The 20% myth: how to steady skittish buyers and safeguard your vendor

Sensationalist headlines warning of an imminent 20 per cent property crash make great clickbait, but on the ground, they create a severe operational headache for real estate professionals.

Across the country, listing agents report a growing wave of purchaser hesitation as would-be buyers, flush with finance approvals and fully qualified to transact, are suddenly pulling back or attempting to walk away from agreed deals, betting that patience will net them a massive discount down the road.

Bishnu Aryal, director of Finconnex Financial, confirms that this hesitation is driven by buyer psychology rather than financial incapacity.

“It’s not what I’m thinking, it’s what clients are telling me they’re thinking. They believe property prices may drop another 10 to 15 per cent, or some even think 15 to 20 per cent. We’re seeing buyers who have finance approved and are ready to purchase, but they’re choosing not to because they believe prices have much further to fall.”

“They’re not waiting because they can’t buy. They’re waiting because they think they’ll get a much better deal if they’re patient,” he says.

“For the first-time buyers, even if it’s $10,000, it makes a big difference. They’re waiting, like, ‘what if I get another $10,000 off?’ It’s a psychological thing – people are ready, they have pre-approvals, but I think we’re starting to see momentum come back.”

OBrien Real Estate general manager Jason Mudford agrees that major price collapses are highly unrealistic, pointing to historical market resilience and long-term hold trends across Australian capital cities.

In Metro Melbourne, the average hold tenure has expanded to 13 years – up from 10.5 years in 2016 and 7 years in 2006. With supply tightness persisting and buyers active across state borders, such as purchasers relocating from Tasmania to secure Melbourne’s current value entry points, sitting on the sidelines to time the absolute bottom of a cycle carries immense risk.

“We certainly don’t believe a 20 per cent drop is possible at all for Victoria, and for some of the capital cities within Australia. For anything like a 20 per cent drop, it will take a major financial economic shock across the world,” Jason says.

“Providing the data and evidence will always outweigh opinions. Timing the bottom of a cycle is almost impossible to pick, and people should always choose the right property and not the right moment to buy. If it is the right property buy it, because you
might never find another like it.”

Reframe the narrative

To help hesitant clients overcome market paralysis, agents must pivot the conversation away from timing the cycle and toward securing long-term asset value. Rather than debating speculative crash theories, frame the current window as a rare opportunity to acquire top-tier real estate without intense competition.

Charles Touma, Founder of the Touma Method and Director at Ray White Touma Taylor, outlined the practical framework agents should use to break through buyer hesitation in an Instagram post.

“In my twenty five years experience, waiting for the market to bottom out or waiting to pick the bottom, there’s two risks. The first one is when the market really bottoms out, nobody sells quality assets. The selection of homes is very poor, and you end up buying a house cheap, but it’s a C or D grade asset. Now over the years, I’ve come to realise that when the market rebounds and it will rebound, those inferior assets don’t move. The A grade assets, they’re the ones that get immense capital growth.”

Agents need to challenge sitting buyers directly, reminding them that trying to pick the absolute bottom almost guarantees missing the turn and getting dragged right back into multi-offer friction.

“Nine times out of 10, you’re gonna miss the bottom. And when it starts to bounce back, you get caught in that rat race. You don’t need to buy at the bottom. You probably wanna buy the best asset you can. A grade asset, good location, strong fundamentals. You are getting a bit of a discount, but do you really need to pick the bottom? Because at the bottom, there’s no good stock.”

When educating clients, guide them to see that fair value on a premier property today beats a marginal discount on an inferior house tomorrow:

“Challenge the buyer. Say what are you waiting for? Because if you want a great quality asset at a fair price, now is your time to buy.”

The legal reality: why ‘cold feet’ won’t break a binding contract

When purchaser cold feet turn into an active threat to walk away post-exchange, real estate professionals must immediately shift the dialogue from market speculation to strict legal reality.

Luke Shumack, Principal at Realgate Legal, breaks down exactly how difficult it is for a buyer to legally walk away from a property contract after exchange simply because they believe prices will fall further.

“It’s very hard, and in most cases impossible,” he says.

“Exchange is the moment the deal stops being a negotiation and becomes an obligation. From that point the buyer has only two kinds of exit: a right the contract itself gives them, or a right the legislation gives them. A view about where the market is heading is neither.”

He also points out that outside of a tight statutory cooling-off window, the contract is ironclad:

• Queensland: Five business days, costing 0.25% of the purchase price.
• New South Wales: Five business days for an ordinary residential contract (10 days for off-the-plan), costing 0.25%.
• Victoria: Three clear business days, costing the greater of $100 or 0.2%.
• Auctions: None of these cooling-off options apply after an auction. After that window closes, the contract is the contract.

