As the Australian property market rolls into 2026, buyers are facing a growing trend: the expectation to provide good faith money when making an offer. But what exactly does this term mean, and how does it affect your next big purchase? Let’s unpack the essentials of good faith money, the latest regulatory shifts, and how you can protect your interests in an increasingly competitive market.
Understanding Good Faith Money: More Than a Deposit
In the world of Australian real estate, good faith money is an upfront payment made by a buyer to demonstrate serious intent when putting in an offer. While it’s sometimes confused with a deposit, good faith money is typically a smaller amount paid before contracts are exchanged. It serves as a signal to sellers that you’re committed, often giving your offer an edge in a crowded field.
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Amount: Usually ranges from $1,000 to $10,000, depending on the property value and local norms.
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Timing: Paid at the time of submitting the offer, not upon contract exchange.
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Purpose: Shows the seller you’re negotiating in earnest, reducing the risk of time-wasters.
Good faith money is generally held in trust by the agent or a third party until the deal progresses. If the sale falls through for valid reasons (like failed finance or unsatisfactory inspections), the money is usually refunded. However, the specifics can vary by state and the terms you agree upon.
2026 Policy Updates: What’s Changed for Buyers?
This year, several states have introduced or clarified guidelines around good faith money to boost transparency and consumer protection. Key 2026 developments include:
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NSW Fair Trading has mandated that all good faith money must be held in a regulated trust account, with clear written agreements outlining refund conditions.
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Victoria now requires agents to provide a standard disclosure form before accepting any upfront payments, ensuring buyers understand their rights and obligations.
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Queensland is trialling digital escrow platforms for good faith money, making transactions faster and reducing the risk of disputes.
Across the board, regulators are focused on preventing dodgy practices—such as agents pocketing payments or sellers refusing to return funds without cause. These changes aim to make the process fairer for all parties, but they also put the onus on buyers to read the fine print and keep documentation secure.
Pros, Cons, and How to Protect Your Money
So, should you pay good faith money when making your next property offer? Here’s what to weigh up:
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Advantages:
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Strengthens your offer in hot markets—especially for in-demand Sydney or Melbourne suburbs.
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Signals genuine intent, which can help in multi-bid scenarios.
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May secure you first right of negotiation or priority access to the vendor.
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Potential Risks:
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If terms aren’t clear, you could forfeit your money even if the sale falls through for valid reasons.
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Not all agents or sellers follow best practice, so miscommunication or disputes can arise.
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How to Protect Yourself:
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Always ensure the good faith payment is documented in writing, with clear refund and forfeiture conditions.
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Insist the funds are held in a regulated trust account—not by the agent personally.
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Keep copies of all agreements and payment receipts.
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Don’t be pressured into paying more than the market norm for your area.
Real-world example: In February 2026, a Brisbane couple successfully negotiated a $5,000 good faith payment on a new apartment, securing a 48-hour exclusivity window. When their building inspection uncovered issues, they withdrew, and the agent refunded the payment in full—because all terms were clearly set out in the initial agreement.
Conclusion: Good Faith Money as a Smart Negotiation Tool
Good faith money is fast becoming a standard part of the Australian property buying playbook. With the right approach—understanding your rights, insisting on transparency, and documenting every step—you can use this tool to your advantage, without risking your hard-earned cash.