We have recently noticed an increase in real estate agent exchanged contracts. A reduction in supply and unprecedented demand means purchasers are scared to miss out on their dream home and real estate agents know it. Real estate agents will advise you that the only way to get the house off the market will be to hand over a 0.25% deposit and sign on the dotted line (often an online signature will do the trick). You may be told not to worry as you have a cooling off period. But there are some things you should know before you jump in and sign.
Do you need a longer cooling off period?
You may need more than the standard five business day cooling off period. This may be the case if you need to organise finance, additional time to obtain the 10% deposit (payable at the end of the cooling off period) or you would like additional time for building, pest or survey reports to be completed.
It is important to ensure all reports you request are completed before contracts become unconditional. After exchange we can request for an extension of the cooling off period, however the Vendor may not agree, leaving you in the position where you either lose the 0.25% deposit paid to the real estate agent or commit yourself to the purchase without having the reports completed and potential issues outlined.
What does the contract say about the settlement date?
Is there an overly long or drastically short settlement period? You should consider whether the date suits you and, if not, negotiate to have the time lengthened or shortened before signing. Things to consider are whether you need to give notice in your current rental, whether you need to settle on your own home before purchasing, whether you have time to get a removalist and most importantly, whether there is a gap between when you move out of your current home and move into the new home.
Are there special conditions?
You may want to consider whether the purchaser has added special conditions to the contract and what impact those special conditions have before entering into the contract. Often these special conditions take an experienced eye to review and interpret.
Can you afford to lose your deposit if you would like to rescind within the cooling off period?
You should consider whether you are happy to potentially lose your 0.25% deposit if you change your mind. You may also lose the cost of building, pest and survey reports. If you are unsure, then you should consider taking extra time to make up your mind about whether this is the right decision before potentially losing thousands of dollars on a rushed decision and a perceived fear of missing out. Buyer’s remorse is a common feeling when we make quick decisions, especially when a real estate agent is using every trick in the book to get a quick signature.
Getting legal advice first
We recommend you have a Solicitor review the contract and discuss your options around settlement dates, cooling off periods and other special conditions before you sign. If you get this advice, you may save thousands of dollars on a lost deposit if the contract does not fit your current needs.
You can also click here to see an information page prepared by the NSW Department of Fair Trading.
You may be surprised how quickly we can review your contract and provide advice to make sure you are making a well-informed decision. If you are considering a home purchase, please reach outto us to see if we can help.