Forum Replies Created
Hi Apana,
While you may think that your clauses are fair (and to a degree, they are), If the Seller were to sign your contract they would be effectively taking their property off the market for the next 21 days while they wait for you to accept or decline due to what ever your searches find. If you were to decline, this puts a a degree of doubt into the minds of future purchasers. What was wrong with it? Why did the contract fall over? Perhaps a seven day clause would have been better received by the Seller and your Lawyer could get of his arse and do some work (Time is of the essence in contract law – an issue most Lawyers have no concept of)As real estate agents we dislike it when Lawyers get involved in drawing up contracts – we often call them deal breakers. Lets analyse your conditions:-
Special condition 1. – "This Contract is subject to and conditional upon the Buyer obtaining a satisfactory building compliance search from Ipswich City Council within 21 days from the date of the Contract…."
The standard contract has provision for a Building and Pest inspection and any qualified Inspector would be able to tell if the home were built to council specifications. As to compliance, I would suggest that not many home will comply with council plans. This part of the condition is an easy out for any Solicitor. If the property that you were buying is relatively new or in a newish estate, I would not advise my Seller to accept this condition.
Special Condition 2 . "This Contract is subject to and conditional upon the Buyer obtaining a satisfactory Mining search from the Department of Natural Resources and Mines within 21 days from the date of the Contract…."
Being in or around Ipswich, I understand that this is quite common due to the many underground mines in the area, however again I am sure that this search could be done quicker than 21 days if your Lawyer sent someone into City Hall to do the search and not try to do it from his or her desk. A little service goes a long way.In summing up, a $279,000 property in Ipswich is going to have a lot of interest so any Seller is going to take the cleanest contract that they can. As you are a first time Buyer I can emperthise with your caution, perhaps a better way to approach the situation may be to do the searches yourself.
Jon
Hi All,
Some excellent answers to a very tongue in cheek question. It is as I expected, good Positive cash flow properties must be created not found.I especially like Tysonboss!'s answer:- Stop looking for positive cash flow properties for you to BUY.
Hallg, you've done well, Commercial is often a good way, the only draw back can be long time between tenants, so 5 x 5 or better should always be considered.
KP. 15% return on outlay has to be good, but you've got bigger heart than me, that top end stuff is not my bag.
regards
JonHi Else,
In answer to your post, I find that while I fully understand that all prospective purchasers must go through a stage of self education in respect to what their money will buy, it is more often the case that Buyer expectation exceeds reality.
In saying that, I believe that there are perhaps four things that a Purchaser should know
1. How much the bank will loan them. ( A pre approval would be good and in fact may help to negotiate a better buy price)
2. Where they would like to live (What Suburbs)
3. What features they must have (No of bedrooms, close to tpt, schools etc, high set low set and so on)
4. The name, address and contact number of the Solicitor and Building Inspector that they will use.Jon
Hi Ms B,
Happy to help, but must inform that it is simply an excel spreadsheet with built in calculator. Provided that you know the variables it works out the %rate return on the investment outlay. If this is not around the 20% mark then I would not consider the site. Please email me where you want it emailed.
Jon
Karen,
Simon is correct you must be careful when it comes to purchasing off the plan. Purchasing any property is all about timing and with Off the plan purchases you must have a clear vision of how and where the market is heading by the expected completion date, I would also advise that you should not pay more for the property than the average at signing. There is no doubt that there are many people who speculate with this type of investment, but believe me they have done their homework. I have seen people make $50 to $100K on this type of deal but I have also seen people lose money.Jon
Mikey, I have a friend who just did a 100 lot subdivision. He told me that it cost him $50K to produce. On the other hand we must not confuse the cost to develop with the total cost of Govt and Council fees. If we were to add Stamp Duty and GST to the equation we would surely be close to the $100K mark.
Jon
Lots of visits but no examples – Is it as I asumed, another investor myth?
Jon
Hi Marc,
Thanks for the reply. I was really wondering where people find them and wanted to know more about them.As for the pos cashflowed after tax method, I am fully aware of this method as I use it myself.
I am looking for Properties that are purchased as Positive Geared from date of Purchase without a deposit to make them positive.
