If you’re getting ready to make an offer on a property, you might be wondering about the cooling off period and what this involves.

This clause may affect how quickly you need to sign a contract, so take a look at what you need to know.

What are cooling off periods in Australian real estate?

A cooling-off period is a set period of time in which you can change your mind about a property purchase without financial repercussions.

The standard cooling off period is two to five business days, so if you change your mind after having an offer accepted or realise you can’t get finance to buy the house, you can withdraw from the sale without losing your deposit or being forced to go ahead.

Note that different rules may apply, depending on the state you are in.

Why do cooling off periods exist?

The cooling off period is designed to protect you from making an impulsive decision and regretting it. It also provides a crucial buffer, allowing you to conduct due diligence, make sure you can get the finance you need to buy the home and request a property inspection to confirm whether or not the home is structurally sound, pest-free and compliant with local council regulations.

In other circumstances, you may find a different, more suitable property, or a vendor may come back accepting an offer you made that they initially rejected. The cooling off period will give you those few days to be ‘extra sure’.

The cooling off period can benefit the seller as well, particularly if they have a sought-after property and feel as though they could still get a better offer.

Why are cooling-off periods often waived?

There is an option to waive the cooling-off period. In NSW, for instance, there is a document called a 66W certificate that allows the buyer and seller to waive the cooling-off period, and other states have similar options.

66W is often applied in a hot market; buyers are keen to ensure a higher offer isn’t placed during the cooling off period so they push to waive the waiting period and get everything locked in.

Waiving the cooling off period can feel like a lot of pressure, so speak with your real estate agent and conveyancer to make sure this is the right decision.

Auctions

Unlike private treaty sales, auctions do not come with a cooling-off period.

When the auctioneer’s hammer falls, and you’ve made the winning bid, you are legally bound to the purchase or you will risk losing your deposit. This highlights the importance of thorough research and due diligence before participating in property auctions. Have inspections carried out before the big day and work with your lender to ensure you have the funds available for the loan.

Should you waive the cooling off period?

In a ‘hot’ market, home sellers will often push to waive the cooling off period. Sometimes this can be a relief if you want the deal done and dusted but don’t be afraid to speak up if you want the extra couple of days to make sure you have made the right decision.

Ready to buy a home? Get in touch with me at teresa@teresaberger.com.au today.