Holding Deposits in NSW: Why There’s No Such Thing
“Just put down a holding deposit” is the advice buyers hear most. But you can’t lay-by a house. Here’s what that money really is, and what actually secures a property.
Is there such a thing as a holding deposit in NSW?
No. A deposit does NOT stop other buyers from making offers on the same property. “The agent said to put down a holding deposit” is what we hear on almost every buyer call, and it makes conveyancers wince, because you can’t lay-by a house. Most buyers pay the money believing the property is now theirs, and finding out otherwise is one of the most common heartbreaks in NSW property. It’s part of exchange, and on its own it secures nothing.
At a glance
- Is there such a thing as a holding deposit? No, it’s a myth. Paying the agent money on its own does not hold the property or take it off the market.
- What is that money actually called? An expression of interest deposit. It’s refundable and holds nothing. The initial deposit is what you pay at exchange.
- What does exchange actually need? The initial deposit paid, and the contract signed by both the buyer and the seller. Until both happen, nothing is secured.
Why there’s no such thing as a holding deposit
The word “holding” suggests the property is being held for you. It isn’t. In NSW, a property is only secured when contracts are exchanged, and money paid to the agent doesn’t change that.
That’s why conveyancers don’t use the term. Money paid to the agent before exchange is legally an expression of interest deposit, and it’s refundable. The deposit that actually secures the property is the initial deposit, paid at exchange, usually 0.25% of the purchase price when there’s a cooling-off period, with the balance of the deposit paid later under the contract.
What buyers are told
“Put down a holding deposit and it’s yours.”
“Once you’ve paid, it comes off the market.”
“Nobody else can buy it now.”
What actually happens
You can’t lay-by a house. Until contracts are exchanged, the property stays on the market. The seller can keep negotiating, other buyers can still inspect and make offers, and the house goes to whoever exchanges first.
What exchange actually needs
To exchange contracts in NSW, two things must happen:
The initial deposit is paid
Usually 0.25% of the price when a cooling-off period applies. If you’ve already paid an expression of interest deposit, it’s normally put towards this at exchange.
The contract is signed by both the buyer and the seller
Signed contracts are then swapped. Paying the deposit without a contract signed by both sides secures nothing.
Once both have happened, contracts are exchanged and the seller can’t sell to anyone else.
Most NSW residential sales come with a 5 business day cooling-off period after exchange. If you pull out during cooling-off, you lose 0.25% of the purchase price. That’s the trade off: a small, known cost in exchange for the property being locked in while you finish your checks.
“Which is going to cause more tears? Losing the deposit or losing the house?”
Already paid the agent before contracts were signed?
Then the money isn’t holding anything yet. The law calls it an expression of interest deposit, and under the Property and Stock Agents Regulation 2022 it’s refundable. Before you pay it, the agent must tell you in writing that:
- The seller has no obligation to sell the property
- You have no obligation to buy it
- The money is refundable if a contract isn’t entered into
The agent must also tell you promptly if another offer comes in, confirm you can keep making offers until exchange, and refund your money within 14 days if another buyer exchanges. In other words, the paperwork itself confirms it: nothing is being held for you. The only fix is getting to exchange.
How to get to exchange quickly
Every day between your offer being accepted and exchange is a day someone else can buy the property. Here’s how to shorten it.
Line up your conveyancer before you offer
If we already have your details, we can start on the contract the moment the agent sends it.
Get the contract reviewed early
You can ask for the contract as soon as a property is listed. Check the inclusions list on the front page too, because missing or unticked items are one of the most common causes of delay.
Have finance and your initial deposit ready
A real pre-approval, not just a chat with a broker, and deposit funds you can transfer straight away.
Exchange with a cooling-off period
Rather than waiting for every inspection and report before you exchange, you can exchange with a cooling-off period and finish those checks inside it. We’ll talk you through whether that’s right for your purchase.
Agent asked for a holding deposit? Send us the contract today and we’ll get you to a proper exchange.
The short version
There’s no such thing as a holding deposit, and you can’t lay-by a house. Money paid to the agent before exchange is an expression of interest deposit, and it’s refundable. The property is only secured by the initial deposit paid at exchange, alongside a contract signed by both the buyer and the seller. Until then, the house is still on the market.
Offer accepted?
Talk to Justin, Julie, Amanda or Nicole today. We’ll review your contract and help you get to exchange before someone else does.