I have noticed that the number of people who walk into my business asking me to show them some has increased alarmingly.
They don't seem to understand when I jokingly tell them that I have bought them all.Jon
LA Aussie says,
On the other side of the coin, there is nothing worse for an agent than a purchaser who doesn't give them specifics, or constantly changes what they want.Marc, this is so true. You can't help people who don't know what they want. I would like a dollar for every buyer who has told me that they don't know what the want but they will know it when they see it. Good – keep looking, but not with me.
Jon
After reading this article Agent Underquoting A Necessary Evil from the Melbourn Age, I fully understand why some of you are concerned with the process. This method of Auctioning has been wiped out in sunny Queensland and our system is much more controlled and open – Come on up the weather is fine.
Jon
Hi JKF, An interesting question. I presume that you are asking from the perspective of a Purchaser and not a Seller.
The sad reality for Purchasers is that most agents just don't care. The real possibility of helping is limited to the extent of the listings that an agent has to offer (Although we often don't know what we may list in the next few days from your enquiry). In order to explain this a little clearer try this example. I listed a property on the Friday night and by the first open house (8days later) I had received 84 enquiries – only one person can buy the property so presumably there are 83 people out there still looking. Now I sell around 30 to 40 properties a year, so the simple maths tells me that I can't help all of them. I do however find that I am personally attracted to a small percentage of them who treat me with a degree of respect and open honesty. I find that I will do everything that I can to assist these people – unfortunately if I don't have the listing there is little that I can do.
Taken from another angle, there is a saying in the industry that goes 'Buyers are liers' so I guress that most agents won't believe what you say anyway. Statistics also show that the average Purchaser spends somewhere between 10 and 15% higher than they planned to.
I hope that this sheds some light on your question.
Jon
Hi Renomart, I notice that (like me) you are new to the Forum and already noticing that there a few contributors who seem to think that everyone in business is a rip off merchant and knows nothing. Please ignore them and continue to contribute, if I wanted information on Kitchens I would much preferr to hear it from someone in the game than a know all with no experience.
Jon
Now I’m totally confused. MKC says:-
l'm sure it'll be a way slow seller so l'm hoping the owner might be open if his realistic. One up the roads been up two years so the deal l want to put to him would be over in twelve mths, gotta look good to him surely.
You surely must be talking about some God forsaken property out back in the boon docks where no one in their right mind would want to live. It’s probably positively geared so I’m way out of my depth for advice. The fact that it’s been on the market for such a long time tells me this, the only other scenario is that the Seller is not motivated and won’t meet the market value, in which case, why would you bother to buy a property like this – Please explain!
With the state of the market in Major cities and Regional Centers (Demand exceeds Supply). Please tell me why any Seller would look at a 12 month settlement? Again I can only speak for my local area which is experiencing an annual growth rate of 10% so with this in mind, what are you suggesting I advise a Seller who has a property with a current market value of $300,000?
Dear Mr. Vendor I have an offer of $300,000 with a 12 month Settlement. Or Dear Mr. Vendor I have an offer of $330,000 with a 12 month Settlement If it is the latter, I wouldn’t have a problem presenting it to the Vendor, however if it is the former, why? What’s in it for him?
Please tell me what I’m missing? I am honestly trying to learn from the collective experience of the Investors here.
Jon
Nats12,
we're building a 200+sqm townhouse – single level not double, but 3 BR + study plus 2 living areas for well and truly under $200k.
I should hope so, single story is so much cheaper to build. I stand by my estimate of $200K , have just done it, but hey what do I know?
Jon
Hi everyone, I guess I just take Agent bashing a little personally – no offense taken on my part as all questions are valid to the person asking the question.
Unfortunately, I can't speak for all States as I understand that property negotiation is different across Australia, However in Qld an Agent must take and present all offers to a Client (I would personally recomend that as a Buyer you insist that the offer is done in writing(as a contract) and not taken verbally. I am sure that all of you would know if the conditions that you are offering are reasonable and the best way to understand this point is to ask yourself if you would accept them if they were put to you. Obviously, if you don't ask, you don't get. But don't take it personally if the answer is no.
