Key takeaways
An offer isn't legally binding until both parties have signed a contract of sale and, in most states, a deposit has been paid.
Cooling off periods, penalties and disclosure requirements differ significantly between states and territories.
The highest offer doesn't automatically win. Sellers weigh up conditions, finance certainty and how quickly a buyer can settle.
Gazumping is still legal in most parts of Australia, so speed and preparation matter more than sentiment.
Withdrawing from a deal gets progressively more expensive the further along you are in the process.
You've finally found it. The property that ticks every box, the one you can picture yourself living in for years or the investment property you still want to own in 10 years’ time, and now your heart is pounding because you have absolutely no idea what happens next.
Do you just call the agent and say, "I'll take it"? Do you need a solicitor before you even open your mouth? And why does everyone keep warning you about being gazumped?
As a buyers’ agent, I get asked these questions constantly, and the answer is that it depends entirely on which state or territory you're buying in.
Australia doesn't have a single offer and acceptance process; it has eight, and the rules genuinely aren't consistent, ranging from a three-day cooling-off period in Victoria to no cooling-off period at all in Western Australia and Tasmania.
So let's get into the detail of what actually happens once you decide to make a move on a property, because understanding this properly can be the difference between securing your home or investment grade asset and watching someone else snap it up from under you.
Is an offer on a house legally binding?
Here's something that surprises many buyers: an offer on a house or unit generally isn't legally binding until both the buyer and seller have signed a contract of sale, and in most states, until a deposit has changed hands.
That means an agent is entitled to continue accepting offers even after you've submitted yours and can absolutely put in a higher offer to the vendor if one comes along.
This catches people off guard because, emotionally, once you've made an offer, it feels like the property should be yours. Legally, in most of Australia, it isn't yours until ink hits paper on both sides.
When you're putting an offer together, keep a couple of things front of mind.
Agents are required to submit all offers to the vendor in writing. If you're serious about a property, put your offer in writing with a holding deposit rather than relying on a phone call.
And remember, the property technically stays on the market the whole time the vendor is weighing up offers, so being first in or even having the highest number doesn't guarantee you the win.
So my advice is to speak with your solicitor or conveyancer before you make an offer, not after. Getting legal advice early removes a lot of the confusion and protects you if things move quickly, which they often do in a competitive market.
What happens from here really does depend on your postcode, so let's work through each state.
Victoria
Victorians sometimes assume that once a contract is signed, it's locked in and done. That's not quite right, and it catches sellers out as much as buyers.
Every residential contract in Victoria comes with a three business day cooling off period. A solicitor used to be able to waive this for you if the contract was unconditional, but that's no longer the case, you simply can't sign it away.
The only exception is the period around an auction, when there's no cooling-off period in the three days before an auction, on auction day itself, or in the three days after.
If you exercise your cooling-off right to pull out of a deal, the penalty is the greater of 0.2 per cent of the purchase price or $100, which is a relatively small price to pay compared with being stuck with the wrong property.
In Victoria, making an offer typically means writing and signing an actual contract rather than a vague expression of interest, so treat it as the real deal from the start.
Something worth knowing is that agents can still legally accept a higher offer from someone else, even after you've signed, right up until the vendor has countersigned your contract.
This is what's known as gazumping, and it can also show up when agents use your signed offer to encourage other buyers to outbid it, sometimes called shopping the offer.
The agent's legal duty is to the vendor, not to you, so don't be surprised if a rival buyer swoops in with an extra five thousand dollars at the last minute.
New South Wales
If you're buying in New South Wales, be prepared to put some money on the table early, because expressions of interest and preliminary deposits are common practice here.
Paying a preliminary deposit doesn't take the property off the market, nor does it mean it's yours. It simply signals to the vendor that you're serious.
The seller or agent is legally allowed to take as many preliminary deposits from different buyers as they like on the same property, which is worth remembering before you get too attached.
When you pay a deposit, the agent is required to give you a receipt and confirm in writing that they have no obligation to sell to you, you have no obligation to buy, and that your deposit will be refunded if a contract does not eventuate.
They also have to let you know if another offer comes in for the same property, which at least gives you some visibility.
If your offer is accepted verbally, be ready to move quickly and sign the sale contract, because the vendor remains free to negotiate with other buyers right up until contracts are exchanged, even if they've told you yes.
If the vendor exchanges with someone else before you get there, that's gazumping, and unfortunately you won't be compensated for any building or pest inspections you've already paid for.
Once contracts are exchanged, buyers in New South Wales have a five-business-day cooling-off period, but walking away during that window will cost you 0.25 per cent of the purchase price, deducted from your deposit.
Your deposit, usually 10 per cent, is paid to the real estate agent and held in a trust account until settlement.
