When an offer to purchase a property is accepted by the seller, it is generally referred to as ‘under offer’. This means that the agreement on price, terms and conditions has been reached, however the seller and buyer still need to sign the contracts and exchange.
Depending on various terms and conditions agreed upon during the negotiation phase, it can take several days to progress from the offer being accepted to the contracts being exchanged.
During this time the buyer or the seller may withdraw from the agreement.
In NSW two identical contracts are prepared – one is signed by the seller, the other by the buyer. Solicitors or conveyancers will exchange the contracts, however if the property is sold on auction the real estate agent usually exchanges contracts.
After the contracts have been exchanged, it is referred to as ‘under contract’. With a private treaty sale, the buyer has a five-day cooling off period. However, the buyer would be required to pay the seller 0.25% of the purchase price as a penalty for withdrawing from the sale.
Auction properties do not have cooling off periods. If a property is sold prior to auction, or on auction day, the buyer must complete the purchase or risk losing their 10% deposit.
Most agents put the Sold sticker on after contracts have exchanged and the cooling off period has expired.
When the property transaction is completed, which is commonly 42 days after exchange, it is referred to as settlement and the new owner takes possession of the property!