Delayed settlement can boost the chances of finding the right buyer

Delayed settlement can boost the chances of finding the right buyer
Delayed settlement can boost the chances of finding the right buyer

In property conveyancing, dates are essential terms in the contract.

Buyers and sellers regularly negotiate property settlement dates that work for them both.

And with just 80 days to Christmas, it is timely to consider how best to work around the calendar to secure a smooth sale.

Finding a private treaty buyer is taking around 40 days in Sydney, according to CoreLogic.

Then settlement typically takes place six weeks after contracts are exchanged, but this can be a point of discussion before the signature on the contract.

Whether it’s a sale by private treaty or by auction, once a contract has been signed, the settlement date is fixed.

A home purchase doesn't finish with signing the sales contract. In fact, the signing is the beginning of the most important process.

Of course, just because there's a date within the signed contract, doesn’t mean that the date isn't movable. But there could be consequences.

There are often issues that arise before actually taking possession of the property.

Around one in five property settlements in Australia is delayed by a median period of seven days, according to Property Exchange Australia (PEXA).

This delay has financial and emotional repercussions.

And the postponed settlements often create a knock on effect resulting in additional property settlement delays.

The proximity to Christmas, New Year and the school holidays heightens stress, so it warrants the earliest consideration of delayed settlement terms.

The seller and buyer need to agree to push back the move date before signing the contract.

I think it is actually a selling point to be flexible on settlements, possibly pushing the settlement well into 2019 as its offers the pre-Christmas buyer plenty of time to find the buyer of their home too.

Ofcourse, some buyers might have already sold and be keen for a quick settlement.

Either way, vendors need to be receptive to enhancing their sale prospects.

There will likely be some attendant issues, such as insurance, bank approvals, bridging finance and maybe deposit release.

Communication and common sense are needed in the formal and informal interactions between the buyer and seller, along with their estate agents, lenders and conveyancers.

I'm told Australia's most expensive house, Fairwater, which sold last month to tech entrepreneur Mike and Annie Cannon-Brookes ending the Fairfax family's 100 year plus hold on the exclusive beachfront, was done with delayed settlement terms.

They agreed on six month settlement terms.

Finding finance won't be an issue for the Atlassian billionaire, but vendors do need to be aware of looming problems if their buyer struggles to find purchasing funds in these straighten lending times.

On the formal front, in the event that a NSW purchaser is not in a position to settle on the settlement date, generally the vendor can charge penalty interest for each day that settlement is delayed and also issue a notice to complete, which gives the purchaser an additional 14 days to settle, thereby making time essential.

In the event that the purchaser is not able to settle by that date, the vendor may be able to terminate the contract and keep the purchaser’s deposit.

Changing minds isn't the go.

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of our authors. Jonathan has been writing about property since the early 1980s and is editor-at-large of Property Observer.

Tags: 
Property Advice Settlement

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