Hi
Im new to this site & to property buying. I finally found a block of land I like and then decide to go in to the agent to get the price. I was told it is sold, subject to finance. A holding deposit has been take $500. No contract signed I asked why and was told section 32 & contract is not available yet. As Im new to buying can some one please explain the following:Is it wise to buy a property with out seeing the section 32 or reading the contract?
Can I still make an offer on this property?
Is the holding deposit a gareentee to the other buyer that they will get the property?
Can the agent sell it to me if I offer a bit more money?
Does the agent have to take my offer to the vendor ( as the property is not on the market as a holding deposit has been take ??????)
I can offer a 20% deposit and Im not subject to finance can I use this to my addvantage?
Is the property realy sold, I beleive it is not sold untill both parties sign the contract?
Is it ethical for me to offer something a bit better to the vendor in order to cut the other buyer out. Also is it legal for the agent to play them off against me to win the property?I feel a bit dissapointed that it is sold and dont want to rush in with the fear of missing out and end up paying too much. But as we all know land is a bit hard to find and Im sick of looking and seeing the price go up evey re sale that I find.
Any help would be appreciated.
Regards
Tony B.Hi,
I think legal advice is your best bet for the most accurate answers. I recommend you try:
Lewis O'Brien & AssociatesSuite 4310 Whitehorse RoadBALWYN VIC 3103P: 03 9888 6388However, I can offer my help but remember I am not a lawyer and this is not legal advice.
Quote:Is it wise to buy a property with out seeing the section 32 or reading the contract?I didn't think it was 'legal' to sell a property in Vic without a signed Section 32. Having said that, it is sometimes commonplace to agree on price and terms on the basis that the s. 32 is being prepared.
Certainly, any negotiations that take place should be subject to your satisfactory review of the contract once prepared.
Quote:Can I still make an offer on this property?Yes, you can make an offer to buy, but I'm not sure of the contractual validity should the vendor sell to someone else in the meantime. Again, the negotiation would be to agree on price and terms and then make sure the paperwork is as expected.
Quote:Is the holding deposit a gareentee to the other buyer that they will get the property?I don't think so. It is more a gesture of goodwill than it is a rock solid guarantee. If you pull out then you may lose the $500, if the vendor pulls out I imagine that you would get it back.
Quote:Can the agent sell it to me if I offer a bit more money?Not sure where you are going with this question. Agents normally sell to whoever offers the most, but be careful that you don't get into a bidding war against yourself.
Quote:Does the agent have to take my offer to the vendor ( as the property is not on the market as a holding deposit has been take ??????)Legally, I think all legitimate offers need to be presented unless the vendor has said to the agent 'Don't bring me offers less than $XXX…'
Quote:I can offer a 20% deposit and Im not subject to finance can I use this to my addvantage?Definitely!
Quote:Is the property really sold, I beleive it is not sold untill both parties sign the contract?Generally for a contract to be established there needs to be three components: offer, acceptance and consideration paid. The formalities of acceptance will be met when you sign the contract, but having said that, contracts do not necessarily have to be in writing.
Quote:Is it ethical for me to offer something a bit better to the vendor in order to cut the other buyer out. Also is it legal for the agent to play them off against me to win the property?Ethical matters are often subjective. What is ethical to one person may not be to another. Personally, I don't see anything wrong with putting your best offer forward, and if that is above the asking price then that's great for the vendor. As for agents – some play all sorts of games which is why the profession has a questionable reputation. My advice is to work out three prices:
1. The price you are happy to pay (top dollar)
2. The price you won't pay (above top dollar)
3. The price where you think the property is a bargainDepending on the potential profit, aim between prices 1 & 3.
Cheers,
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Steve
Thank you kindly for the reply & great info. I will definety get legal info. tomorrow. I feel I have an emotional attachment to this block as I may build on it to live in one day. I dont want to get into the price war as when the agent knows Im really intrested ( desprate & tired of looking) they may play me off. I feel the same as you re. holding deposits & being suject to finance & no section 32 & no contract seems to me If I want to offer 1k more with a 20% Deposit, 30 day settlement not suject to finance makes me a genuine buyer.
