What is an Exchange of Contract and a Cooling Off Period.
When you purchase a property there is a process that you need to follow.
A property is not SOLD until the contracts have exchanged. A deposit of $1,000 or
10% of the purchase price does not hold that property for you. There is no such thing
as a holding deposit!
Once you exchange contracts, you have a 5 business day cooling off period. In this
period you do your pest and building inspections and make sure your finance is
approved. Once this 5 day period has passed the contracts become unconditional and
the sold sticker goes up.
If you exchange contracts alter you have done the necessary inspections and checks
you run the risk of being gazumped. Gazumping is legal and not a pleasant
experience.
My advice is to exchange contracts straight away (basically lay-by the property),
make all the necessary checks and do it with peace of mind that the property is yours.
If you need to pull out in the cooling off period due to a bad pest or building report or
finance reasons you can. You do lose 0.25% of the purchase price. This fee goes to
the vendor. If you were purchasing a house for $350,000 your penalty would be $875.
This is a small amount of money for the peace of mind you get when making sure
everything is ok with purchasing your next home or investment property.
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