Buying a property is one of the biggest financial decisions you will make, and the process in NSW can feel overwhelming if you are not sure how it works. Before you start inspecting homes or registering for auctions, it helps to understand the different ways a property purchase can actually come together.
In NSW, there are three main methods of buying property: private treaty with a cooling-off period, exchange with a section 66W certificate, and purchase at auction. Each method has different rules around deposits, due diligence, and your ability to withdraw from the deal. Here is a breakdown of how each one works.
Exchanging contracts with a cooling-off period (private treaty)
This is the most common way to buy property in NSW. The buyer and seller sign identical contracts, which are then exchanged. The real estate agent often facilitates the exchange, with the lawyers or conveyancers completing the formal steps afterwards.
After exchange, the buyer has a cooling-off period. In NSW, this is typically 5 to 10 business days. The law provides for 5 business days, however this is often extended to 10 days by agreement between the parties.
During the cooling-off period, the buyer can withdraw from the contract for any reason. Common reasons include a loan application not being approved, concerns arising from building, pest or strata inspections, or simply a change of mind.
When exchange occurs, the buyer pays a deposit equal to 0.25% of the purchase price. If the buyer decides to withdraw during the cooling-off period, the seller keeps the 0.25% deposit.
The cooling-off period gives the buyer time to complete important tasks such as finalising loan approval, obtaining legal advice on the contract from their lawyer, and arranging building, pest, strata and other inspections.
Exchanging contracts with a section 66W certificate (cooling-off waived)
This method follows the same process as a private treaty exchange, but with one key difference: there is no cooling-off period.
A section 66W certificate is signed by the buyer’s lawyer, and the contract becomes unconditional immediately on exchange. Neither party can withdraw, and the full 10% deposit must be paid by the buyer (unless a different deposit amount has been agreed).
Because both parties are locked into the deal straight away, the buyer must complete all of their due diligence before signing the contract. This includes having the contract reviewed by their lawyer, completing building, pest and other inspections, and, if the buyer is relying on a loan to fund the purchase, obtaining formal unconditional approval from their lender.
Buying at auction
The third way to buy property in NSW is at auction. If you are the highest bidder and the auctioneer accepts your bid as the final bid (known as the “fall of the hammer”), you are committed to the purchase immediately. The buyer then signs the contract and pays the deposit on the spot.
As with a 66W exchange, there is no cooling-off period for an auction purchase. This means buyers must complete all of their due diligence before bidding, including reviewing the contract with their lawyer and negotiating any terms they want changed before auction day.
Which method is right for you?
The method that applies to your purchase will depend on the circumstances of the sale. If you are buying through a private treaty, you will generally have the benefit of a cooling-off period to finalise your checks. If you are buying at auction or exchanging with a 66W certificate, you need to be fully prepared before you commit.
Whichever method applies, having a property lawyer review your contract and guide you through the process can help you avoid costly surprises and make informed decisions with confidence.
Contact our experienced conveyancing and property law team if you are thinking about buying or selling property and need someone to explain the process to you.
