Hi All,
I just made an offer on my first property (a PPOR). It is located in NSW. During the discussion with the agent he told me some thing that I didn’t know or that I was under the impression was incorrect….
I made my offer (written) using a few clauses:
subject to solicitor reviewing the contract to purchasers satisfaction
subject to finace approval to purchasers satisfaction within 14 days of signing the sale contract
subject to a builders report to the purchasers satisfaction
subject to a pest inspection to the purchasers satisfaction
subject to purchaser receiving vacant possession of the property on settlement.I put a sunset clause in there of around 36 hours. Deposit of $1000 and balance due in 42 days.
The REA tells me that there are accually two types of deposit. the .25% one which covers the 5 day cooling off period which is paid upon signing the sale contract. Then the 10% deposit which is paid after the 5 days has finished. Is this correct?
If there is two different types of deposit which one was I refering to in my offer
Because on my offer I have put down a deposit of $1000, if the offer is accepted does that mean I don’t have to pay the 10%?
I was under the impression that a deposit wasn’t manditory. I thought that it was pushed by REAs but never actually required. He showed me how the sale contract says 10% deposit… but I still didn’t think it was required. Is this true or not?
If I sign the sale contract does this lock me in or do all of my clauses still take effect (especially the solicitor reviewing one)?
Should I get the solicitor to look at the sale contract before I sign it?
He felt that the owner woudn’t accept the 14 day to get finance clause.. Why do you think this is?
I thought I had done all my research and had some idea of what was comming but as soon as its time to do it in real life things all seem different
Hey A.L.
Congrats on making an offer on your first property.
I’m not an expert, but have signed a couple of contracts in the past.
As far as I know, you can put whatever conditions you like in your contract – it is up to the vendor to accept or reject your conditions.
Once you have both signed the contract, then it is legally binding.There really is only kind of deposit in my view, that is the amount you give to the real estate agent when you exchange contracts. They, or a solicitor should hold this in trust until the property settles.
The 0.25% that the real estate is talking about is the entitlement (written into law) to the vendor should you withdraw within the 5 day cooling off period (would equal $250 for a $100K property). This isn’t really a deposit though.
The 10% deposit is the “standard” deposit written into contracts – you can change this to whatever you want (eg you offered $1000) and it’s up to the vendor if they are happy with that. If not, then they’ll either refuse to sell to you under these conditions, or maybe renegotiate.
Until you have both signed (“exchanged” contracts) they can sell to someone else.
The vendor may not be happy with the 14-day finance term, because a previous purchasor may have fallen through on finance, or they may be wanting to buy another house and have to know for sure that they can sell this house before they sign the next contract? Who knows – ask the Real Estate agent.
Your job is to write a contract that contains all your clauses so that you are happy, but at the same time, suits the vendors wishes. Then you get a win-win (and they’ll agree, which is what you want!).
If you aren’t that familiar with contracts, you should get a solicitor to check it before you sign. Just be aware that someone could beat you to the sale (or the vendor could just pull out) in the mean time.
Good luck!
The Hound
I have recently put an offer in for a QLD propert of $500 and balance at settlement.
I have heard other member do $100 and even $20.
Vendor would have to be keen to accept that offer… they probably won’t because ( as your question was about 14 days subject to finance), they have to take the place off the market and pretty much wait on you. Do things like the building & pest inspection before signing or during the cooling off period, and show your solicitor before signing – or if you’re using that just as an escape route, then don’t – if you can submit an unconditional offer you’ll have a better chance at getting the property if there is another offer on it at the same time.
(“,) $$$ HoLdEnCoMmOdOrE $$$ (“,)
Real Estate agents are driven by self interest. Don’t let anyone tell you otherwise. For them, the best outcome is large deposit, no conditions, and short settlements. Given that they work on small percentages to calculate the commission, they aren’t even that much worried about how much it sells for! EG: At 2% commission the difference between selling a house for another $30k more equates to only $600: after the principles of the agency get paid the agent is not often getting enough to worry about – easier to turn over two properties at lower dollars instead of squeeze the price up on one.
