Holding Deposit NSW: Can the Agent Keep Taking Offers Before Contracts Are Exchanged?

In NSW, paying a pre-exchange holding or expression-of-interest deposit does not usually stop a vendor from considering another buyer. Until contracts are exchanged, the vendor is generally not bound to sell. If a subsequent offer is made after an expression-of-interest deposit has been paid, the selling agent must promptly inform that buyer and advise that further offers can be made before exchange. For Sydney buyers, the critical milestone is therefore contract exchange, not simply transferring money.

A Sydney buyer can inspect a property, negotiate a price, receive an acceptance call, transfer a holding deposit and still discover that another purchaser has entered the negotiation.

That sequence often feels inconsistent with the language used during a sale. Terms such as “secured”, “accepted”, “under offer” and “holding deposit paid” can sound as though the commercial contest has ended.

Under the NSW transaction framework, however, the important distinction is between a pre-exchange negotiation and an exchanged contract. NSW Government guidance states that the buyer and seller become bound when signed contracts are exchanged. Before that point, a vendor can generally change their mind, and agents are generally required to submit offers received before exchange unless the vendor has given written instructions to the contrary.

NSW Government: Making an offer on a property explains this distinction directly.

The Holding Deposit Is Not the Transaction Milestone Buyers Think It Is

The phrase “holding deposit” creates much of the confusion because it can describe different payments at different stages.

Elyment has previously examined the distinction between a refundable pre-exchange payment and a deposit paid as part of an actual exchange in its guide to what NSW buyers should confirm before paying a 0.25% deposit.

This article addresses a different operational problem: what happens to the offer process after a buyer has paid money but before a binding contract exists.

Verbal offer

• What has happened: Buyer has proposed price or terms
• Can another offer still matter? Yes

Offer described as accepted

• What has happened: Vendor has indicated agreement in principle
• Can another offer still matter? Yes, if contracts have not exchanged

Expression-of-interest deposit paid

• What has happened: Money has been received before exchange
• Can another offer still matter? Yes

Buyer has signed but exchange has not occurred

• What has happened: A signed document may be circulating between representatives
• Can another offer still matter? Potentially yes

Contracts exchanged

• What has happened: Signed contracts have been exchanged
• Can another offer still matter? The vendor is generally contractually committed, subject to the contract and law

NSW Fair Trading describes exchange as the critical point at which the sale becomes legally binding. For most private-treaty residential purchases, the purchaser then ordinarily receives a five-business-day cooling-off period, but the seller does not receive an equivalent cooling-off right.

NSW Rules Specifically Contemplate Another Offer Arriving

NSW law does more than acknowledge that another offer may arrive. The regulatory framework expressly sets out what an agent must do when it happens.

Under the Property and Stock Agents Regulation 2022, where an expression-of-interest deposit is paid before exchange, the agent must first provide written information explaining that the vendor is not obliged to sell, the prospective buyer is not obliged to buy and the deposit is refundable if no contract is entered into.

The regulation also requires the agent to promptly inform that prospective buyer if a subsequent offer is made and to advise that they have the right to make further offers until contracts are exchanged. If another person ultimately enters into the contract, the expression-of-interest deposit must be refunded within the required period.

Separately, an agent acting for the vendor must generally inform the vendor of all purchase offers as soon as practicable until exchange, unless the vendor has provided written instructions to the contrary. If an offer will not be submitted because of those instructions, the person making it must be told.

The regulatory design therefore treats the pre-exchange period as an active negotiation phase rather than as a reservation system.

An Accepted Offer and an Exchanged Contract Are Different Events

This is where buyers can lose track of the transaction.

A typical private-treaty sequence might look like this:

1. The buyer submits an offer.
2. The agent says the vendor has accepted it.
3. The buyer's conveyancer requests amendments to the contract.
4. The agent requests an expression-of-interest or holding payment.
5. The buyer transfers the funds.
6. Finance, contract amendments or a Section 66W discussion remain unresolved.
7. A second purchaser submits another offer.
8. The first buyer is told that the vendor is reconsidering the transaction.

