Victorian buyers have lost a bargaining chip but gained the ability to change their minds in cooling-off changes
Buying a property is the most expensive and significant purchase we’ll ever make in our lives.
This makes the purchase process one of life’s most exciting and daunting moments. When buying small items like clothes or cars one can browse, pause, walk away, think and consider. But when buying a half-million-dollar property at auction, the single opportunity to buy is happening right before your eyes. The time to decide is now. Even if you purchase privately and have given weeks of thought to a property, the decision is rarely easy one.
The heat of the moment of an auction and the emotion of becoming attached to a property can sometimes result in post-purchase uncertainty. For whatever reason it may be, it is worth noting that buyers have rights after purchase, and as of March 1, 2012 the Sale of Land Act (in particular section 31) changed to protect Victorian purchasers even further.
Cooling-off rights
Basically put, the legislation now allows for a purchaser to “cool off” after making an offer on a property, no matter what the circumstances are.
Previously a purchaser would forfeit the statutory three-day cooling off period if he or she had sought legal advice prior to signing a contract to purchase a residential property. Purchasers could also agree to remove all rights to a cooling off period legally, by choice, through a solicitor.
However as of March 1st, a Victorian purchaser will no longer lose the right to the cooling-off period if he or she received legal advice, and the new amendments to the legislation also no longer allow the purchaser to legally waive their three-day withdrawal period.
The amendment to the legislation is a positive for purchasers who are not 100% certain about their decision. This may not be good news for purchasers that are certain on their decision, however, as a selling agent will be less likely to accept an offer before auction, or entertain the idea of negotiating with a buyer before an action, if the buyer can still cool off. Previously, if a strong offer was put forward without a cooling-off period, the offer was as good as being sold under the hammer, as it was deemed an unconditional offer.
From a negotiation perspective, this reduces a purchaser’s bargaining power, as waving the cooling-off period was a negotiation tool used by some purchasers, and this avenue is no longer available – no matter how certain they are on the purchase.
Just one example of this being used to a buyer’s advantage was a recent property Infolio purchased on behalf of a buyer in Carnegie, where we secured a purchase price of $773,100 – despite there being an offer above $775,000 – due to our waiving the cooling-off period.
Key negotiation tools now include submitting offers that are not subject to finance or a building inspection and agreeing to an early release of the 10% deposit, known as a section 27.
More information on the changes affecting buying and selling property effective from March 1st can be found at www.consumer.vic.gov.au.
Cameron Deal and Lauren Staley are founders of Melbourne buyer advocate and property management agency Infolio.