hey people!
If anyone remembers I first posted on this forum around Christmas time. I am 19 and am now in the process of purchasing my first property! It’s very exciting!
Anyway, I just wanted to ask the experienced ppl for advice on something. I have found a great property that is positive cashflow in a growth area. I negotiated a great price, but the agent just got back to me today and told me that the owner wants to settle in September! Because I live in Sydney and the property I’m buying is up north, I am yet to see the contract. The agent did not mention the long settlement up to this point.
I don’t quite understand why they want such a long settlement. The agent said it was for ‘financial reasons’ and I have already been told that she is in financial difficulties.
I don’t want to walk away from the deal, but since I now have the upper hand I thought there might be something creative I could do. But I’m not quite sure what – does anyone have any suggestions? I’m going to try to negotiate a lower deposit for a start…but if she needs the full 10% for whatever reason then maybe I could draw up a separate agreement for her to pay me interest on that money. I’m trying to think of a win-win outcome for both of us.
Anyway, would love to hear any suggestions.
-NickHey Nick,
Why not ask the vendor why she needs a long settlement. If you can’t getto the vendor ask the agent. As far as I can see I would love to have people say they will sign up at todays prices but I don’t have to pay for 6 months. You can be working other deals in between with full knowledge that this one is locked away. I think you are very lucky I am usually trying to convince vendors that I need longer not the other way around.As to the deposit. I have never put more than $1000 down on a deal. That was the exception as most have been no more than $250. This 10% rubbish is just that. Don’t let the agent tell you otherwise. Tell them that you do a lot of deals and cannot afford to have 10% tied up in a deal for 6 months earning you nothing. That is a lot of money which isn’t working for you.
Another thougth on the vendor. Maybe she wants to stay. If you really want it now (I still would wait unless extenuating circumstances) maybe they want to rent back for a period. You choose the rent amount to cover your end. With a long settlement just make sure that you do a final inspection to ensure things haven’t changed that much. You don’t want to be out in the cold with a house that has been trashed.
Hear ends the ramblings….Hope this helps.Enjoy
AD [:0)]“Carpe diem, quam minimum credula postero.”
Lat., “Seize the day, put no trust in tomorrow.”
-Horace, OdesThanks heaps AD.
I didn’t realise how negotiable the deposit amount can be.
The vendor is not an owner occupier so I can’t for the life of me see why she would want such a long settlement. But you have put a positive light on the subject!
NickHi Walkernick – you may be able to use a deposit bond in this instance, keeping your own capital free. The deposit and the bond cost may also be covered by the mortgage, if you get a loan based on value rather than on the sale price (that is if you’ve bought at a price lower than value, and can cosmetically clean the place up prior to settlement) Thus the house will be purchased with entirely OPM. hope this provides food for thought
cheers
ShaunWHey Nick!
This is a fabulous opportunity! Long saettlements are normally something *you* want to negotiate fore, not the vendor! [
] You might want to agree to the long settlement on the condition that you have access to to the property for the purposes of making improvements. This way, you have six months to make cosmetic improvements to the property (EG paint, mow the lawn etc – all of these can be done by someone else). Six months from now you go to your financier and say “I know I bought this house for $XXXX, but since then I’ve improved the property and property values have gone up (show recent sales in the area and a valuation by someone on their board of valuers), so I would like to have the property value raised to $YYYYYY. If they agree (which assuming the growth you’ve talked about has happened) then suddenly you’ve got a stack of equity that can be used in all kinds of ways….Just a thought! [
]Quasimodo
hey people!If anyone remembers I first posted on this forum around Christmas time. I am 19 and am now in the process of purchasing my first property! It’s very exciting!
Anyway, I just wanted to ask the experienced ppl for advice on something. I have found a great property that is positive cashflow in a growth area. I negotiated a great price, but the agent just got back to me today and told me that the owner wants to settle in September! Because I live in Sydney and the property I’m buying is up north, I am yet to see the contract. The agent did not mention the long settlement up to this point.
I don’t quite understand why they want such a long settlement. The agent said it was for ‘financial reasons’ and I have already been told that she is in financial difficulties.
I don’t want to walk away from the deal, but since I now have the upper hand I thought there might be something creative I could do. But I’m not quite sure what – does anyone have any suggestions? I’m going to try to negotiate a lower deposit for a start…but if she needs the full 10% for whatever reason then maybe I could draw up a separate agreement for her to pay me interest on that money. I’m trying to think of a win-win outcome for both of us.
Anyway, would love to hear any suggestions.
-Nick___________________________________________________________________________
We are all but half formed images of our true potential.
___________________________________________________________________________If only 6 month settlements were the norm.
That’s a great situation if you dont tie up too much deposit money.
] You might want to agree to the long settlement on the condition that you have access to to the property for the purposes of making improvements. This way, you have six months to make cosmetic improvements to the property (EG paint, mow the lawn etc – all of these can be done by someone else). Six months from now you go to your financier and say “I know I bought this house for $XXXX, but since then I’ve improved the property and property values have gone up (show recent sales in the area and a valuation by someone on their board of valuers), so I would like to have the property value raised to $YYYYYY. If they agree (which assuming the growth you’ve talked about has happened) then suddenly you’ve got a stack of equity that can be used in all kinds of ways….
]
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