Hi everyone,
We have just put in an offer for a strata-titling
property in Queensland (very scary, it’s our first property). To close this deal we need either
a money partner or vendor finance. The agent says that the
vendor would consider leaving some money in the deal as vendor
finance, but he is not sure how it works practically, so if I can
convey it to him in simple, clear terms there is a good chance that
he will agree. The problem is that I am not 100% clear myself how it
works in practice (which makes it hard to convince anyone
. The agent
thinks vendor finance is messy, so I really want to make it as clear
as possible to him.
Our offer is that the vendor leaves $170k in the deal (29%) for 6
months at 10% interest (=$8500) and that we settle in 35 days.Could someone please help me clarify the following questions:
1. Since we are settling in 35 days, is it correct that we get
the deeds and basically take control of the property at that point, despite the vendor still having money in the deal?
2. What kind of documents will we need to present to the vendor to
satisfy him on when and how he will receive the outstanding $170k?
3. Does anyone have a template for this kind of document?
4. Am I right that we can initiate the strata-titling process as soon as we have settled?By the way, this has all happened today and the clock is ticking. So if you can, I’d love some tips ASAP.
Many thanks guys,
Mary-Rose
Hi Mary
Yes Vendor Finance is common practise and dependant on where in Qld many agents should be aware of it.
Could someone please help me clarify the following questions:
1. Since we are settling in 35 days, is it correct that we get
the deeds and basically take control of the property at that point, despite the vendor still having money in the deal?
Yes the title is Transferred to you on settlement asyour Bank will require first mortgage against the property. Make sure the Vendor understands that his mortgage / caveat will not have priority2. What kind of documents will we need to present to the vendor to
satisfy him on when and how he will receive the outstanding $170k? Your purchase contract will set out the terms of the vendor finance, the amount, the term and the rate payable..
3. Does anyone have a template for this kind of document? Your Qld Solicitor should as i say it is common and i have done lots of them.
4. Am I right that we can initiate the strata-titling process as soon as we have settled? You can start an application to strata title the property once you are the registered owner. Why not make it a condition that you can prepare the application for strata titling during the 35 day settlement period and get it lodged prior to taking ownership.Just make sure your financier is happy with a registered 2nd mortgage and from what i understand it is a block of units or subdividable block you are referring to so therefore maybe using comemrcial or development funding dependant on the size.
Richard Taylor
Residential & Commercial Finance Broker
**NODOC loans from 6.89%**
Licensed Financial Planner
http://www.yourstatefinance.com
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Ph: 07-3720 1888Richard Taylor | Australia's leading private lender
Hey there,
Why not see if you can get the venders will leave the cash in the deal for 5 years …. then work back from there….. you never know they may agree to it and if you never ask you may have missed out on the time you could have had that finance.
Cheers
KiwiYeah if the Vendor doesn’t need the money now why not make it a longer deal. Maybe offer something like 8% over 5 years that way they are receiving passive income of $13600 p.a which may attractive to them and give a chance to restructure down the track. Lots of options and combinations it is just finding the right one!
. The agent
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