You may feel nervous with all the details regarding the negotiations to sell your home. Perhaps you are unsure about all the strange terminology that is used. Your agent manages the process of negotiations for you but knowing the process and the terms used will ensure you can stay informed.
Here are the most relevant terms used in the buying process that you need to be aware of.
Negotiations to Sell Your Home – What is a Cooling Off Period?
The cooling off period is the time between when contracts are signed and when the buyers are ‘locked in’. Sellers do not have a cooling off period. A standard cooling off period is 5 business days however it is not uncommon for a 10 day cooling off period to be requested.
Once both parties (i.e. you as the seller, and the buyer/s) have agreed on price and signed the contracts and the contracts have been ‘exchanged’ you as the owner are locked in.
Negotiations to Sell Your Home – If my buyer wants an extension to the cooling off period do I have to agree?
Once you have signed contracts the buyer may request an extension to the cooling off period. My advice would be to check with your agent as to why the extension has been requested before agreeing to extend. It is not uncommon for a solicitor or conveyancer to request a time extension when the purchaser doesn’t actually need it. Sometimes it’s best to grant a day by day extension but you should be guided by your agent.
Your agent should know the buyers’ circumstances and will know whether the extension is truly needed or if it’s just a case of the buyer’s legal people needing more time.
It is your agent’s job to keep things on track and to let you know up front the likelihood of your buyer requiring an extension. Your agent should keep you up to date through every step of the process from negotiation to settlement. This is particularly important during the period from ‘price agreement’ to unconditional exchange when pest and building inspections and valuations are being conducted.
Unconditional exchange just means that the cooling off period has expired. This is the period where things can go wrong and your agents job is to manage this and manage it well!
Many deals ‘fall over’ during the cooling off period. It is imperative as an owner that you engage an agent that has experience in negotiating tricky and difficult situations.
Your decision to extend or not extend the cooling off period should only be made after you have spoken to your legal representative and your agent as both will have relevant information regarding the purchaser’s circumstances.
Negotiations to Sell Your Home – I have agreed to a verbal offer. Now I have received a higher offer from another buyer. Can I accept it?
This will depend on the circumstances and whether contracts have exchanged. Some owners are of the opinion that an agreement is an agreement and they will honour the first buyers offer even though they are not legally bound to do so.
Other owners will take the highest offer. Their approach is that whoever is prepared to sign on the dotted line first wins. You should be guided by your agent as to the strength of each offer and the financial stability of each interested purchaser.
Negotiations to Sell Your Home – What is a 66W?
A 66W is a legal document that waives the buyers rights to a cooling off period. It is signed by the buyers conveyancer or solicitor once they have explained the legal ramifications to their client.
66W’s are used when selling auction properties as there is no cooling off period when purchasing a property at auction. They can also be used in private treaty negotiations but this doesn’t happen as often.
What does ‘unconditional’ mean?
During negotiations to sell your home once both parties – i.e. the seller (vendor) and the buyer (purchaser) have signed the contract, the 10% deposit has been paid (can sometimes be 5% if both parties agree) and the cooling off period has expired, then the property is deemed to be ‘unconditionally exchanged’.
Both parties are now locked in and the SOLD sign will be put up.