Jon
Hi Marc, I am going to make the effort to answer some of your statements in your post, NOT in an attempt to try to change your mind because I know that this would be wasted breath, but just in case some other members happen to read your opinion and are swayed by it. There are, as you know, three sides to any story – Your side, My side and the truth.
I will leave it to the readers to make up their minds as to what is what. The real problem with Property selling is that on the one hand we have a Seller whose greatest fear is that they are going to be ripped off and sell their asset too cheaply on the other hand we have a Buyer whose greatest fear is that they are going to be ripped off and pay to much. Somewhere in the middle we have an Agent who has to convince both parties that they are making the right decision. Whether this is done by Auction (without a price) or by Private Treaty (For Sale with a Price) will make little difference to the unethical agent that Marc seems keen to indicate that all agents who Auction are.
Let me reply to some of his statements.
"The main reason that people dislike auctions is that they don't have a value to work backwards from. (ie. a listed price)Jon"
Actually Jon, if only this was the only reason.
The main reason(s) why people don't like auctions are:- 1. Under-quoting – this is where the agent advertises the property (with or without the Vendor's permission) at a price far below both the reserve and the eventual sale price. The prospective purchasers are mislead into thinking they can afford the property, spend considerable money and time getting inspections, arranging finance, going to the "open houses" to look at the property to help them ascertain if the property is suited to them etc. There are heavy fines for this practice, although it is not well enforced.
How many people have read an add that says ‘offers over $300,000 will be considered’ when you know damn well that the Property is worth well over $350,000. This is called baiting and is often used by poor agents to get people in the door of a Property with a listed price. Auction or not, bad agents are just bad agents.
2. Over-quoting – the agent tells the vendor the property is worth more than it really is worth to get a listing.
And this does not happen with Private Treaty listings – give me a break. I agree it should be outlawed.
3. Dummy Bidding – this is where there are false bidders planted in the audience of onlookers and bidders either by the agent or the Vendor, or both, to help drive the price of the property up. They usually stop bidding when the the bidding is near or at the reserve price. This practice is now illegal in several States of Australia, with heavy fines attached, but is not well enforced.
I can only speak for Queensland here, but the Department of Fair Trading have Inspectors regularly visiting our Auctions to make sure that this does not happen and that all bidders are registered. However, remember the Seller retains the right to bid on their own behalf and this bid is normally stated by the Auctioneer.
4. No Cooling-Off period – the purchaser has no cooling off period after the auction if there is something amiss with the sale, or if they decide the property is not right for them. Again, a lot of time needs to be spent prior to the Auction with searches, building inspections etc to find out the truth behind the property.
The statutory ‘Cooling – Off period was not instigated merely to allow Buyers to simply change their minds, it was designed to allow people who had been coerced by ‘unscrupulous Marketers’ to sign a contract to change their mind, hence the .25% withdrawal fee.
5. Pressure and Stress – for the purchaser this is a problem, particularly if they have no experience at auctions. They often feel they will miss out on the property and then spend more than they should; especially when the property has been under-quoted and the price keeps going above their limit. For the Vendor this is a problem as they are quite often inexperienced, and are often pressured to make a decision on the day by the agent. For both parties there is stress from having to make fast decisions about a very large financial transaction in front of a crowd of people. Many purchasers now pay buyers' agents thousands of dollars to act on their behalf at auctions because they are not knowledgeable or scared to do it themselves.
Let me assure all the readers here that no matter how you decide to sell or purchase your most valuable asset there will always be Stress involved. For most people that is the nature of things, and from my experience it is more often than not bought about by peoples natural lack of trust in their fellow man.
6. Advertising – the Vendor needs to commit to many dollars of advertising to try to generate some interest in the property. In a private sale this is usually not necessary.
Absolute garbage – You can not sell a secret. If people do not know it is for sale, how do they find it? Do prospective Buyers have to visit every single agent in the area that they decide to look in to make sure that they don’t miss out on anything?
7. Auctioneer's Fee – another cost for the Vendor. Can be avoided in a private sale.
A small cost in the scheme of things. And often worth it for the peace of mind.
8. Time – many people cannot attend an auction or an open house when it is conducted. Sure they can bid by phone, but most people are inexperienced at auctions and this adds to their stress. They prefer to inspect and make offers as they are able to fit it in. This may not be the desired option for the agent and the Vendor, but they want/need to sell the property and should accommodate the customer (purchaser).
