What Happens After You Accept an Offer?

Whether selling at auction or private treaty, accepting an offer for your property is an exciting milestone. After months of preparation followed by open inspections and negotiations, it is likely to be a moment of elation and relief as you farewell one chapter of your life and get ready to move on to the next.

While you may have already popped open the champagne, there are still several stages ahead before the deal is officially completed. This includes settlement preparations and the final handover. This step-by-step guide will take you through the stages of completing a property sale.

A quick overview of the post-sale process

Once you have agreed to a price for your property, it can feel like all the work is done; however, there are important legal and financial steps ahead to navigate.

The buyer will pay a deposit, which will be held in trust until settlement. Typically, the process can take six weeks to finalise the transaction and hand over the keys to the new owner. During this time, pest and building inspections will be carried out, contracts will be exchanged and confirmation of finance will be obtained.

Depending on where the property is located and how it is purchased, there may be a cooling-off period which allows the buyer to walk away from the deal with only minimal financial penalty.

It is useful to use this waiting time to pack up your belongings, so you are ready to move out on time. Book in the removalist, clean the house thoroughly and tidy up the gardens in preparation for the buyer’s final inspection.

Step 1: Accepting the offer

You’ve likely started the selling process with a figure in mind that will allow you to move on to your next home. Perhaps you’ve had to adjust expectations, or maybe strong interest allowed you to negotiate a little higher during the marketing campaign. Your LJ Hooker agent will act as a mediator during negotiations and present you with the best price in the current market.

A verbal offer may be accepted, however, whether this is a legally binding agreement depends on your state or territory. In most instances, a contract of sale needs to be signed and exchanged.

A holding deposit is often paid at 0.25 per cent of the property price while the contract is being prepared or altered. If the property is secured under the hammer, then the purchaser must pay a 10 per cent deposit on the day, with no cooling-off period.

At this point, there is still potential for gazumping, where a seller can accept a better offer before contracts have been formally exchanged. There are different rules governing this process, so check with your agent, as it isn’t permitted in all states and territories.

Step 2: Exchange of contracts

A contract of sale is prepared by a legal professional, conveyancer or real estate agent before the property is listed for sale. Regulations vary between states and territories, but it may also require a council zoning certificate, pool certification and a sewerage drainage diagram.

It will also outline any inclusions and exclusions, things that stay in the property and those which the seller may take with them, such as a dishwasher, blinds or TV antenna.

If contracts haven’t been exchanged, the seller may ask to negotiate or rewrite parts, such as a longer settlement period or a shorter cooling-off period. A seller may ask for a higher deposit amount to help fund their next property or even rent back the property for a specific period.

The contract of sale must be signed by both parties and formally documents the property price, specific terms and conditions. Whether this is your first real estate sale or one of many, it is essential to have it carefully reviewed by a solicitor and conveyancers to ensure that the terms reflect what has been agreed to and avoid any complications. If you are thinking of selling, find out more about conveyancing.

What does exchange of contracts mean?

Once both parties have signed the contract, it is considered ‘exchanged’. This means it is now legally binding, committing both the vendor and the buyer to the sale.

It is common practice today for contracts to be signed electronically using verified e-signature platforms. These carry the same legal weight as a traditional paper contract.

A deposit, which is typically 10 per cent of the purchase price, is paid. This is held safely in a trust account until settlement. It can be paid by electronic funds transfer (EFT), bank cheque or a bond.

The transaction is now moving towards settlement, where the balance of the property price is paid, and ownership is transferred.

Depending on the state or territory, a cooling-off period starts as soon as the contracts have been exchanged. It can range between two and five working days, depending on the state or territory.

Step 3: Understanding the cooling-off period

A cooling-off period gives buyers time to carry out due diligence, including building and pest inspections as well as finalising their finances. It is important to understand that it also allows a purchaser to exit the contract with written notice, with minimal financial impact.

Sellers who suspect a potential issue with their home should address it before listing it on the market or be transparent with potential buyers. Common problems detected during home inspections include structural defects such as shifting foundations, moisture damage and termite damage. Hiding any problems can lead to future legal disputes, compensation claims and post-settlement lawsuits.

It may seem inconvenient or costly, but addressing a building defect or pest damage can prevent a buyer from withdrawing from the sale or asking for a discount on the sale price.

If the property has a history of termite damage, keep a record of all treatment and clearance certificates to reassure the purchaser and help finalise the sale.

Do cooling-off rules differ by state?

Private treaty sales are governed by state legislation rather than agency-specific rules, including the cooling-off period.

In New South Whales, Queensland and the Australian Capital Territory, the standard cooling period is five working days. In the Northern Territory, it is four days; in Victoria, it is three clear business days; and in South Australia, it is just two days. There is no mandatory cooling-off period in Western Australia or Tasmania, although purchasers can request such a clause in the sales contract.

