5 things to check when exchanging contracts
While both the buyer and seller may be happy with an offer, the deal is not sealed until both parties each sign copies of the contract for sale and exchange them. In this blog, our agents outline five action items to check off during the exchange process before settlement.
Have you reviewed the contract?
This step should be done before making or accepting an offer; however, as the document has legal implications, it’s essential to do a final review before signing on the dotted line. Check over the finer details and make any necessary amendments for your conveyancer to raise with the other party. Once all revisions are accepted and finalised, it’s time for the exchange.
Are the contracts ready to be exchanged?
Exchanging contracts is the legal part of selling and buying. There will be two copies of the sale contract: one for the seller and one for the buyer. Each party must sign one copy before they are swapped and kept for record. At auction, exchange happens immediately after the winning bid is accepted. For private treaty sales, each party signs separately then exchanges documents by hand or post. The exchange is usually arranged by a solicitor, conveyancer or agent and must happen within two business days. The buyer and seller are legally bound once the contracts are exchanged.
Do you have the deposit ready?
At the time of the exchange, the buyer must be prepared to pay a deposit. Deposits are usually calculated between 0.25% to 10% of the purchase price, typically made by cheque, electronic funds transfer, and produced with the contract.
Have you taken note of the cooling-off period?
There is typically a cooling-off period in place for buyers. In Australia, the timeframe varies from state to state, with extended cooling-off periods generally applied to properties sold off the plan. A buyer can waive the cooling-off period by giving the vendor a ‘66W certificate’. It is also possible to reduce or extend the cooling-off period by written agreement from both parties. The cooling-off period starts as soon as the contracts are exchanged. If the buyer may forgo their deposit if they use their cooling-off rights and withdraw from the agreement.
Are you prepared for settlement?
A sale contract will typically outline a settlement day. Settlement is the conclusion of the sale transaction and usually takes place six weeks after contracts are exchanged. At settlement, the buyer will need to pay the seller all outstanding costs to ‘settle’ the property purchase.
Buyers and sellers don’t typically need to attend settlement in person; instead, solicitors, conveyancers and bank representatives meet to exchange the necessary cheques and documents. The amount owed takes into account the outstanding purchase amount (minus the deposit) as well as utility bill and tax calculations. For more information about the property settlement process, read our blog, The Property settlement process - five key steps.
The best strategy you can put in place to facilitate a seamless exchange process is to enlist the support of a seasoned real estate professional.
Our experienced and knowledgeable agents can support you through each of the steps above, connecting you with conveyancers and finance providers where necessary. Speak to your local Hockingstuart agent today.