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What happens after selling a house?

By Emma Smith

You’ve waited patiently through the open homes, bargained hard on price, and finally decided what furniture you’re keeping and what goes to charity. But what actually happens after you sell your house?

There are three key processes you need to go through to finalise the sale of your home.

  1. Exchanging contracts and getting the deposit.
  2. Surviving the cooling-off period.
  3. Settlement.

Here’s what happens at each stage.

1. Exchange of contracts

This process creates a legally-binding document that confirms the price and conditions for the sale.

The buyer will sign an official offer, called the Contract of Sale document, for the seller to consider. This will cover the price, the deposit amount, the amount owing at settlement, the property details, the settlement period, and any other conditions of the sale, such as the contract being subject to finance or a building inspection.

The document will also include the buyer’s and seller’s names, as well the details of each party’s legal representatives, if they choose to use them.

It’s at this time that the buyer hands over the agreed-upon deposit, which is generally 10% of the purchase price to the agent held in trust.

2. The cooling-off period

As the name suggests, the cooling-off period gives the buyer time to reconsider their decision and cancel the sale.

The buyer needs to inform the seller or their legal representative in writing if they change their mind during this period. They will then get their deposit back, minus the applicable penalty.

It’s important to remember that the cooling-off period starts from the day the buyer signs the contact, not when the seller signs it.

Each state and territory has its own rules around the cooling-off period – if it has one by default – including those that outline how long it is, penalties that might apply, and the property types that it applies to.

In Victoria, the cooling off period is 3 business days with a penalty of $100 or 0.2 per cent of the purchase price, whichever is greater.

There is also no cooling-off period when a property is sold at auction.

3. Settlement period

Once the cooling-off period is over, the sale moves into the settlement stage.

Normally between 30 and 90 days, although it can be as long as 120, the settlement period gives the buyer time to get their finances in place, and allows enough time for both parties to double check that all elements of the Contract of Sale are met.

The respective lawyers or conveyancers will check zonings and property boundaries, complete formal documentation, and arrange payment of stamp duty and any other fees and charges associated with the sale.

From the buyer not completing their loan documents to the seller not being able to provide vacant possession, Settlement can be held up for a range of issues. The key to a smooth one, is for both parties to work closely with their lawyers each step of the way.

On settlement day, the buyer’s lawyer will make sure that the money needed to buy the property is on hand, before helping the buyer get the title or freehold to the property.

Once the last signature has been added and the final cent changed hands, it’s finally time to pop the champagne.

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