From the buyer's perspective, stages two and five can feel decisive. Legally and operationally, another purchaser may still enter the process because exchange has not yet occurred.

NSW Government guidance expressly notes that a vendor is generally not compelled to sell to a particular prospective buyer before exchange and may even choose an offer that is not the highest.

Why Another Buyer May Be More Attractive Without Offering More Money

Pre-exchange competition is often discussed only in terms of price. In practice, vendors can compare the complete transaction.

A competing buyer may present:

• a higher purchase price;
• a signed contract ready for immediate exchange;
• a Section 66W certificate waiving the ordinary cooling-off period;
• fewer requested contract amendments;
• a larger deposit available immediately;
• a settlement period better suited to the vendor;
• fewer conditions or transaction dependencies; or
• a timetable that the vendor considers more certain.

That does not mean a buyer should automatically waive protections merely to accelerate exchange. The significance of a Section 66W decision in NSW should be considered with a solicitor or licensed conveyancer because waiving cooling-off materially changes the purchaser's risk position.

The Real Operational Risk Is the Gap Between Acceptance and Exchange

For property teams, the vulnerable period is not simply “before purchase”. It is the interval between commercial agreement and legal commitment.

Every unresolved task in that interval can extend exposure to another offer.

Contract review

• How it can delay exchange: Special conditions or disclosure issues require advice
• What needs coordination: Buyer and conveyancer

Contract amendments

• How it can delay exchange: Vendor's solicitor must agree to requested changes
• What needs coordination: Both legal representatives

Finance

• How it can delay exchange: Buyer may be waiting for approval or valuation
• What needs coordination: Buyer, broker and lender

Building and pest inspection

• How it can delay exchange: Buyer may want results before becoming bound
• What needs coordination: Inspector and vendor access

Strata review

• How it can delay exchange: Records may expose levies, defects or approval issues
• What needs coordination: Strata inspector and conveyancer

Deposit transfer

• How it can delay exchange: Funds or verified trust details may not yet be ready
• What needs coordination: Buyer, agent and bank

Signing authority

• How it can delay exchange: Documents may still require signatures or authority
• What needs coordination: Buyer, vendor and representatives

Buyers should not confuse reducing this interval with skipping due diligence. A more controlled approach is to begin contract review, finance preparation and inspection planning early enough that a decision to exchange does not trigger a scramble.

Elyment's analysis of contract-review timing when a NSW agent wants an immediate answer examines this compressed decision problem in more detail.

What Should the Agent Tell the Buyer After a Holding Deposit Is Paid?

Where the payment is an expression-of-interest deposit made before exchange, buyers should expect the transaction status to be communicated clearly.

The important controls include:

• written confirmation of what the payment represents;
• confirmation that the payment does not oblige the vendor to sell or the buyer to purchase;
• confirmation that the payment is refundable if a contract is not entered into;
• notification if a subsequent offer is made;
• advice that the buyer may make further offers until contracts exchange; and
• clear communication if another purchaser ultimately exchanges.

Current NSW Government guidance states that before an expression-of-interest deposit is accepted, the agent must provide the prescribed information in writing and obtain the prospective purchaser's signed acknowledgement.

What If the Agent Says the Property Is “Off the Market”?

Buyers should separate a marketing decision from the legal status of the transaction.

A vendor may instruct an agent to stop advertising, cancel inspections or decline particular categories of offers. Those steps can be commercially meaningful, but they are not the same thing as exchange.

Conversely, an online listing remaining visible does not by itself establish that a previously negotiated transaction has failed.

The useful question is not whether the listing says “under offer”, “deposit taken” or “sold subject to contract”.

The useful question is:

Have signed contracts actually been exchanged?

Signing Alone May Not Answer the Question

Buyers can also become confused after signing their copy of the contract.

