Can a Seller Accept Another Offer After You Pay a Holding Deposit in NSW?

In NSW, paying a holding deposit does not automatically stop a seller from accepting another offer unless contracts have been exchanged. Before exchange, a seller can usually keep negotiating, and the agent may need to pass on other offers. After exchange, the sale is binding. Sydney buyers should confirm whether their payment is only an expression of interest or part of an exchanged contract.

A holding deposit can feel like a turning point in a Sydney property purchase. The buyer has transferred money. The agent has issued instructions. The property may appear to be moving from negotiation into paperwork. For many buyers, that payment feels like a commercial handshake that should stop the seller from entertaining anyone else.

In NSW, that assumption can be expensive. The real protection is not the payment itself. It is whether contracts have been exchanged. NSW Government guidance makes the distinction clear: before exchange, a seller may still negotiate with other buyers, including where an expression of interest payment has been made. A sale becomes binding when signed contracts are exchanged between the seller and buyer.

That distinction matters because buyers often spend money quickly once an offer is accepted. They may order building and pest inspections, pay for strata reports, arrange finance, brief a conveyancer, book removalists, speak to flooring contractors or start planning renovation access. If another buyer exchanges first, those early costs may not be recoverable.

The Payment Is Not The Protection. Exchange Is. The central question is not simply whether a buyer has paid money. It is what that money legally represents.

In NSW private treaty transactions, buyers commonly encounter three different payment situations that are often described casually as a “holding deposit”. They are not the same thing.

Expression of interest deposit Usually means: a preliminary payment showing the buyer is serious before exchange. Can the seller still accept another offer? Usually yes, until contracts are exchanged. Buyer risk: the property is not secured and the buyer may be gazumped. 0.25% deposit at exchange with cooling-off Usually means: part of an exchanged contract where the buyer has cooling-off rights. Can the seller still accept another offer? No, the seller is generally bound after exchange. Buyer risk: the buyer may lose 0.25% if they rescind during cooling-off. Full deposit on unconditional exchange Usually means: a stronger contractual position, often after cooling-off is waived or expired. Can the seller still accept another offer? No, subject to the contract terms. Buyer risk: the buyer has limited exit rights and may face serious default consequences. This is why buyers should avoid relying on informal language. “Holding deposit”, “initial deposit”, “0.25 deposit”, “EOI payment” and “deposit to secure the property” can be used loosely in conversations, but the legal effect depends on the contract status and the written documents.

Why This Issue Is More Visible In Sydney Sydney buyers often operate in compressed decision windows. Competition for well-priced homes, strata apartments and renovation-ready properties can push buyers to act quickly, especially when agents indicate that other parties are interested.

The operational problem is that property due diligence rarely moves as fast as sales urgency. A buyer may need to coordinate:

contract review by a licensed conveyancer or solicitor; finance approval and lender valuation timing; building and pest inspection availability; strata report review for apartments and townhouses; inclusions, exclusions and settlement terms; renovation feasibility for flooring, bathrooms, painting, access and storage; deposit transfer limits and proof of funds. The buyer may think the holding deposit has bought time. In practice, an expression of interest deposit may only signal seriousness. Unless contracts are exchanged, it may not prevent the seller from accepting a better offer or a cleaner offer from another buyer.

What Gazumping Looks Like In Practice Gazumping occurs when a buyer’s offer is accepted in principle, but the property is sold to someone else before contracts are exchanged. In NSW, the agent is generally required to pass on further offers to the vendor up until exchange, unless the vendor has given a written instruction to the contrary.

On the ground, gazumping does not always look dramatic. It can appear as a quiet shift in communication:

the agent asks for a “best and final” offer after the buyer has already paid money; the vendor delays signing while another party improves their offer; a cash buyer offers a faster exchange; another buyer provides a 66W certificate and waives cooling-off; the seller prefers different settlement terms, not just a higher price; the agent says the property cannot be marked sold until exchange is complete. The buyer’s frustration is understandable. Money has been paid. The buyer may have stopped searching. Trades may have been contacted. Family decisions may have been made. But if exchange has not happened, the commercial expectation and the legal position may be different.

