off period. This is why it is so important to engage an agent that you trust. During the negotiations to sell your home you do not want to be locked into a sale that doesn’t turn out to be in your best interest.
If my buyer wants an extension to the cooling off period do I have to agree?
It is your agents job to keep things on track and to let you know up front the likelihood of your buyer requiring an extension. Your agent should keep you up to date through every step of the process from negotiation to settlement. This is particularly important during the period from ‘price agreement’ to unconditional exchange when pest and building inspections and valuations are being conducted.
Unconditional exchange just means that the cooling off period has expired. This is the period where things can go wrong and your agents job is to manage this and manage it well!
Many deals ‘fall over’ during the cooling off period. It is imperative as an owner that you engage an agent that has experience in negotiating tricky and difficult situations.
Your decision to extend or not extend the cooling off period should only be made after you have spoken to your legal representative and your agent as both will have relevant information regarding the purchaser’s circumstances.
I have agreed to a verbal offer. Now I have received a higher offer from another buyer. Can I accept it?
This will depend on the circumstances and whether contracts have exchanged. Some owners are of the opinion that an agreement is an agreement and they will honour the first buyers offer even though they are not legally bound to do so.
Other owners will take the highest offer. Their approach is that whoever is prepared to sign on the dotted line first wins. You should be guided by your agent as to the strength of each offer and the financial stability of each interested purchaser.
What is a 66W?
A 66W is a legal document that waives the buyers rights to a cooling off period. It is signed by the buyers conveyancer or solicitor once they have explained the legal ramifications to their client.
66W’s are used when selling auction properties as there is no cooling off period when purchasing a property at auction. They can also be used in private treaty negotiations but not as often.
What does ‘unconditional’ mean?
During negotiations to sell your home once both parties – i.e. the seller (vendor) and the buyer (purchaser) have signed the contract, the 10% deposit has been paid (can sometimes be 5% if both parties agree) and the cooling off period has expired, then the property is deemed to be ‘unconditionally exchanged’.
Both parties are now locked in and the SOLD sign will be put up.Posted by