The standard residential property transaction is known as a ‘Private Treaty’ sale. A private treaty sale allows the vendor to set a selling price and the agent to negotiate with individual prospective buyers to achieve a sale closest to the set price.
When buying by Private Treaty, there are two ways of purchasing your own property:
With a cooling off period
WIthout a cooling off period
With a Cooling Off Period
This is often referred to as an Office Exchange.
Once a successful sale is negotiated, purchasers will sign a contract of sale and put down a small non-refundable deposit of 0.25% of the sale price and enter a cooling off period. This cooling off period allows you time to carry out tasks such as pest and building inspections, bank valuation, 10% deposit arrangement, obtain advice from solicitor/conveyancer regarding the contract and have the loan unconditionally approved.
During this period, vendors are locked into this sale price and are unable to accept any other offers during this time.
Without a Cooling Off Period
This is often referred to as a Solicitor Exchange, a Section 66W Exchange or an Unconditional Exchange. Once a successful sale is negotiated, a sales advice will be sent to your solicitor and they will carry out the exchange of contracts.
Purchasing this way has no deadline and does not lock in the sale price with the vendor. This can leave the purchaser’s chosen property on the market opening it for other buyers to potentially submit offers on.
At the time of exchange, the full 10% deposit will need to be paid, and both vendors and purchasers are bound by the contract.
A key note to remember: A property stays on the market until it is unconditionally exchanged. So make sure to secure your dream when it is in your favor!