We’ve gone through how to sell your home, and how to find the best real estate agent when you do it, but what happens after selling a home?
The ownership of more than 1,600 houses and residential units changes hands in Australia every day based on recent estimates. This daily home sales volume would seem to indicate that once you’ve accepted an offer in the house you’re selling, the rest of the way would be easy.
So you may think that what’s left in your home sale is just an administrative process, and the sale will proceed like clockwork. However, there are still important things to do to close the deal and for you to be fully paid in your home sale.
The good news though is that after accepting a buyer’s offer, you’re just three steps away from concluding the sale and eventually moving onwards on your plans with its proceeds.
These three steps include the exchange of contract, the cooling-off period, and finally, the settlement period.
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What happens in an exchange of contracts?
This is the stage when you and the buyer sign the sales contract, whether you sold your home in the open market or through an auction.
The sales contract must include the following:
- Title documents
- Drainage plan
- Certificate on current zoning
- Swimming pool certificate (if applicable)
- Property exclusions (if any)
- Provision on the buyer’s cooling-off rights
- Clause on the settlement period
The exchange of copies of the sales contract doesn’t have to be done in person. It can also be facilitated via mail or a third party.
After you and the buyer exchange the signed contracts, the buyer will have to pay a deposit typically amounting to 10% – 20% of the purchase price. The amount of the deposit can be negotiated in some cases.
If you sold your house or unit at an auction, the winning bidder will usually pay the deposit on the spot.
Generally, the deposit that may be listed on a contract is either of these two types:
- Initial or partial deposit
- Full or balance deposit
After the deposit is paid, the closing of the sale can progress to the next step—the cooling-off period.
What is a cooling off period?
After selling a home, there’s something called a cooling off period. First, it’s important to emphasise that if your property is sold at an auction, there is no cooling-off period for the winning bidder. This buyer who bids the top price above your reserve price (the minimum amount you’d sell your house) must sign the sales contract and pay the deposit right away.
The cooling-off period applies on home sales contracts in the open private market, and a buyer can withdraw from the sale within this time span.
But take note that there are variations in the legal rules on the cooling-off period in Australia’s states and territories. The exception here is Tasmania where there is no cooling-off period on home sales contracts. In general, buyers can also waive off their right to a cooling-off period.
Cooling-off period rules across Australia
Here’s a rundown on the legal rules on the cooling-off period in the states and territories of Australia.
- New South Wales: The buyers have five business days to withdraw from a contract they have already signed. They will have to pay the seller a termination fee of 0.25% of the purchase price.
- Queensland: It has the same rules as New South Wales—five business days and a 0.25% termination fee.
- Victoria: It allows a cooling-off period of three business days and imposes a termination fee of 0.20% or $100, whichever is greater. Homebuyers in Victoria which are corporate entities or estate agents do not have a cooling-off period in sales contracts. A cooling-off period also no longer applies for a buyer who had previously signed a sales contract on a Victoria house under the same terms.
- Northern Territory: Its cooling-off period is four working days, and there’s no termination fee for buyers.
- South Australia: The homebuyers here are given two business days to withdraw from a sales contract and must forfeit to the seller a holding deposit of up to $100.
- Australian Capital Territory: The cooling-off period here is five business days and the termination fee is set at 0.25% of the purchase price.
What buyers do in the cooling-off period
During the cooling-off period, expect your buyer’s conveyancer or solicitor to complete inspections and research on your property. It’s also the time for you and your buyer to confirm an agreement on the sale price.
The documents that your buyer’s agent may search for include survey and building reports on your property. Be sure to have local certificates of compliance on these matters.
If the buyer doesn’t see or present any problems during the cooling-off period, the sales contract becomes unconditional. This means the sale is locked-in, and it can proceed to its final step—the settlement stage.
Ownership transfer in the settlement period
The length of the settlement period is specified in the sales contract, and it usually ranges between 4 and 12 weeks, depending upon your negotiations with the buyer. During this time, your buyer will conduct a final inspection of the property to ensure that its condition is the same as when the sales contract was signed.
Your agent solicitor or conveyancer and that of the buyer will review the sales contract to see to it that all of its provisions are met. They will check if all the documentation is filed with the proper authorities. They will also confirm if the required payments are completed, such as taxes and land transfer duty fees.
Facilitating mortgage transfer
If the house you’re selling is mortgaged, the settlement period will involve a documentation transfer. On settlement day, your legal agent will meet with your mortgage lender and the buyer’s financial and legal representatives for this process. They will work out the payment of the balance of your loan, and the mortgage that the buyer secured will be registered on the property you sold.
With everything in order, you will receive the balance of the sales proceeds, and you will turn over the keys of the sold house to your buyer. Expect also to receive from your agent an invoice on the service fees due based on the final sale price specified in the contract.
When do I move into my new home?
The weeks of the settlement period after selling your home is a crucial window for you and the new residence you would be moving in. Ideally, you should be ready to move into a new residence after selling your home. Otherwise, you have to rent a place to stay in while your home purchase contract is still pending.
To avoid the extra rental expense, this means that you have to buy and sell a house at the same time, which can be complicated. The most logical approach here is to synchronise your selling and buying through the help of an expert real estate agent.
Buying & selling a house at the same time
There are strategies that knowledgeable agents suggest for those aiming to buy and sell a home as a single project. One of these calls for making your buyer offer contingent on the sale of your current residence.
This contingency gives you the option to back out of a contract in case you fail to sell your house. It allows you to do so free from any legal consequences and can protect you from losing your deposit for the home purchase.
Another tactic is to request an extended closing of your purchase so that you will have more time to find a buyer for your old residence. You can seek a similar extension when closing the sale of your current home. Given these extensions, you can plan well on moving to your new dwelling, an exercise that also requires meticulous thinking.
Basics on moving to a new home
At the outset, it would be smart to seek from the agents you’re dealing with on your home sale/purchase some referrals on moving services. Consider the licensed and insured movers with full- service offerings, including packing, and are local or familiar to the area of your new residence. Of course, the services depend on your budget.
Knowing the features of the residence that you’re moving in should also be a basic consideration starting from your tours of the homes on your buying shortlist. This way, you can already plan exactly on what items should go in each room.
The extended closings on your home sale/purchase likewise give you more time in decluttering and deciding which home items to keep, sell, discard, or donate. Moving would surely be a lot smoother if you bring along only the items necessary for your new dwelling.
Did you learn more about selling a home?
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