If you're in the market to buy your first home, you need to understand the rules and regulations and the various clauses that determine how to proceed. In particular, you may be interested in what is known as a "cooling off" period and how you may be able to use that clause as you make your decision. What are the implications and what should you be aware of?

Definition

As the phrase implies, the cooling-off period allows you to reconsider your decision before you enter into a contract of sale. If applicable, it will begin as soon as you receive the draft contract and may end a specified number of days into the future.

Using a Cooling-Off Period

Be careful when thinking about such a clause, and don't be tempted to rush into any decision with this clause as a backup. Some people may be tempted to "secure" a property if they fall in love with it at first sight and are afraid that somebody else will come along and take it. They may decide to enter into an agreement, knowing that they can use this period to think again, but there may be penalties involved if they change their minds.

Varying Laws

It's also important to note that cooling-off laws vary from state to state. In some states, the seller is not required to include a cooling-off period within any contract, whilst in others, the length of the period may vary. If offered a cooling-off period, it will last for a given number of business days, not including weekends and public holidays.

Financing

It is okay to use this period to confirm loan arrangements with a financier. After all, you may just have an outline agreement from your bank and must now confirm that the institution is okay with the particular property in question.

Auction

Don't expect to get a cooling-off period if you decide to buy a property at auction, as this clause is not valid there.

Compensation

Also, remember that you may have to pay a compensation fee to the seller if you should change your mind. After all, they have invested their time and will have taken the property off the market while you cool down. Again, this can vary from state to state, and you will certainly want to be aware of your obligations.

Clarity

In an ideal world, it's best to have clear instructions from your financier and be sure that you want to take the property in question. Try not to use a cooling-off period simply because you haven't quite made up your mind yet and want to block other parties out.

Working with a Conveyancer

To be as safe as possible, it is always best to use a conveyancer, especially as this is your first time. Contact a local conveyancer to get started.