A few more questions if I may:What is the best way for me to put my offer to the agent and know they will pass it on to the vendor (as they feel its sold, their commision is in the bag already). They may not even bother giving my offer to the vendor if its only 1k more?
Im in a cash position & dont need finance, is offering 20% deposit too much? Whats the worse thing that can happen offering this much as opposed to 10%.
Whats the diffrence between a holding Deposit & the 10% deposit?
If its only a show of good faith while the buyers go and chase finance why can't a cash buyer whos at the door today buy it now?
Ive only one reservation ( remember Im new to property investment & have lossed large amount before so Im being very careful)
the other party has offered a bit more that its worth 5k more than what my research shows. If the other party cant get finance I have a better chance with a lower offer. If I really want the property I have to bite the bullet & offer more than them, (based on what the agent told me they offered and lets face it who knows what they really offered !!!!! Welcome to the real estate game.
Steve thanks again, I will get legal advice for sure if you have any more comments please feel free.
Kind Regards
Tony B.Tony, there is no sure way of knowing whether the agent has passed on an offer to the vendor unless you are present with the agent when they call them. If you can, always make your offer in writing and subject to a sunset clause.
The amount of the deposit doesn't mean much – whether it is 1, 5, 10 or 20%, that is the amount of pain that you want to bear until you own the property. There may be a clause allowing the investment of these funds and the interest is shared.
A holding deposit is a deposit in good faith, it means very little other than putting some money into the agent's pocket until acceptance of the deal. The deposit, due at the exchange of contracts forms part of the contract – part of the consideration (if a deposit is required ).
There is no reason that a cash buyer can't purchase whilst another prospective buyer is hunting down finance approvals – it comes down to how ethical the agent is or how good a negotiator (some may see the agent as going back on 'an agreement' and taking the holding deposit as gazumping, a good agent will keep all buyers in the loop regarding progress of any potential deal).
What a site is worth and what you are prepared to pay are two different things – whilst there is a higher offer on the table it is more difficult (but not impossible) to secure a deal on better terms (if there was a signed contract and a deposit in the hands of the agent, it makes for a very persuasive arguement to accept a no-risk deal compared to one which is subject to conditions).Scott
Thank you kindly for your relpy. A big yes to" what a property is worth & what someone is willing to pay". If I go in to the agent and say Im willing to pay 5K more that the current offer Im sure they will forward my offer. The "sun set clause" presents a hard line and for an extra 1k they may not bother. Although I would like to think they are acting for the vendor and If I was the vendor I would like to hear all offers even if its $100 more. I feel this holding deposit is a bit wet as there is no contracts signed and non prepared as yet no section 32 also. It just takes the propety of the market and people like me have to wait and maybe miss out. Ether you are in the market or not. There is a thing called pre approval for finance . I always say money speaks loader than words so "show me the money". I will contact the agent & Request a sect. 32 & contract. discuss the matter. This is my first ever offer on a property, so the learning begins. I will ask a different agent in the same office. Find out what is the real current offer, let them know Im a cash customer with other properties in mind and have a short time fraim for them to act. I will offfer what the other has offered but not subject to finance inform them I can come in today with a bank cheque for 10 to 20% deposit. But for today only or maybe 48 hours. If I get a sect. 32 & contract I will know the owners name & address. I dont want to be a real hard ass but I could contact them direct after I do it with the agent, then see if my offer has been forwared to them. Also a friend surgested registed mail to confirm it. I have worked in imports from Asia so I have learnt there are no rule in business as long as you can sleep at night. I myself would take the cash on the day insted of waiting 2 weeks for someone to find the money. The agent told me its a buyer market now????? He also told me they get their holding deposit back if they cant get finance. Thanks again for the good advice, any more comments are most welcome.
Kind Regards
Tony B.
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