Remember, a cooling-off period is designed to ensure that the buyer has a window to carry out due diligence on the property, consider their position and get their finances in order.

If the buyer changes their mind, the vendor may be entitled to keep the 0.25 per cent holding deposit as compensation. This also filters out serious buyers who may not be financially ready to proceed with the sale process and wasting valuable time.

Step 4: Preparing for settlement

Once the contracts have been exchanged, the countdown to settlement day begins. Typically, this ranges from 30 to 90 days, depending on terms agreed to in the sales contract.

Your solicitor or conveyancers will coordinate the financial side of the settlement, such as the mortgage discharge and ensure all the necessary paperwork is completed. You will be asked to sign a discharge form usually at the same time as exchanging the contracts.

If there are any clauses or special conditions outlined in your agreement, it is important these are fulfilled. It may include:

• A satisfactory inspection of the property

• Any repairs or maintenance to the property
  

Settlement day can seem like a long time away, but this isn’t the time to put your feet up. Emptying your home and packing away your belongings can be a huge job even if you decluttered before selling, and it is better to start earlier than later.

Check all cupboards, storage areas, and outdoor areas to make sure you haven’t missed anything and that there are no issues that could delay the sale. Any unwanted items or rubbish stored in the backyard shed, garage, or under the house, such as scrap timber, old paint tins and empty chemical bottles, must be removed.

The pre-settlement inspection usually takes place a few days before the official handing over of the keys. There is an expectation that the home will be left clean and tidy, including the garden.

Step 5: Settlement day

It’s time to finally say farewell to your old home, and after what might seem like a long wait, the sale is finalised. You can use a solicitor or a conveyancer to manage the process of transferring ownership from one person to another. 

The good news is that there is no need to attend any formal meetings with the buyers. This is typically done through an electronic platform. Your solicitor, conveyancer and real estate agent will handle everything for you.

If the deposit was held in a trust account, it is also transferred into the sale proceeds. Funds are paid out, and the mortgage has been discharged. The seller pays council rates, water rates, land tax and body corporate or strata levies up to settlement, with the new owner then taking over these payments. Any adjustments are paid to ensure everyone only pays for the period of ownership.

The transfer of land document is signed by or on behalf of both parties and lodged electronically with the Land Titles Office within the state or territory.

When do you have over the keys?

It can be a good idea to drop off the house keys, any security code and garage remotes to your real estate agent over a few days before settlement. This ensures everything is ready to go once all the paperwork and financial side of the deal are completed.

Rest assured, your agent will not hand these over to the new owner until officially notified by your solicitor or conveyancer that settlement has been completed.

If you are selling a tenanted investment property, then a set of keys will be handed to the new or existing property manager. A tenant retains exclusive possession of the property throughout the lease, even when the property is being sold. 

What should sellers do after settlement

Now that the settlement is complete, there are a few more tasks to finish.

Importantly, disconnect and transfer utilities such as electricity, gas, internet and other services. Redirect your mail through Australia Post and update your address with your bank, insurance providers, superannuation fund and any government agencies. Don’t forget online shopping accounts, subscriptions and any delivery services.

Do not cancel your house insurance policy until settlement is complete.

Whether you are planning to buy again, rent or are still working out your next steps, the period after selling your home is a good time to get organised.

Put your sale contract, settlement statement, mortgage discharge details and financial records in a safe place. These may be needed for tax, financial planning or your next property purchase.

With funds now in the bank from the sale, you can consider your budget, borrowing capacity and preferred location to start house-hunting. Perhaps you have decided to rent or stay with family for the short term.

Start by reviewing your finances, including paying off outstanding debts and covering upcoming costs associated with your next move.

What can delay settlement?

The good news is that most property settlements proceed without any problems.

Common issues that cause delays include finance approval, incomplete paperwork, title or legal issues and outstanding repairs or agreed inclusions.

Take a step ahead to ensure there are no issues on your end that could delay the sale. For instance, make sure your swimming pool meets safety compliance and obtain any required certificates. Don’t leave any rubbish or personal items behind when vacating the property.

Any damage or broken appliances can also lead to unnecessary disputes. Avoid changing your mind about which inclusions stay with the property, such as appliances, light fittings and curtains, as this can hold up proceedings.

For a smooth settlement, stay in close contact with your solicitor or conveyancer to ensure everything is completed on time. Your LJ Hooker agent can help guide you through the process, keeping you informed every step of the way.

Planning to sell your home? Talk to us

LJ Hooker will soon mark its centenary – that’s 100 years of helping Australians find a place to call home. With offices throughout the country, our experienced agents are there to lead you through every step of the selling process with confidence and ease.

This starts with an obligation-free property appraisal with one of our experienced local agents. They will provide a detailed breakdown of your property’s size, location and how it compares to similar homes in your area. A better understanding of where your house stands in the current market will provide important insights to help plan your next move. Your LJ Hooker agent will also provide tips on how to achieve the best possible price for your property.