The Purchase & Deposit
When it comes to purchasing residential property in NSW many vendors will allow for the standard ‘5 Day Cooling Off’ period after you’ve ‘Exchanged Contracts’. This means that when an offer is made by the purchaser to the vendor they must hand over .25% deposit of the agreed purchase price. So in the case of a $1,000,000 purchase the buyer must lay down a deposit of $2500. At this point they have exchanged contracts. The buyer now has 5 business days to conduct their building & pest inspections and hopefully get finance formerly approved through their chosen lender (some lenders will require more time. Another reason to have a good broker on your side to advise you of current lender timeframes. )
66W Form Explained
During that 5 Day Cooling Off period the buyer can pull out of the sale for any reason but will forfeit their small deposit. When people attend an auction or if it’s a ‘hot’ market (also referred to as a ‘Seller’s Market’) then the vendor will probably ask for a 66W form when exchanging contracts. This form stipulates that the buyer is forfeiting their right to a Cooling Off Period. Thus, if the buyer decides to not complete the sale they will have to potentially pay up to 10% of the purchase price as a penalty.
So what this means if you’re looking at property that may require you to sign a 66W form, you must ensure that you have a pre-approval in place with a lender; you understand the timeframes of the bank to get the loan formally approved; have had pest and building inspections completed before signing and most importantly….. you know you truly want that property!