The Agent’s Trust Account Is Not The Finish Line A common source of confusion is the agent’s trust account. Buyers often assume that once money lands in trust, the property is held for them. That is not automatically correct.

For an expression of interest payment, NSW Government guidance indicates the buyer should be told in writing that the vendor has no obligation to sell, the buyer has no obligation to buy, and the deposit is refundable if a contract for sale is not entered into. The agent can also take more than one preliminary deposit for the same property.

That does not make the payment meaningless. It can help prove seriousness and move the file forward. It may encourage the seller to consider the offer carefully. It may help the agent prioritise communication. But it is not the same as exchange.

After Exchange, The Risk Profile Changes Once contracts are exchanged, the legal position changes significantly. NSW Government guidance states that a property sale becomes binding on the seller and buyer when contracts are exchanged between the two parties. Exchange occurs when the seller signs their copy, the buyer signs their copy, and the signed contracts are exchanged.

In a standard NSW residential private treaty purchase, the buyer usually has a five-business-day cooling-off period after exchange. If the buyer rescinds during that period, the vendor may retain 0.25% of the purchase price. A longer cooling-off period generally applies to off-the-plan purchases. Different rules apply to auctions and same-day post-auction exchanges, where cooling-off rights generally do not apply.

This means a buyer who has exchanged with cooling-off has a very different position from a buyer who has only paid a preliminary deposit. The seller is generally bound to the exchanged contract, while the buyer has a statutory cooling-off right unless it has been waived, reduced or otherwise affected by agreement.

Why A Cleaner Offer Can Beat A Higher Offer Buyers often assume gazumping is only about price. In Sydney transactions, the stronger offer is sometimes the more executable offer.

A vendor may prefer a buyer who can exchange faster, provide a larger deposit, waive cooling-off with a 66W certificate, accept the contract with fewer amendments or agree to a settlement date that aligns with the seller’s next move. A buyer offering slightly more money but requiring longer finance, more due diligence or complex changes may not be the preferred party.

This is where conveyancing and project planning intersect. A buyer who knows their finance position, understands the contract, has identified likely renovation constraints and can make decisions quickly may be better placed than a buyer who is still working through basic risk checks after paying a preliminary deposit.

What Buyers Should Confirm Before Paying Before transferring any deposit described as a holding deposit, buyers should slow the process down long enough to confirm the status of the transaction in writing.

Ask whether contracts have already been exchanged. If not, the payment is likely not the thing that secures the property. Ask what the payment is called in writing. Is it an expression of interest deposit, a 0.25% exchange deposit or part of a full contract deposit? Ask whether the vendor has signed. A buyer signing alone is not the same as exchange. Ask who is holding the money. Confirm whether it is held by the agent, solicitor, conveyancer or another stakeholder. Ask what happens if another buyer exchanges first. For a preliminary deposit, the refund position should be clear. Ask your conveyancer what must happen to exchange quickly. Do not let the deposit create false confidence. Buyers using Elyment’s Sydney conveyancing support can treat this as a sequencing question, not just a legal wording issue. The objective is to understand what has actually happened, what remains outstanding and what must be completed before the property is contractually secured.

Where Renovation Planning Can Go Wrong The holding deposit question often becomes a renovation problem because buyers start planning occupation before the purchase is secure.

That may include booking floor removal, requesting strata access, measuring for hybrid flooring, speaking with painters, organising storage, planning furniture delivery or pricing urgent works before moving in. If the property is later sold to someone else, the buyer may lose time, inspection costs and planning momentum. If the buyer proceeds but settlement dates shift, the renovation program may still need to be rebuilt.

This is particularly relevant for apartments where strata approval, lift bookings, acoustic flooring requirements, access paths and common property protections can affect the start date. Elyment’s guidance on what buyers should plan when settlement is delayed but trades are booked applies strongly to pre-settlement decision-making.

