stumbled on an “emotional purchase” property that is up for tender…… I have been told three different prices by the RE agent each one $100K more than the last ..up to $800k. I have never tended (10%depos, then 20% depos stat if successful, vendor chooses length of contract) I feel that it is not in the “buyers” interest at all, as I wont know who or how many other offers there are, you have to sign a contract up front……if you don’t go ahead you lose all deposits. All prosp. purchasers require a building and poss. valuation. I am considering telling the agent (not only where to go….) I am willing to make an offer out of tender and to follow this up with a letter to the vendor {so that they know of my offer} I am wondering if this would be construed as acting unethical toward the agent…..(well, he hasn’t done me any favours………yet) I am not trying to avoid his commission.
any advice helpful.Mopsy[}
]If you can advance confidently in the direction of your dreams, you will meet with a level of success far beyond the expected.
I think the tender is the ‘silent auction’.
If you are going to submit an offer, you must put what you are willing to pay – and be prepared to miss out. I think that’s how they get the emotion out of purchasers – at least with an auction you can see what others will pay. However, tender is better for a seller I guess in that the top price may be many thousand’s above second, whereas in an auction it only has to be $10 over.
So do all research as if an auction, and if you put an offer in, and it’s accepted, you have bought it. I don’t get the 20% depos stat if successful?
I’d say, no, 10% deposit – or you can offer less in your tender, just cos they say MUST BE doesn’t mean it’s not negotiable. Balance payable at settlement in my book. they’ve got a signed contract, so I don’t see why they would need more.
Cheers
MelThanks Mel,
It is 10% deposit with tender
then if your tender is accepted you are required to pay
a further 20% deposit within 48 hours or risk losing your initial deposit plus the tender.[:o)]I wouldn’t touch them with a barge pole at that point then.
How many people are going to be cashed up enough to have 30% deposit PRIOR to a bank loan?
I would find out if they are ‘their’ rules, or standard tender rules for your state. Besides that, you can offer what you like in the tender I would think. You can say ‘here’s 5% deposit, here’s my price, here’s my terms’. They could always say no. You also need to stipulate that your cheque cannot be cashed until all your terms have been agreed to.
Cheers
MelMel.,
I mentioned to agent re; 10 & 20% and he replied: “Just get a deposit bond”…… I have used deposit bonds heaps of times but only on property that has the contract signed by myself and the vendor, {and I know it is going through} [:o)]am not sure how it works if you hand over the deposit bond and then you are not successful….
I cannot see this property being overwhelmed with buyers as the agents are trying to sell it as a B&B… and no one I know, makes any sort of money out of B&B.. it has historical value, but needs renovating…hmmm… better check heritage listing too…(urk)
do you think I should make my offer known to the vendor as well?thanks
mopsyIf you cannot see it being overwhelmed, put in an offer on your terms. I don’t know of too many deposit bond companies that would want to give you a ‘deposit’ in two stages, or even one for 30% deposit.
If you are serious about this place, I’d ask around a few other agents and ask what the normal tender process is. If it were me I’d really want to know that I was the successful bidder before I had to hand over my signed contract. The whole thing sounds iffy to me.
Cheers
Mel…
Whats tender?
And what’s up with the high deposit?
Whats deposit bond?
>.<
Penguin Jr
A tender is sort of similar to an auction. You go to see the house, you do all your inspections/research, and you submit a sealed bid to the agent. You don’t know until the closing date whether or not you have won, and unlike auctions, you don’t get a chance to increase your bid. I think it’s this reason that some agents push them at their vendors, cos if the buyer really wants the place, they (may) put down their highest price.
The high deposit? YOu’ve got me there. That’s what I’m questioning too.
Deposit Bond is an insurance bond that you can give to the agent/vendor that basically covers your deposit requirements. If you then default, the vendor goes to the insurance company, and cashes the bond in. The insurance company will then come after you to get their money back.
It means you can put a deposit down without using cash – you may be waiting on a term deposit to mature, the sale of your other house, to sell some shares (at the right time), wanting to use your current equity to borrow 100% for an IP etc. etc.
A Bank guarantee does the same job, and I think personally that it’s a better option.
Cheers
MelHm… I understand tender and stuff..
but for the deposit bond… is it like a … um… “promise” in a way? but it needs an approval first right?
Yes Penguin, you are basically assessed by most deposit bond lenders as if you were applying for the loan. If approved, they will ‘promise’ the vendor that they will pay up if you abscond/default on the contract.
THEN, they come after you to get their money back.
Cheers
MelOne method of pricing in a tender is something like “$50.00 above the highest tender to a maximum of $X”. This means that your price need not be thousands above the next highest, but that if someone has gone over your limit you are still protected.
crj
Im with mel on this one. Make an offer, your price, your terms, your settlement. What does a contract mean? Usually what the REA has talked the vendor into!
Why not get a contract, contact the owner and use the jenman phrase.-I would like to buy your house, how much would you like? If they crap on about how it is going to tender in 6.12 weeks time on the full moon, just say, “well thats a shame, because there are two other houses which I am very interested in buying, and I will not wait 7 weeks (or whatever) to see if I am the winner. Give them a price on an in-office exchange ie .25% deposit with a 5 day cooling off period to do your building and pest. Lord knows you will need it with a (possible) heritage listed.
If the agent is intelligent, set up a meeting with them. Remember, he gets paid by your back pocket, and if you come up with a reason (cash, now, my terms), he would be a git to ignore youcrj, have you submitted an offer and had it accepted under your terms?
My first thought was that I wouldn’t be too happy if I was the other bidders, but then my second thought was that how would you as the tenderer be sure that they didn’t just take your bid price as your max bid. That to me says exactly how much you are willing to pay. Are you able to look at the other tender documents if you are the winning bidder? I would think not, but that’s coming from a commercial tender background where a lot of it is commercial in confidence.
Cheers
Mel
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