Selling your home is a major milestone, but the process doesn’t end once you’ve accepted an offer. There are still important steps to complete before the sale is finalized. Understanding these steps will help you navigate the transition smoothly and avoid unexpected surprises.
From contract exchange to settlement, tax implications, and deciding when to buy your next home, here’s everything you need to know about what happens after selling a house.
1. Exchange of Contracts
The exchange of contracts is the first official step after an offer is accepted. This is when both the buyer and seller sign the contract of sale, making the agreement legally binding. Although the sale is confirmed at this stage, the process is not yet complete.
At this point, the buyer also pays a deposit, usually 5-10% of the purchase price. This deposit is held in a trust account (usually by the real estate agent or conveyancer) until settlement. If the sale occurred at auction, the deposit is typically paid immediately. If it was a private sale, it may take a few days.
Once contracts are exchanged, the property is officially off the market, and the legal and financial processes begin. If applicable, the sale enters a cooling-off period before settlement.
Key Takeaways:
• Both parties sign the contract, making the sale legally binding.
• The buyer pays a deposit, usually 5-10% of the purchase price.
• The property is officially taken off the market.
• The process moves into either the cooling-off period (if applicable) or straight to settlement.
2. Cooling-Off Period (If Applicable)
In some locations, buyers are given a cooling-off period after signing the contract. This allows them time to reconsider their decision and withdraw if necessary. However, properties sold at auction usually do not have a cooling-off period—auction sales are typically final.
If a buyer decides to back out during the cooling-off period, they may have to forfeit a portion of their deposit. The length of this period varies by country and region, but it usually lasts between 2 to 5 business days.
For sellers, this period can feel like an uncertain waiting game. However, once the cooling-off period ends, the contract becomes unconditional, and both parties must proceed with the sale.
Key Takeaways:
• The cooling-off period varies by location but is usually 2-5 business days.
• Buyers can withdraw from the sale but may forfeit part of their deposit.
• Auction sales are final and typically do not have a cooling-off period.
• Once this period ends, the contract is unconditional, meaning the sale must proceed.
3. Settlement Period (30-90 Days)
The settlement period is the final stage before ownership of the property is legally transferred to the buyer. It usually lasts between 30 to 90 days, depending on the terms agreed upon in the contract. During this time, legal, financial, and administrative tasks are completed.
Your conveyancer or solicitor will handle paperwork, ensuring all legal requirements are met. They will also work with financial institutions to pay off any outstanding mortgage balance and adjust property rates, taxes, and utilities. Meanwhile, the buyer’s bank will finalize their loan approvals.
For sellers, this is the perfect time to plan the move—whether it’s into a new home, a rental, or another arrangement. Packing, hiring movers, and updating your address should be high on your to-do list.
Key Takeaways:
• The settlement period typically lasts 30-90 days but can be negotiated.
• Your conveyancer finalizes legal paperwork, including the title transfer.
• Adjustments are made for property taxes, council rates, and utilities.
• If you have a mortgage, your lender will arrange to discharge the loan.
• This is the best time to start packing and organizing your move.
4. Should You Buy Your Next House Before Selling?
A common dilemma for sellers is whether to sell their current home first and then buy or buy first and then sell. Both options have pros and cons, and the best choice depends on your financial situation, market conditions, and personal needs.
Option 1: Selling First and Buying Later
Many homeowners prefer to sell their property first before committing to a new home. This approach is safer financially because you know exactly how much money you have from the sale before purchasing another property.
✅ Pros:
• No risk of carrying two mortgages at once.
• You have a clear budget for your next home.
• Less pressure to sell quickly at a lower price.
❌ Cons:
• You may need temporary housing if you haven’t found a new home yet.
• If property prices rise after you sell, buying may become more expensive.
Option 2: Buying First and Selling Later
Some sellers choose to buy their next home first so they can move in immediately and avoid temporary housing. However, this option comes with financial risks, as you may need bridging finance (a short-term loan) if your existing home doesn’t sell quickly.