Buyers planning post-settlement works should separate three stages:

Pre-exchange interest: useful for desktop planning only. Post-exchange, pre-settlement: suitable for conditional scoping, quotes and access preparation. Post-settlement possession: suitable for confirmed works, site attendance and physical renovation activity. This protects the buyer from committing too early to trades, deliveries or building access dates that depend on a transaction that has not yet become binding.

The Seller’s Position Also Needs Discipline Sellers and agents also need clear process control. Accepting multiple expressions of interest, managing competing offers and communicating deposit status can create dispute risk if the language is loose or the buyer is allowed to misunderstand the position.

Clear written communication reduces the likelihood of conflict. Sellers should ensure their agent and conveyancer are aligned on what has been accepted, whether contracts have been issued, whether amendments are outstanding, whether a 66W certificate is being requested and when the property can accurately be treated as sold.

For sellers preparing a property for sale, this also links to campaign readiness. If the property is still on the market, renovation, presentation and access decisions may continue until exchange. Elyment’s broader property services model brings operational awareness to the way legal timing, sales preparation and physical works affect each other.

When A 66W Certificate Enters The Conversation A 66W certificate is commonly raised in competitive NSW purchases because it waives the buyer’s cooling-off period. It can make an offer more attractive to a seller because the contract becomes more certain from exchange.

It should not be treated as a sales tactic only. Waiving cooling-off can remove an important safety window. A buyer should not provide a 66W certificate without legal advice, finance confidence and a clear understanding of the contract, inspections and property risks.

This is where speed and discipline must be balanced. A buyer who is too slow may lose the property. A buyer who is too fast may inherit contract, finance, strata or renovation problems that should have been identified before committing.

Practical Buyer Checklist Before You Rely On A Deposit A practical NSW buyer workflow should look like this:

Get the contract as early as possible. Send it to a licensed conveyancer or solicitor before assuming the property is secure. Put offers in writing and keep dated records. Confirm whether any deposit is preliminary or part of exchange. Confirm whether the vendor has signed. Confirm whether contracts have actually been exchanged. Clarify cooling-off, 66W and deposit consequences before signing. Delay non-refundable renovation commitments until the contract position is clear. Use conditional language with trades before settlement is confirmed. Buyers looking at apartments, older homes or properties intended for immediate renovation should also consider whether flooring, levelling or access issues may affect their post-settlement budget. Elyment’s apartment floor levelling planning resources show how strata logistics and site timing can affect renovation execution after purchase.

The Commercial Lesson For NSW Buyers The safest way to read a holding deposit is conservatively. Unless contracts have been exchanged, the buyer should assume the property may still be at risk. That does not mean every agent or seller is acting unfairly. It means the legal milestone and the emotional milestone are not the same.

In a competitive Sydney market, buyers need more than enthusiasm and a bank transfer receipt. They need contract review, finance confidence, written records, timing control and a clear understanding of when the property is genuinely secured.

The operational question is simple: has the transaction moved from negotiation to exchange? Until that answer is clear, the holding deposit should be treated as a step in the process, not the end of the race.

NSW PROPERTY TIMING REVIEW: Buying, selling or planning works around settlement? Elyment helps Sydney and NSW property owners review conveyancing timing, renovation sequencing, access planning and project delivery risks before commitments become expensive. Request A Project And Property Review

Final Word A seller may be able to accept another offer after a buyer pays a holding deposit if contracts have not been exchanged. Once exchange has occurred, the position is materially different. The buyer’s priority should be to identify which stage they are actually in, what the deposit legally represents and what must happen next to secure the property.

This article is general information only and should not be taken as legal advice. Buyers and sellers should seek advice from a licensed conveyancer or solicitor about their specific NSW contract, deposit and exchange position.

Sources And Further Reading NSW Government guidance on property deposits, expressions of interest and exchange NSW Government guidance on private treaty property purchases NSW residential property cooling-off and 66W certificate guidance Elyment: Sydney conveyancing support Elyment: What buyers should plan when settlement is delayed but trades are booked Elyment: Property services Elyment: Apartment floor levelling planning