How Long Is The Cooling Off Period When Buying A House?

How Long Is The Cooling Off Period When Buying A House?

If you’ve signed a contract for a property you thought was perfect, but now you’ve found out about a major issue or are having serious doubts, stay calm.

As long as you haven’t bought your property at auction, you’re protected in NSW by a five-day cooling off period.

Here’s what you need to know to cancel a property purchase, get out of a house contract for sale and protect yourself in future negotiations.

What is a cooling off period?

The ACCC says that a cooling off period is ‘a safeguard designed to give consumers the opportunity to change their minds about a purchase or agreement they have made’.

In other words, a cooling off period gives you the time to change your mind and back out of a contract you’ve already signed.

In NSW, the cooling off period for residential real estate starts when you exchange contracts and lasts until 5pm, five business days later. But there are some limits.

You won’t be covered by the cooling off period in NSW if:

  • The property has been bought at auction or after it was passed in at auction.
  • You waived the cooling off period as a way to make your offer more appealing to the seller. To do this, your solicitor or conveyancer must sign a specific document, known as section 66W certificate.

How do I get out of a house sale contract?

Once you’ve decided to cancel the contract and confirmed you’re still within the cooling off period, you need to send written notice to the seller’s agent within five business days. You don’t need to explain why you want to back out of the contract.

Will I lose any money?

Unfortunately, there are costs involved. In NSW, buyers have to pay 0.25% of the property purchase price. So if the property you’ve signed a contract for cost $1 million, you’ll still have to pay the seller $2,500.

What if the cooling off period is already over?

It might still be possible to cancel your purchase on the property, but there will almost certainly be higher costs involved. The details of exactly how much you’ll have to pay will be outlined in your contract for sale. If you’re making the decision to back out of the sale outside the cooling off period, it’s best to start discussing your options with a solicitor as soon as possible.

How can I avoid this scenario?

Obviously, the best possible outcome here is not having to worry about whether you’re within a cooling off period at all. Making sure you’re buying the right property is all about doing your research properly.

If you’re thinking seriously about buying a place, make sure you’ve covered these bases at a minimum:

  • Building inspections: check for pests, water damage, foundation problems or electrical issues.
  • Council checks: Are you about to buy in an area where major developments or infrastructure changes are on the cards?
  • Your finances: Make sure you have your home loan approved and sorted to avoid any last-minute surprises from the bank.

Need more advice?

As one of the longest running agencies covering Ryde and surrounding suburbs, the Snowden Park team know what to look out for when buying in our area. For expert advice on finding your new home, contact us today.

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