How long does it take to receive money from a home sale?

A man at his desk gets a notification that his sale is proceeding smoothly

As many Australians have discovered throughout their lives, purchasing a house is one thing, but selling one is another.

Acquiring real estate can be considered something of a game: the objective is to find ways to show banks and lenders that you have the resources to pay back a mortgage loan. Putting real estate into the market for sale is a whole other ballgame – one that can test the patience of both the seller and the buyer.

What happens once you've sold property, though? When do you actually get the money? Some may think it can take some time, while others may think they can get their hands on it as soon as the purchaser has signed the contract and made a deposit.

While both can be true, depending on the situation, you can usually bank on getting your money earlier, rather than later. How? You have to talk to your solicitor or conveyancer in the early stages of selling the property – that way you'll have a head start in the preparation of the necessary paperwork.

Here is a breakdown of every step of the process, so you'll know where potential snags can occur:

1. Contract of Sale

Whether you choose to sell off a property through auction or private sale, all parties involved will agree on a certain price. Usually the buyer will have to make a deposit of at least 10% of the property value, although in some cases, it can be negotiated.

2. Cooling-off Period

Typically lasting about 2-5 working days, the cooling off period is the time between the agreement to buy and the time when the contract becomes binding. For buyers, this is the time for them to really dive into everything about the property they may have forgotten – if it has prior damages from pest infection, flood or fire and if it went through various renovations, among other things.If you're looking to avoid payment delays, the inspections must go smoothly.

Once this period ended with no issues arising from both parties, especially the buyer, the contract is deemed "unconditional" and is binding.

Each state has its own real estate laws and they differ from each other. The duration of the cooling-off period, whether it can be negotiated between both parties, and the penalties for not honoring the agreement during this period are all dependent on the law on which the property is located. Be sure to check your local state laws.

3. Settlement Period

The end of the finish line is within hand’s reach. The final and the most arduous step, this is where most problems crop up as most of the technical and legal legwork is done.

Generally, the settlement period runs for about 30-90 days, although 60-day period is the most common (aside from New South Wales, where it is usually set for just 42 days). This gives the vendor and the buyer to arrange everything from finances, documents, house cleaning and moving and other details that need to be ironed out before handing out the keys to the new homeowner.

To paint a picture of what goes on, here’s a gist of what usually happens during this course:

  • The lender or bank gives the approval to release the buyer’s loan as payment to the property being sold.
  • The buyer (or his/her solicitor) will then authorise the seller to collect the money from their agent where it is being held in trust.
  • Both parties will make any necessary payment adjustments that were accrued during this period.
  • The vendor will now give the title of the property to the buyer while his/her solicitor or bank will make appointments to the registrar general to make arrangements for the transfer and home loan (if applicable).
  • Both parties will give confirmation to the agent that the settlement is a success, thus the turnover of the keys.

The settlement period defines the length at which the vendor can receive the money from the house sale. If the property being sold does not have any prior mortgage commitment, the transition should be straightforward – no wrinkles to iron out.

On the other hand, if the property does have a mortgage on itself, it will take some time and effort to run the transaction that can result in the buyer denying the seller to collect the money.

There are a number of possible things that can occur during this period that can delay the deal, such as the buyer missing the payment deadline, changing the settlement date and issues with the bank or lender.

These problems would not hinder you from selling off the property, but bumps along the road can prolong the process and delay the payout process.

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