While both the buyer and seller may be happy with an offer, the deal is not sealed until both parties have signed copies of the contract for the sale and exchanged them. Below are five items to check off during the exchange process before settlement.
Have you reviewed the contract?
This step should be done before making or accepting an offer. However, as the document has legal implications, it is essential to do a final review before signing on the dotted line. Go over the finer details and make any necessary changes for your conveyancer to raise with the other party. Once all revisions are accepted and finalised, it is time for the exchange of contracts.
Are the contracts ready to be exchanged?
Exchanging contracts is the legal part of selling and buying. There will be two copies of the sale contract, one for the seller and one for the buyer. Each party must sign one copy before they are swapped and kept for record. At auction the exchange happens immediately after a winning big is accepted. For private treaty sales, each party signs separately then exchanges documents by hand, post of electronically which is usually arranged by a solicitor, sales agent or conveyancer and must happen within two business days. The buyer and seller are legally bound once the contracts have been exchanged.
Do you have the deposit ready?
At the time of exchange, the buyer must be prepared to pay the deposit. Deposits are usually calculated between 0.25% to 10% of the purchase price and are typically made by cheque or electronic funds transfer and produced with the contract. There is an initial deposit which is due at the time of signing the contract. There is also something called a balance deposit (if any), which is to be paid upon the contract going unconditional.
Have you taken note of the cooling off period?
There is typically a cooling off period in place for buyers. In Australia, the timeframe varies from state to state with extended cooling off periods generally applied to properties sold off the plan. A buyer can waive the cooling off period by giving the vendor a 66W Certificate. It is also possible to reduce or extend the cooling off period by written agreement from both parties. The cooling off period starts as soon as the contract has been exchanged.
Are you prepared for settlement?
A sale contract will typically outline a settlement day. Settlement is the conclusion of the sale transaction and usually takes place six weeks after contacts are exchanged. At settlement, the buyer will need to pay the seller all outstanding costs to settle the property purchase.
Buyers and sellers don’t typically need to attend settlement in person, instead, solicitors, conveyancers and bank representatives meet to exchange the necessary cheques and documents. The amount owed takes into account the outstanding purchase amount (minus the deposits) as well as utility bull and tax calculations.
For more information about the property settlement process, contact us today!