So understand this dynamic when they talk to you. They want 10% deposit because THEY will get paid if you default on the contract: a contract is a contract because there is “consideration” which can be $1. They want short finance conditions so that their commissions are assured. They want short settlements so that they get paid sooner. Sure the poor bloody vendor gets some benefit from these terms but that is less than half of why the agents push for the terms.
How do I know this? Real estate booms are wonderful things because a lot of wannabe agents sign up for a new career. They are easier to “trip up” with carefully crafted lines of questions than their more seasoned colleagues that have been around for years. Over the course of many deals I have been able to get the newbies to spill their guts on what really motivates agents.
Of course, I have also been a seller. Watch how fast an agent will try to convince you to drop your price if they can’t get an offer in the first 48 hours! For agents turnover is the name of the game and that is only achieved by conditioning the market (both vendors and buyers) to the agents view of the world. And they have done a marvellous job! Your post indicates how many people think that you MUST buy property on 10% deposit! Nonsense!
I have found that the rigidity of agents differs from state to state. In Victoria they have the market well and truly suckered. A lot harder to get alternative terms in Melbourne than, say, Perth. WA agents seem more flexible but I wish I had $0.05 for each time they told me “we don’t do that here in WA”. Queensland is somewhere in the middle.
I am sure I will now get howls of outrage from real estate agents on this site. We have encountered agents that are not the same as what I have described but they are few and far between. If you think you are different, PM me. You are the type of agent we will deal with. But you are in a minority.
So, write the terms YOU want. If the agent of vendor won’t play, go find another deal somewhere else. We do it all the time and have done very well out of sticking to OUR business rules and NOT those of the agent.
Good luck!
Quick question kmiddlet, you mentioned you had sold before, but let me put something to you to highlight the point I was making:
If you’re the vendor faced with two offers that are identical (or relatively so) in every aspect except for the deposit, which one would you as the vendor pick out of these two:
a) $1 deposit, remainder payable on settlement; or
b) 10% deposit showing you that the buyer is serious & ‘putting their money where their mouth is’ – you could access the deposit (less agents fees & marketing – even if you were ripped off at a high commission from the agent, you’d still be left with at least 5% of the purchase price to now use at your will), and remainder on settlement.Not sure about you, but I’d rather access the deposit early rather than having it in an agent’s trust account, and rather than waiting until settlement, I now have some spare cash that I can use before settlement.
Just food for thought – I’d be interested to hear your views on it.
(“,) $$$ HoLdEnCoMmOdOrE $$$ (“,)
G’day Commodore
Thanks for the question.
The direct answer to your direct question is identical offers with the only difference being deposit terms, as the vendor, take the better deposit.
I don’t disagree with anything you said. Vendors set their terms either on what the market will bear, what their agent’s convince them, or some other personal circumstance. (had one once that needed terms to protect his pension). Sometimes that is 10% and 30 days if the market is in their favour.
But the original poster wasn’t framing their post that way. They were battling with the agent presenting that items like 10% deposits and terms of that ilk as if the terms were somehow cast in stone.
My rather longwinded post was saying that what many agents tell buyers is “the process” is not necessarily so. The flipside is what they will be telling the vendor at the same time! Try this some time: get a mate to ring up the agent as a potential buyer for a property you are selling. I have and its a hoot. I once had an agent who represented to his vendor that a multiple choice offer we put forward was two different buyers! Go figure….
Some agents are terrific. But they are in a minority. If you find them treasure them and treat them like gold. PM me for a couple that I would trust implicitly. Laws of libel and slander prevent me from naming those that I wouldn’t!
At the risk of stating the bleeding obvious, there are few rules beyond those of contract law and some real estate law (EG: cooling off, vendor declarations, etc, state by state) that govern a real estate transaction. If you want a clause that the vendor mows your lawn every day for a year you can put it in and if they accept it they must do it. A contract must have “consideration” to be a contract which usually means a dollar, not the 10% that the agents usually insist you have to shell out.
For new players the message is don’t be intimidated or stampeded because the agent presents a certain view of the world likely coloured by their self interest. Weigh up what you really want out of the deal and stick to your guns. It is your decision and the vendor’s acceptance if you want to pay 10% deposits, short settlements, long settlements, mow the vendors lawn, whatever: it is not the agent’s decision.
Happy trading!
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