Queensland
Queensland gives buyers a five business-day cooling-off period, and the clock starts on the day both parties sign the contract. If that falls over a weekend, the period kicks off on Monday morning and runs through to 5pm on the fifth day.
You can shorten or waive this cooling-off right, but only by providing the seller's agent with a form signed by a lawyer, so it's not something you can do casually.
If you do terminate within the cooling off period, the seller has to refund your deposit within 14 days, though they're entitled to deduct a termination penalty equal to 0.25 per cent of the purchase price.
Buyers here generally write their offer directly into a contract, and it becomes binding once the vendor signs. Agents must then present every offer to the seller, but they can and do shop offers around to see if anyone will beat yours.
They're also required to tell you if you're in a multiple-offer situation, meaning there are at least two offers on the table.
I'd encourage buyers to pay a deposit at the time of signing, and if the contract ultimately falls through, that deposit is fully refundable and is held safely in the agent's trust account in the meantime.
Western Australia
WA does things a little differently, and has a “48-hour clause” which is a real estate contract condition used when a buyer's offer depends on selling their current home first.
It allows the seller to keep marketing the home. If a second better offer comes in, the seller can give the first buyer two business days to make their purchase unconditional or step aside.
And if you love the drama of an auction, Western Australia probably isn't your market, only around two to three per cent of sales happen under the hammer, with the vast majority conducted as private treaty sales where the agent is legally required to present every offer to the vendor.
What you'll usually experience instead is a back and forth negotiation on the contract itself until both sides land on a number they're happy with.
What tends to surprise interstate buyers is that there is no statutory cooling-off period in WA at all, with the odd exception of retirement villages, or if the listing came about through an agent cold-calling or door-knocking.
You can still protect yourself by making your offer conditional on finance, which means you'll get your deposit back if the loan doesn't come through.
South Australia
If you fall in love with a property in South Australia, resist the urge to make an offer over the phone, because all offers here must be in writing, whether that's a formal contract or a letter of offer.
The agent then has 48 hours to present your offer to the vendor, unless you set a tighter deadline yourself, say 5pm that same day.
Agents are entitled to collect multiple offers and shop them around because nothing is legally binding until the vendor signs the contract.
The Real Estate Institute of South Australia has acknowledged this frustrates buyers, but their advice is realistic. Treat your first offer as though it might be your only one, so know your ceiling before you put pen to paper.
Once you're under contract, South Australia gives you a cooling-off period, though it's a short one, expiring two clear business days after you receive what's called a Form 1 which is a legally required disclosure document covering things like title particulars, covenants and zoning, and it's genuinely worth reading properly rather than skimming.
You lose your cooling off rights entirely if you're buying at auction, through a company, or via tender.
- Also read:Caveats: The hidden red flags smart property investors never ignore
- Also read:What property sellers have to disclose
- Also read:Making an offer on a property – what price should you offer?
- Also read:Are all real estate agents rich and overpaid?
- Also read:How much of your income should you spend on a mortgage?
The ACT
Canberra runs a very different system from the rest of the country, which catches out many buyers moving from interstate.
The ACT is the only jurisdiction where contracts are pre-prepared before a property even hits the market, meaning everything is drafted and ready except for the purchaser's details, similar to how auction contracts work elsewhere.
That contract has to be available to prospective buyers before they make an offer, and it includes a building and pest report and an energy rating, which is a nice piece of upfront transparency.
Most agents in the ACT give buyers up to 10 working days to sign, which means the standard five-day cooling-off period is rarely used, because most contracts don't get exchanged until finance has already been formally approved.
Around 99 per cent of contracts in Canberra exchange unconditionally, which tells you how much of the heavy lifting happens before signing rather than after.
Offers here are typically made verbally at first, and if a higher offer comes in before you've locked things in, you can lose the property with no recourse, which does happen in a hot market.
Tasmania
Tasmania operates on a buyer beware basis more than any other state, and it's important to go in with your eyes open.
There's no legally mandated cooling off period here at all, and there's no requirement for a vendor to disclose defects in the property either.
What has changed is that the standard form contract used across the state now includes an optional cooling-off provision, giving buyers the option to elect a three-business-day cooling-off period. However, you have to actively choose it. It isn't automatic and doesn't apply unless both parties agree to include it in the contract.
If you don't include it, and most buyers historically haven't, the contract becomes binding the moment the vendor signs, in much the same way an auction sale is final.
Given the lack of mandatory disclosure, I'd strongly encourage anyone buying in Tasmania to get a proper pre-purchase building inspection and have your conveyancer thoroughly review the contract before you sign, rather than relying on cooling-off rights that may not even be there.
Bait advertising, listing a property well below what a vendor would ever actually accept just to generate interest before an auction, is illegal in Tasmania, unlike the tactics you'll sometimes see used elsewhere.
Tasmania also uses the 48-hour clause in a similar way to Western Australia, giving a buyer 48 hours to secure finance if a higher offer arrives while their contract is still conditional.
