Hi,
Looks like we have someone interested in purchasing our property on vendor terms. I would like to know what steps we should take. Normally when someone buys through the real estate they sign a contract, place a deposit, then have a certain time frame to obtain finance. With vendor finance we are the 'bank'. We have asked for a deposit, but what I would like to know is
1. is there a contract specifically for Vendor Terms?
2. What do we do about 'bank' statements. Normally a bank will send out a statement with how much interest paid and what the balance is – how do we work this out? Is there a programme that will do this for us. I would say by law we have to have this and I would want it anyway just for everybodies records. Also if they pay the loan out early then we would need to be able to work out the final payment.
Does anyone have any knowledge they would like to pass on? PLEASE.
We are in Queensland.
BronnyHi Broony
The contract you need is an Instalment Sales Contract. PM me and I can give you the name of a solicitor in Brisbane who is experienced in these contracts.
If you use an Instalment Sales Contract you will be regarded as supplying credit so you will have to abide by the Uniform Consumer Credit Code (UCCC). One very good Australian software package to manage these types of loans is Loan Alert. It can be found at:
http://www.loanalert.com.au/
Loan alert is fully UCCC compliant. We originally used it when we started our Real Estate Vendor Finance business but now we're moving over to a specialist Vendor Finance property manager. He also uses Loan Alert and charges us 4.5% to completely manage the loans for us. If you don't want to do the administration yourself, this could be an option for you. Thanks.Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Hi
You don't say whether you're financing the whole of the sale or only a part of the sale price. If your purchaser is getting first mortgage finance from another source, you will still, quite rightly, need a contract of some sort, (Vendor terms, Loan contract etc) for the amount owed to you.
You should also think about your own protection of the funds left in the property (caveat, second mortgage?)
Each state has different laws and you need to be compliant with the Consumer Credit Code as it applies to your state. Check with the Fair Trading Office (or whatever they're called in QLD).
We sold 4 properties last year on Vendor Terms but for the deposit funds only (purchasers borrowed the other 80%). It's a great way to sell, esp, in the first home buyer market.
Remember, to keep it professional and dot all your i's and cross t's in case of any problems down the track.
Regards
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