I bought a house in Morwell, 83K, 2 bedrooms, weatherboard, big lot, near to shopping center, TAFE and sporting areas.Pest inspection done and is okay, bldg. inspection is a bit of a worry.This is my first property offered to buy. I didn’t sign the contract yet because i was waiting for the pest and bldg. inspections report.
Now that i seen the bldg. inspection it seems that i don’t want to buy the house, the report was summarized as follows:
1. storm water drainage system is degraded/ partially blocked and requires up-grading.
2. A down pipe on the residence south elevation discharges into the sewer drain and is illegal.
3. a number of the waste pipe/ sewer drain connection points require sealing.
4. The roofed canopy attached to the rear residence requires gutter/down pipe connected to the storm water drainage system.
5. parts of the ground area beaneath the bldg. are
excessively damp.
6. the concrete footings beneath the brick wall/concrete paved front entry patio have subsided.
….and 14 more of them, i don’t want to type everything, it will be too long. And by the way, i ask a handy man to give me a quote,estimate,(cost) in case i want to do something/fixing about the bldg. report, and the estimate was almost 6,000.00.Now my questions are:
1. Is the house worth buying? It is more than 55 years old.
2. If i won’t push through the sale, what will happen to the money that i spent for the pest and bldg. inspection? Can i tell the agent to tell the
next buyer that the pest and bldg. inspection were done and i will just sell the report to them, is it possible?
3. How about my $200.00 holding deposit, how much can i get back from that?
4. Or maybe i will make another offer. How much do you think? The listed price was 85K and given to us for 83.
5. I am not even sure if i can onsell (wrap)the house for 105 or 110 K, my other problem is with lo. doc. the bank will only lend me 80%,with 7.4% interest rate.Ps. By the way, the house has a fence and a garage.
sorry, this is bit long. This is my first time and i hope you can help me guys. Take care and have fun.
Regards, lucky40
Delight….
1. Is the house worth buying? It is more than 55 years old.
Hard to answer – what are you plans for the property buy/hold?2. If I won’t push through the sale, what will happen to the money that I spent for the pest and bldg. inspection? Can I tell the agent to tell thenext buyer that the pest and bldg. inspection were done and I will just sell the report to them, is it possible?
Sorry, the $$$ have gone for good. You can try and sell the report – but would you buy the report if you were the next potential purchaser??? I know I would want my own.
3. How about my $200.00 holding deposit, how much can I get back from that?
Depends I guess on your terms with the vendor. What where the terms on the contract?4. Or maybe I will make another offer. How much do you think? The listed price was 85K and given to us for 83.
Show the vendor the report and give them multiple choice. A/ Fix all the problems or B/ Discount the purchase price by the $6 000 of needed work. Just negotiate.5. I am not even sure if I can onsell (wrap) the house for 105 or 110 K, my other problem is with lo. doc. the bank will only lend me 80%,with 7.4% interest rate.
An 80% lend is perfect, they catch is to try and find a potential wrapee willing to pay 9.4% maybe the answer is to only take a 1% spread and make it more attractive to the wrapee. BE WARNED THOUGH – that once there is a wrap and caveat in place you will not be able to re-finance your underlying mortgage.Hope this answers some questions…
Pete
…Beware of the dreamtakers…
Delight
I agree, you have probably done your money on the reports. The real estate agent probably wouldn’t want the next potential purchaser getting a hold of it lisitng all the problems.
You should probably use this as your bargining tool. Get at least another $6000 off the price.
AS for low docs, 7.4% is too high. I could probably get you 6.55% or even lower if you have been self employed for 2 years.
Terryw
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Delight,
I think you should walk away from this.
A 55 yr old Weatherboard house with 20+ points on a Building Report would be a no-no in my book. Too many problems. Sounds like a bulldozer is the best thing that could happen to this place.
Morwell – well my research several months ago was not good. There were many vacant shops in the main streets and discussions with locals said that Morwell was “dead”. However, the Latrobe City Council had plans to relocate their offices to Morwell from Traralgon in an attempt to boost the town. But when this was to occur – nobody could give me a date – just sometime in the future.My 2 cents worth.
Cheers
NessieHi Delight
When you say ‘bought’, what exactly do you mean? Have you signed the contract yet?
If so, be careful, you may be in a position where you have a legally binding contract and will be forced to purchase despite your reservations. Check the contingency clauses in your contact if this is the case.
My advice for what it’s worth (and this is from PERSONAL experience) is WALK… No in fact RUN QUICKLY!
I would only buy the property if the vendor were to fix these problems PRIOR to purchase, I personally wouldn’t want to inherit these problems unless it was at a ‘significant’ discount; ie if it’s really worth $83k in a fixed up condition, I wouldn’t pay more than $70k.
Forget about the cost of the inspection, it’s a business cost and money well spent. The vendor and the vendor’s agent will DEFINITELY not want you to flag these issues to the next prospective purhaser.
I understand the fact that you’re a newbie and this is your first property, but DON’T get emotional. If you set up your rules BEFOREHAND about what you are trying to achieve and what is acceptable, then in reality the decision should always be an easy one.
If it doesn’t comply with your rules… go find another property (without any real problems).. there are plenty more.
Finally how do you know if there is a demand for wraps in Morwell.. Especially for 2 bedroom properties? Doing the correct research BEFOREHAND may provide SURPRISING results!
Make sure you have an exit strategy if it doesn’t go as planned and make sure you can sleep comfortably with this outcome.
In any case, good luck with the decision you ultimately make and congratulations for taking positive ACTION and making progress.
Cheers
David U
RUUUUUUUUUUUUUUUUUUN
It’s a lemonHi Delight,
I know the area fairly well, and we have an IP in Traralgon. Morwell prices have gone nuts !! A couple of months ago that house was probably listed for $60K. Beware.[
]The Latrobe Valley is infested with investors!!!
You may have big vacancies, unless this house is better than the next one for rent (probably nextdoor). Sounds like it’s not…
Walk, no I’m with livelife, RUN.
The pest inspection was a cheap insurance policy.
A good education.Good luck,
DelI have been reading your replies to Delights question and have learnt alot. I to am going into property investments so I am learning alot from this site…This is really just a thank you letter..
Hi guys,
I don’t know what to say, i was just overjoyed by all your responses. Thank you so much guys for all your inputs, it’s muchly appreciated. At first i was bit hesitant whether i will post this case or not and now i am glad i did. you are all a big help. TO DAVID U- no, i didn’t sign the contract (before hand i already know that before i sign the contract it is always subject to pest and bldg. inspection and finance) and to MICHAEL & KAYE, thanks for giving me hope that i can still get my holding deposit. Again, MANY THANKS TO ALL OF YOU.
REGARDS,LUCKY40
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