Holding deposits explained — paying to hold a property before exchange in NSW and Victoria

The short version

A holding deposit is a small sum you pay a seller's agent to show you're serious about a private-treaty purchase, before contracts are exchanged. It is not the 10% deposit, and it doesn't make the sale binding. Until contracts exchange in NSW — or are signed and exchanged in Victoria — neither side is committed: the seller can still accept a higher offer, and you can still walk away and get the money back. A holding deposit buys goodwill and, sometimes, a little breathing room. It does not buy the property.

A holding deposit is not the deposit

The two get confused because they share a word. The deposit proper is the roughly 10% you pay when contracts exchange — the money covered in our deposit and settlement guide. A holding deposit is a much smaller token — often a few hundred or a few thousand dollars — handed over before exchange while you finish your checks. The agent should place it in their trust account, not pass it to the seller, and it is credited towards the real deposit if the sale goes ahead. Get a receipt, and get the terms in writing.

It doesn't bind anyone

This is the part that catches buyers out. Paying a holding deposit does not create a contract, and an agreement to sell isn't binding until contracts are exchanged. So the seller is free to keep showing the property, entertain other offers, and sell to whoever exchanges first — which is exactly how gazumping happens. A holding deposit is a gesture of good faith, not a legal reservation, and it won't stop a higher offer before you exchange. The only thing that truly secures a property is exchange.

Is a holding deposit refundable?

Usually, yes. Because there's no binding contract, a holding deposit is generally returned to you if the sale doesn't proceed — you decide not to go ahead, the seller takes another offer, or the parties can't agree terms. The agent holds it in trust and refunds it. What matters is that you don't rely on "usually". Some agents ask you to sign a short acknowledgement setting out when the money is and isn't refundable, so read it, and be wary of wording that lets the seller keep it if you change your mind. If it isn't clear in writing that you get it back, ask before you hand anything over.

It doesn't start a cooling-off period

Paying a holding deposit changes nothing about your cooling-off rights, because cooling off runs from exchange, not from when you show interest. In NSW the five-day window under the Conveyancing Act 1919 (NSW) starts only once contracts are exchanged. In Victoria the three clear business days under the Sale of Land Act 1962 (Vic) run from signing. Before exchange there is no cooling-off clock to speak of — and no need for one, because nothing binds you yet. Our guide on the NSW cooling-off period and the Victorian one set out when the window actually applies.

Where you won't see a holding deposit

Holding deposits belong to private-treaty sales, where there's a gap between agreeing a price and exchanging. At auction there's no such gap: you sign and pay the full deposit the moment the hammer falls, so there's nothing to hold. And a holding deposit never converts a hopeful arrangement into an unconditional contract — that only happens on exchange, on the terms in the contract itself.

Before you pay a holding deposit

1. Understand it doesn't secure the property. Treat it as a signal of intent, not protection. The seller can still sell elsewhere until you exchange.
2. Get the refund terms in writing. Confirm the money sits in the agent's trust account and comes back to you if the sale doesn't proceed — before you pay it.
3. Keep it small. There's no advantage in paying a large holding deposit; it doesn't strengthen your position, and a bigger sum is only more to recover if things fall through.
4. Use the time to get to exchange. The real value of the pause is the chance to finish your finance, inspections and a contract review so you can exchange quickly, before someone else does.
5. Don't mistake it for the deposit. You'll still need the full deposit ready at exchange; the holding deposit is credited towards it, not instead of it.

Common questions

Does a holding deposit take the property off the market?

Not in any binding sense. An agent may agree to stop actively marketing it as a courtesy, but they're not legally required to, and the seller can still accept a better offer until contracts exchange. If keeping the property matters, the answer isn't a bigger holding deposit — it's exchanging sooner.

Will I get my holding deposit back if I change my mind?

Generally yes, because you haven't entered a binding contract before exchange. But it depends on what, if anything, you agreed in writing when you paid it. Read any acknowledgement the agent asks you to sign, and don't assume the money is automatically refundable in every situation.

Is a holding deposit the same as the 10% deposit?

No. The 10% deposit is paid at exchange and forms part of a binding contract. A holding deposit is a much smaller amount paid beforehand that binds no one. If the sale proceeds, the holding deposit is usually counted towards the deposit at exchange.

Does paying one give me a cooling-off period?

No. Cooling off starts at exchange, not when you pay a holding deposit. If you later exchange by private treaty, you'll have the cooling-off window your state allows — and you'll have to actively use it to pull out. Paying a holding deposit doesn't bring that window forward.