Step 5: Exchange – Securing the Property

We just covered how professionals can help you through your selection process. Which brings us to the Exchange. This is one of the most critical steps during the Off the Plan Process. Particularly in high demand projects, a fast exchange can be the difference between buying the property you like and missing out. We will review each aspect below:

Step 5.1: Register Your Interest
Step 5.2: Holding Deposit
Step 5.3: Contract Review
Step 5.4: Payment of Deposit Balance
Step 5.5: Sign Contract
Step 5.6: Contract Exchange

Step 5.1: Register Your Interest

To successfully register your interest, your Off the Plan consultant will take further details from you such as the purchasers name(s) and solicitor details. This is seen below.
img_registeryourinterestexample
The expression of interest and holding deposit will be completed outlining such things as your conveyancer and purchasers details. The holding deposit is a few thousand dollars to secure the property off the market for 7 days.

Step 5.2: Holding Deposit

Bank transfer receiptIt is important to understand the holding deposit. It is the time when you convey to the developer your intention to move forward with the purchase of the property.
Holding deposits vary with each developer and development. Typically a standard holding deposit is a few thousand dollars. They are fully refundable. Once a holding deposit is paid, then you will provide the contract information, which will enable you to get the property off the market and give you a week period to exchange on the contract.

Benefits of the holding deposit

  1. The holding deposit system enables purchasers to decide on a property they like, then secure it off the market
  2. Holding deposits are typically refundable
  3. It incentivises faster decision making
  4. It has limited repercussions
  5. Gives you a week or so to make a final decision
  6. Small outlay which doesn’t adversely affect cash flow
  7. Stops you missing out on a property you really like
Example of how the holding deposit works:

Property value Holding deposit What else is required?
$650,000 $2,000 Contract information – purchasers names, contact details, solicitor / conveyancers details

Arrow

Timeframe to exchange Amount needed to exchange i.e. balance of 10% deposit What else is required?
5 business days $63,000 Signed contract

The holding deposit is the start of the formal deposit process. Now is when you will have the choice between the differing types of deposit options. Once the holding deposit has been paid and registration of interest has been completed, the contract of sale is created and forwarded to your legal representative.

Step 5.3: Contract Review

Same front page contract of sale in NSWSelect a suitable solicitor / conveyancer who specialises in the particular market of purchase i.e. Sydney, Melbourne or Brisbane. Sometimes its worth spending a little more to get quality advice. Once you have selected your legal representative of choice, the contract of sale will be forwarded to them for review. They typically take 1-4 days to go through the contract. After which they organise a time to run through the contract with you. Generally the review meeting with your legal representative takes about an hour of your time.

Step 5.4: Payment of Deposit Balance

The payment of the balance of the 10% deposit is typically paid into the real estate agents or solicitors trust account acting for the developer. The normal methods of payment are EFT (Electronic Funds Transfer) or cheque.

Step 5.5: Sign Contract

Once your conveyancer has explained the contract and you are happy to proceed you will sign the contract. Make sure you ask any questions and understand the contract during your review with your legal representative. Typically you sign the front page of the contract.

Step 5.6: Contract Exchange

Contract will formerly exchange once it has been counter signed by the developer and executed by the developers solicitor / conveyancer. Your 10% deposit will be held in the trust account.

We now enter the settlement which is the final step in the Off the Plan process.