Marc, you seem to be very Buyer satisfaction oriented which is admirable if you are a Buyers agent but if you are working for the Seller then you must respect their wishes and work for them. I am constantly amazed at the attitude of Buyers who say that they can’t make it at the time that you offer for an inspection and once they realize that you are not going to bend to their demands they can all of a sudden make it at the offered time. Don’t misunderstand me, I will always attempt to fit in where possible, however I am a professional and as such appointments need to be made. When was the last time that you demanded to see your Doctor, Lawyer or even any Tradesman now without an appointment?
It is my opinion that the Vendor should have to provide at their cost, all the relevant inspections included with the necessary paperwork that Purchasers need to read before the auction (Section 32), there should also be a cooling-off period and all bidders should be registered with proof of identity at registration.
On this issue Marc, I actually agree. Except I would go further and say that it should apply to any Seller under any method of sale.The only reason that this doesn’t happen in my belief, is that no Buyer would believe the reports anyway.
"This would stop those nasty comments from people who say that they would have paid more but only paid as much as they had to to purchase (what a crock anyhow)."
Jon, Didn't you say in a previous post on another thread about auctions that it was documented that people said they would have paid more at the auction than they did? Actually, yeah; here it is – "Interestingly, many 'would be Purchasers' will ring after the Auction just to advise the Agent that they would have paid more for the property had it been for sale with a price -" That was on June 10, 2007.
Oh dear Marc, do I have to explain everything to you or do you just read what you want into my words? Put simply, my statement says that after almost any Auction the salesperson will receive a phone call from a person (who was not at the Auction) who will ask ‘How much did the Property sell for?’ and upon hearing the answer will make an inane comment such as ‘Oh, is that all, I would have paid more’. The games that people play.
If I was a Vendor, and I knew of this statistic, I would be reluctant to sell at auction.
As a Vendor Marc, you have every right to make your own decisions as to how you sell your property and I wish you all the best, however your lack of trust in your fellow man possibly dictates that you should do it yourself, that way you would have no one else to blame.
Yours respectfully
JonI believe that 'Heat Up' is perhaps a poor description of the current market trend in my area of Brisbanes Inner South.
The basic laws of Supply and Demand dictate that as available property deminishes prices will be pushed by those people wishing to get into the market.
New Development applications are down and construction has all but stopped. Most new Developments are being sold out 'Off the Plan' and sure there are some speculators here attempting to cut and run. Rents are rising to where they should be and the Investors are out in force. Trying to find property under $350,000 is all but impossible.
New 2 bedroom units (approx 80m2) have gone from an average of around $400K eighteen months ago to over $520,000.
Jon
Hi Elka,
That sounds like a fair and open way for a seller to achieve best price on the day. There is a small number of auctions done in Australia similar to this (called reverse auctions) except that the Auctioneer begins at a considerable price higher than the reserve and begins to work down first person to bid before the price reaches the reserve is the buyer. This method certainly brings out the person who wants the property the most. Should see the furtive glances as the property nears the likely sale price. This would stop those nasty comments from people who say that they would have paid more but only paid as much as they had to to purchase (what a crock anyhow).
The main reason that people dislike auctions is that they don't have a value to work backwards from. (ie. a listed price)
Jon
Hi Carpe, I did reply to your pm and also attempted to send a new pm, however It came back as not able to contact???
Please pm me your email address so that I can send you the Development Feasability Spreadsheet.(don't seem to be able to send attachments on this forum) If the bottom line is not over 20% then forget the exercise. I have filled out yours and on the information given it looks like around 34% return on investment.
regards
JonI find it difficult to believe that I just read this post and that someone would actually ask this question – but here goes with an answer.
It is the agents duty to the vendor to present all offers to them, however it is also their duty to offer advice as to if the offer is in the best interest of the vendor or not. It is then up to the vendor to decide to accept or decline or counter the offer.
As to approaching the Vendor direct, in my opinion this would be the height of rudeness, however in saying that, I am sure that some people out there will do it. As an agent I will have already advised my clients to expect someone to do this and have advised them to offer my contact details.
Jon
