Home Buying 101: What is the Cooling-Off Period?

You’re probably not the only person in the world who had acted impulsively, such as when you thought you wanted to purchase a house, but then regretted it later.

Fortunately for you, the process of purchasing real estate has a safeguard against spur-of-the-moment, impulse decisions like this known as the “cooling-off period.” Basically, this helps safeguard buyers like you who have already signed a “Contract of Sale,” then suddenly change their minds.

How Does the Cooling-Off Period Work?

First off, to benefit from the cooling-off period, this specific stipulation must be included in your contract. The Contract of Sale is a crucial document that you should accomplish with the help of a real estate agent, conveyancer, or lawyer.

It’s also best to bring up this condition when you negotiate with the seller. Commonly, this period would only last for three “business days” and starts to take effect once you sign the Contract of Sale.

To illustrate, if you sign your contract on a Friday, then the cooling-off period would start on Friday and end on Tuesday because the three business days only include Friday, Monday, and Tuesday.

In some instances, buyers could negotiate an extension with the seller. But remember that the extension period should also be included in the Contract of Sale for it to be valid and legal.

Some Crucial Precautions

While the cooling-off period offers you the opportunity to renege on the deal, it does come with consequences, warns a conveyancing specialist in Townsville. Mainly, you might need to forfeit a percentage of the real estate’s purchase price.

In most instances, this would be about 0.25% to 0.2% of the purchase price. Essentially, you might end up forfeiting more if the home’s purchase price is on the higher end. This consequence or penalty is to protect sellers against indecisive or impulsive buyers.

This means that this cooling-off period could benefit both sellers and buyers.

To that end, it’s best that you get professional help when you’re looking for a home to purchase.