It is important that property buyers understand the rules that apply to a cooling off period when buying or selling real estate.
A cooling-off period of three clear business days applies to private sales of residential and small rural properties.
The cooling-off period gives the purchaser time to consider the offer. It begins from the date you, the purchaser, signs the contract, not from the date the seller signs it.
If you decide you no longer want to buy the property, you can “cool-off” i.e. withdraw from the transaction, by giving written notice to the seller or the seller’s agent. You will be entitled to a full refund of any money paid, less $100 or 0.2 per cent of the purchase price, whichever is greater.
The cooling-off period does not apply if:
- the property was purchased at a public auction or within three clear business days before or after a public auction
- the property is used mainly for industrial or commercial purposes
- the property is more than 20 hectares and used mainly for farming
- you previously signed a contract for the same property with the same terms
- the buyer is an estate agent or corporate body.
The cost of exercising your rights under the cooling off provisions of a contract should not be taken lightly. On a $500,000 purchase the penalty charge amounts to a manageable $500. On a $2,500,000 purchase, however, the charge is a significant sum of $5,000.
The key, therefore, is to do as much due diligence as possible prior to making a decision to purchase and to think very carefully about how much you really want the property and whether it adequately suits your needs.
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