5 Shattered Myths About the Contract of Sale

by Chris Lang on January 24, 2013

Shattered myths

First home buyers, having just embarked on their journey may find the process VERY confusing, and perhaps the most confusing thing of all is the Contract of Sale. It’s surrounded by some potentially dangerous myths which we are going shatter in a moment!

Myth #1 – “You are just making an offer”

The Contract of Sale is a document outlining all the obligations of the home seller and home buyer. It is legally binding from the moment the buyer has signed it – contrary to a popular belief that a buyer is “just making an offer” by signing this document. No need to explain who created that myth – the only party to benefit from buyers taking the Contract of Sale lightly is the estate agents, aiming to score a quick and easy sale.

Myth #2 – “Only a real estate agent can fill in the blanks on the Contract of Sale”

More often than not an estate agent will try and force you to disclose all the details of your offer, so they can fill in the blanks for you. They will give you a lot of reasons, starting from ‘it’s illegal for a buyer to fill in the blanks on the Contract of Sale without a real estate agent present’ to ‘it’s our company policy’ to ‘the vendor won’t accept it unless we’ve prepared it for you’. But that’s just another myth created so that the estate agent could get your price offer in advance and run to your competition, to try and get them to raise their offer.

Myth #3 – “You must give the vendor 3 days to consider your offer”

You can give them just one day to decide, if you want to. There can be circumstances when you’re submitting an offer on a Thursday, and if you give the vendor 3 days, they may delay their decision till after the weekend, hoping to get another offer at their next inspection. Obviously the aim is to create competition between you and the other buyer – a great way to raise the selling price! But not the outcome YOU want. So nothing should stop you from giving the vendor just 1 day to decide, so they feel under pressure of losing a potential buyer.

Myth #4  – “The cooling off period starts from the date the VENDOR signs the contract”

In reality the cooling off period starts on the day the buyer signs the Contract of Sale. Should the buyer decide to give the vendor 3 days to consider the offer, they may receive the answer on the third day, just as their cooling off period expires.

Myth #5 – “Buyers don’t lose money if they cool off within 3 days”

The truth is they still have to pay something – either a $100 or 0.2% of purchase price, whichever is more. This condition is a part of the Contract of Sale, that people who submit multiple offers at the same time should be aware of. If it so happens that two vendors accept your offer, and you intended to buy just one house, the cooling off will cost you.

 

{ 1 comment… read it below or add one }

Igna February 8, 2013 at 6:01 pm

Such a informational article. Yes, you must give a suitable time to vendor to think about your offer…..

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