Northern Territory
Most deals in the Northern Territory start as a verbal offer, and the contract is only drafted once that offer has been verbally accepted.
Even then, nothing is binding until the final party, usually the vendor, has signed and dated the contract. This means the seller can still accept a better offer right up until that point.
If someone calls with a competing offer before contracts are exchanged, the agent is legally obliged to pass that information on to the vendor.
Once you're under contract, buyers get a four business day cooling off period, starting the business day after exchange, so if you exchange on a Monday, your clock starts ticking on Tuesday.
The Northern Territory stands out from the rest of the country because there's generally no percentage penalty if you cool off. Your deposit is simply refunded in full, which is genuinely buyer-friendly compared with everywhere else.
You typically have seven days for a building and pest inspection and 10 days to sort finance. You can also make your contract subject to an engineer's report, a cyclone rating, or a swimming pool safety inspection, depending on the property.
A 10 per cent deposit is only required if you're buying at auction. There's no deposit requirement for a standard contract. Where a deposit is paid, it sits in a trust account with the agent, solicitor or conveyancer.
Settlement in the NT tends to run 40 to 45 days rather than the 30 days more common elsewhere.
Signs that your offer is likely to be accepted
Waiting to hear back on an offer is one of the more stressful parts of buying property, so here's what tends to indicate you're in a good position.
If the agent or vendor comes back asking for clarification on any part of your offer, whether that's your timeline, your price, or a condition you've included, that's usually a positive sign, it means your offer is being taken seriously rather than dismissed.
A counteroffer is also a strong signal; even though it can feel like a knockback at first, it generally means the vendor likes your terms and just wants to negotiate on price or settlement.
And if the agent tells you outright that the vendor is interested, take that at face value, agents don't usually say this unless it's genuinely the case.
Withdrawing an offer
Of course, your circumstances can change quickly, and I'm often asked whether it's possible to pull out once an offer has gone in.
The answer depends entirely on where you are in the process.
If the seller hasn't yet accepted your offer and signed a contract, you can withdraw in writing at any time, and you don't owe anyone an explanation for doing so.
Once your offer has been accepted and you've entered the cooling-off period, you can still back out. As we've covered above, each state applies its own penalty, generally ranging from nothing at all in the Northern Territory to around a quarter of one per cent of the purchase price in New South Wales and Queensland.
Withdrawing after the cooling off period has expired is a different matter entirely, and it's genuinely expensive, because you'll likely need to compensate the seller for legal costs and other expenses, including any loss they've incurred.
If you ever find yourself in that position, speak to your conveyancing solicitor immediately, because your rights and your exposure depend heavily on the specific wording of your contract.
Protecting yourself from being gazumped
Being gazumped, where a higher offer swoops in and knocks yours out even after you thought you had a deal, remains perfectly legal in most of Australia, even if many people consider it poor form.
The good news is there's a lot you can do to reduce your exposure.
Have your finance pre approved and your deposit ready to go so there's zero delay when it's time to exchange contracts.
Get your hands on the contract early and have your solicitor review it as fast as possible, because speed is genuinely your best defence here.
Push to exchange contracts as quickly as you can once your offer is accepted, because every extra day gives the vendor another opportunity to walk away for a better number.
Insist that the agent puts every genuine offer to the vendor in writing, and ask for proof this has actually happened, because the law requires it.
If you're told other offers exist, ask to see evidence, because agents will sometimes bluff to push you higher.
Put a firm deadline on your offer, and where possible, make it on a day when there isn't an open home scheduled, which reduces the odds of a rival offer landing on the same day as yours.
And if a property genuinely matters to you, be prepared to move on price rather than lose it over a relatively small amount, because in my experience the properties worth chasing hardest are usually worth paying a little more for anyway.
Buying at auction removes the risk of gazumping entirely, since the property goes to the highest bidder on the day with no cooling off period involved at all.
My take after years of doing this
The technical details matter, but here's what I'd want every serious homebuyer or investor to take away from all of this.
The offer and acceptance process in Australia rewards preparation far more than it rewards enthusiasm.
Buyers who have their finance sorted, their solicitor engaged before they need one, and a clear sense of their ceiling price before they start negotiating are the ones who consistently secure investment grade property, particularly in a market where good stock doesn't sit around for long.
Understanding your state's specific rules isn't just legal housekeeping, it's a genuine competitive advantage, because most of your competition hasn't bothered to learn them properly.
If you'd like an experienced team in your corner who negotiate offers like this every single week across Melbourne, Sydney and Brisbane, that's exactly what our buyer's agents at Metropole do for our clients, and it's one of the reasons our clients tend to secure the right property rather than just any property.
You can reach our team at metropole.com.au or on 1300 20 30 30 if you'd like a hand navigating your next purchase.