A fall in the property’s market value between exchange and settlement gives a buyer no legal right to renegotiate or terminate.

“No. Not in any state, and not under any standard contract,” Luke Shumack confirms, explaining that standard property contracts explicitly allocate market fluctuation risk directly to the purchaser from the moment contracts are exchanged. This structure protects the buyer when prices rise, but binds them when values fall.

“The contract already decided who carries the risk of a change in value, and it decided it in the buyer’s favour when the market rises and against them when it falls. In Queensland the standard contract even spells it out: the property is at the buyer’s risk from 5pm on the first business day after the contract date.”

“There is a reason there is almost no case law on buyers who simply change their mind: it is not a defence, so it never gets litigated. What does get litigated is the buyer who wants out and goes looking for a legal hook.”

He points to Laundy Hotels v Dyco as a critical High Court precedent. The buyers had contracted to buy a Pyrmont pub for $11.25 million. Two days after COVID orders shut pubs to everything but takeaway, they refused to complete, arguing the seller could no longer carry on the business in the usual course, and alternatively that the contract was frustrated. A month later, a valuation showed the business was worth $1 million less. They lost on every point and had to complete.

“The court said a buyer is not excused from performing because the contract did not work out in the manner expected by one or even both parties,” Luke says.

“There is no doctrine that rescues a buyer here. Frustration does not apply, because a contract is not frustrated merely because performance has become more expensive or less attractive.

“A residential buyer is getting the identical house, unchanged in every respect, and simply does not like the price. A buyer is perfectly entitled to ask a seller for a price reduction, and sellers sometimes agree, particularly where their own onward purchase depends on getting this one done. But asking is a commercial conversation, not a legal right.”

Clarifying legitimate termination versus simply having cold feet, Shumack explains: “The difference is simple. A legitimate termination is the exercise of a right that already exists in the contract or in legislation, done in time, in writing, and usually only after the buyer has done what the contract asked of them. Changing your mind is not a right. It is a breach.”

Luke outlines the only legitimate exits across NSW, QLD, and VIC:

• Cooling off: Exercised within the statutory window while accepting the penalty (unavailable post-auction).
• Unsatisfied conditions: Subject to clauses like finance, building and pest, due diligence, or prior property sales. However, standard building and pest clauses (such as Queensland’s) require the buyer to act reasonably—a cracked path is not a termination event, whereas structural damage or major termite infestation is.
• Seller default: Where the seller cannot give clear title, vacant possession, or breaches contractual warranties.
• Statutory disclosure failure: Statutory regime breaches that differ by state.

If a buyer ignores these boundaries and refuses to settle because they feel they overpaid, Luke warns that the financial fallout triggers three swift consequences, usually in order:

1. Time is made essential: In QLD, time is already of the essence under standard contracts so sellers move quickly. In NSW, sellers issue a Notice to Complete. In VIC, a default notice gives 14 days to remedy before the seller terminates.
2. Deposit forfeiture: “A deposit is treated in law as an earnest of performance, which means the seller keeps it without having to prove any loss at all. Ten per cent is the customary and accepted figure across all three states,” Shumack says. “And here is the part buyers do not expect: if the deposit has not actually been paid in full, it is usually still owed.”
3. Shortfall lawsuits: “Second, the seller sues for the shortfall. This is the number that hurts. In STM123 v Wang, a Point Piper apartment contracted at $16.5 million resold at $12.82 million. The court awarded the seller in the order of $2.4 million. Liability is not capped at ten per cent.”

If your buyer considers walking away now hoping to buy cheaper later, Luke stresses that assuming the worst-case scenario is merely losing a deposit is a dangerous misconception. Buyers face six interconnected legal and financial risks:

• Uncapped loss: Financial liability extends far beyond the 10% deposit.
• Owed deposits: You may still owe the unpaid portion of a deposit.
• Forced completion: The seller may seek specific performance rather than letting you walk.
• Market miscalculations: The market may not fall as far as anticipated.
• Long-term credit damage: A court judgment can severely destroy credit files, rendering buyers unable to borrow in the future.
• Corporate veil exposure: Purchasing via a company or trust structure will not shield individuals if personal guarantees were executed.

To retain clients and navigate these turbulent psychological waters, real estate professionals must rely on education, hard data, and unyielding legal realities.

For listing agents facing a skittish buyer, the strategic playbook is clear: guide your vendor to issue formal legal notices through their solicitor, maintain rigorous buyer education on long-term market fundamentals, and immediately re-engage underbidders to preserve campaign momentum.