NSW Government guidance describes exchange as involving the seller signing their copy, the buyer signing their copy and the signed contracts then being exchanged. A purchaser should therefore obtain confirmation from their solicitor, conveyancer or authorised transaction representative that exchange has actually occurred rather than assuming that emailing a signature page completed the process.

This becomes particularly important in fast Sydney negotiations where documents, deposit receipts, amendments and authority to exchange may be moving between several parties at once.

After Exchange, the Vendor's Position Changes Materially

Once contracts are exchanged, the issue is no longer merely whether another person wishes to pay more.

NSW Fair Trading states that sellers do not receive a cooling-off period once exchange occurs. Although the actual contract may contain specific rights and legal issues can still arise, a vendor generally cannot simply abandon an exchanged contract to accept a preferable later offer.

Elyment has separately examined what happens if a NSW seller wants to withdraw after exchange.

Why This Matters Beyond Conveyancing

A failed pre-exchange transaction can create secondary costs before the buyer owns anything.

In Sydney, purchasers frequently begin making operational plans as soon as an offer is described as accepted. They may approach removalists, flooring contractors, painters, designers, strata managers, trades or building consultants about work expected shortly after settlement.

Those conversations are useful for feasibility planning. They become riskier when the buyer begins creating non-refundable commitments before the acquisition is contractually secured and the settlement program is understood.

Renovation planning should therefore distinguish between:

• feasibility enquiries before exchange;
• provisional scheduling after exchange where appropriate;
• strata and building approvals where required;
• site access after the buyer has a legal entitlement to enter; and
• committed works and material orders aligned with settlement certainty.

The property contract and the renovation program are separate workstreams, but poor sequencing between them can create unnecessary cancellation costs.

A Better Pre-Exchange Control Process

Buyers cannot control whether another purchaser emerges. They can control how clearly their own transaction is managed.

1. Identify the payment. Confirm whether money requested by the agent is an expression-of-interest deposit or a deposit being paid as part of an immediate exchange.
2. Confirm the actual exchange status. Do not substitute phrases such as “accepted”, “deposit received” or “contracts signed” for confirmation that exchange has occurred.
3. Move contract review early. Obtain the contract promptly so title, disclosures, special conditions and transaction-specific issues can be reviewed before the negotiation reaches its most compressed stage.
4. List every unresolved dependency. Finance, inspections, strata records, amendments, deposit funds and signing authority should have a responsible person and target time.
5. Keep instructions in writing. Important changes to price, settlement, inclusions and agreed amendments should not rely solely on telephone conversations.
6. Verify when exchange occurs. Obtain confirmation from the professional managing the exchange and record the cooling-off position and relevant deadlines.
7. Only then progress downstream commitments. Align renovation, moving, access and contractor planning with the actual transaction stage rather than the optimism of an accepted offer.

The Deposit Is Evidence of Interest, Not Necessarily Exclusivity

A holding deposit can demonstrate that a buyer is serious, but in NSW a pre-exchange expression-of-interest deposit is not the same as acquiring an exclusive contractual right to purchase the property.

The regulatory framework itself recognises that further offers can arrive and requires particular disclosures when they do.

For Sydney buyers, the practical lesson is therefore not to focus solely on whether the agent has “accepted the deposit”. The more useful transaction questions are whether the contract has been reviewed, whether negotiated terms have been settled, whether both parties are ready to exchange and who is responsible for completing that exchange.

Until that milestone is reached, the sale can remain commercially active even when the buyer has already transferred money.

This article provides general information about NSW property transactions and does not replace advice on a particular contract or transaction from a solicitor or licensed conveyancer.

Sources and References

• NSW Government: Making an offer on a property
• NSW Legislation: Property and Stock Agents Regulation 2022
• Elyment: What NSW buyers should confirm before paying a 0.25% deposit
• Elyment: Why Section 66W decisions can matter in a Sydney property transaction
• Elyment: Contract-review timing when a NSW agent wants an immediate answer
• Elyment: What happens if a NSW seller wants to withdraw after exchange
• NSW Fair Trading: Property contract exchange and cooling-off guidance