✅ Pros:
• No need to move twice or rent a temporary place.
• More time to find the perfect home without feeling rushed.
❌ Cons:
• You may need bridging finance (explained below).
• If your current home doesn’t sell quickly, you could end up paying two mortgages.
5. What is Bridging Finance and When Do I Need It?
Bridging finance is a short-term loan designed to help homeowners buy a new property before selling their current one. It’s meant to “bridge the gap” between buying and selling, preventing financial strain during the transition.
How Does Bridging Finance Work?
• Loan Term: Usually lasts 6-12 months.
• Repayments: Often interest-only during the bridging period.
• Final Payment: The loan is repaid once your existing home is sold.
When is Bridging Finance a Good Option?
✅ If you’ve found your dream home and don’t want to miss out.
✅ If you want to move straight into your new home instead of renting.
✅ If you’re confident your current home will sell quickly.
Potential Risks of Bridging Loans
❌ Higher interest rates than standard home loans.
❌ If your old home takes longer to sell, interest costs can add up.
❌ You may feel pressured to sell quickly, which could result in a lower price.
Before taking a bridging loan, it’s a good idea to speak with a financial advisor or lender to understand the risks and costs.
6. Do I Have to Pay Tax If I Sell My House?
One of the most important financial considerations when selling a home is tax implications. The main tax to be aware of is Capital Gains Tax (CGT), which applies when you make a profit from selling a property. However, tax laws vary by country, and in many cases, primary residences are exempt from CGT.
Capital Gains Tax – Do You Have to Pay?
• Primary Residence Exemption: If your home was your main residence, you’re often exempt from CGT in many countries, including the U.S., U.K., and Australia.
• Investment Properties: If you’re selling an investment property, you may be required to pay CGT on any profit made.
• Time-Based Discounts: In some countries, if you’ve owned the property for more than 12 months, you may qualify for a partial tax discount.
How to Minimize Tax When Selling Property
✅ Keep records of renovation expenses, as they may reduce your taxable gain.
✅ If selling an investment property, consider timing the sale in a year when your income is lower.
✅ Speak with a tax professional to check if you qualify for CGT exemptions or reductions.
Selling a home is a journey, and while it may seem overwhelming, having a clear roadmap makes it much easier. From signing contracts and settling legal matters to deciding on your next property purchase and understanding tax obligations, every step is crucial.
If you’re planning to sell your home or need guidance on settlement, tax implications, or buying your next property, reach out to us Core Elite Real Estate Agents for expert advice. A smooth transition starts with being informed and prepared!
References
1. Australian Taxation Office (ATO) – Capital Gains Tax (CGT)
• https://www.ato.gov.au/General/Capital-gains-tax/
2. MoneySmart – Bridging Finance (Glossary)
• https://moneysmart.gov.au/glossary/bridging-finance
3. Consumer Affairs Victoria – Buying and Selling Property
• https://www.consumer.vic.gov.au/housing/buying-and-selling-property/selling-property
4. NSW Fair Trading – Buying and Selling Property
• https://www.fairtrading.nsw.gov.au/housing-and-property/buying-and-selling-property
5. Queensland Government – Buying Property in Queensland
• https://www.qld.gov.au/housing/buying-owning-home/buying-property
6. Real Estate Institute of Australia (REIA) – Australian Real Estate Market & Guidelines
7. Mortgage Choice – Home Buying and Selling Guide
Disclaimer
This article is intended for informational purposes only and does not constitute legal, financial, or tax advice. The information provided is based on general guidelines and publicly available resources, which may not be applicable to your specific situation. Laws, regulations, and financial policies regarding property sales, capital gains tax, and mortgage financing vary by region and may change over time. Before making any real estate, financial, or legal decisions, it is highly recommended that you consult with a licensed real estate professional, financial advisor, accountant, or legal expert to ensure that you receive personalized advice tailored to your circumstances. Neither the author nor this platform is responsible for any decisions made based on the information provided in this article.
