Hi
please forgive if this question has been asked before – I've done some searches, but couldn't find the answer. My husband and I are in the process of purchasing our first home in Melton Vic. It will be our PPOR and it is a 3 bedroom, brick veneer with lock up garage, floorboards and new kitchen and is approx 30 yrs old. Purchase price is $186K.
We got a building inspection report done by Archicentre on the property and it's come back saying that the bathroom and garage need repairs, etimated to be worth about $10K in total.
We're tried to re-negotiate the purchase price with the seller's but they've taken offence at the report stating that they don't believe it and won't negotiate.
I still think that it's worth pursuing the property because the repairs (especially in the bathroom) will bring it up to date and therefore, I believe, add value. It is also walking distance to the train, bus, schools, shopping centre and university. As we intend to rent it our in about 5 years time, I think the location is a valuable asset…
Just wondering if anyone had any thoughts or experience on situations like this that they could share as we are still very new to this business…
thx heaps
Hi M,
Really, unless they are open for negotiation, there really isnt anything you can do. As there is no intrinsic "amount" finding a problem doesnt necessarily reduce the cost UNLESS the vendor is open to negotiation. You cant MAKE them consider your findings. You either agree with them or walk away. If it stays on the market, resubmit an offer based upon your new knowledge. It is harsh but there are always other properties.
Just checking…….have you already entered a contract? If so, unless you had a clause "subject to satisfactory building report" or similar, then you dont really have a recourse, if you pull out you forfiet your deposit. If you did have such a clause, then you are entitled to either renegotiate (which they dont want to) or pull out of the deal with no penalty to you, and refund in full of your deposit.
All the best
MickThanks Mick – that's pretty much what I suspected…
We did make the contract subject to satifactory building and pest report' so we are ok there.
cheers
I agree fully with Mick. If the seller won't negotiate and you don't think the property is worth what you are paying – walk away
Hi Melbally, As most people wish to believe that the Vendor should always negotiate down, I'll pose the other side of the equation.
While I have no idea where Melton is in Victoria, but with a 3 bedroom house at $185K, I can only assume that it is a regional area. While as a Buyer you have every right to negotiate as much as you wish and you ultimately either buy or pass up the property. I believe that you have answered your own question with your statement:- I still think that it's worth pursuing the property because the repairs (especially in the bathroom) will bring it up to date and therefore, I believe, add value.
The fact that you believe that the repairs will add value says to me that the Seller has taken this into consideration when accepting your offer. Why should they fund your improvements?I have no problem with Building Inspections in principal. That is to say if they uncover a structural or major problem which was unable to be seen during a normal inspection )eg White Ants), then it would be fair to attempt to renegotiate. You must also accept that it is also fair if the Seller says 'No'. The problem that gets up my nose is when a person inspects a 100 year old house and notices that the iron roof is rusty but wants to renogiate when the Building Inspector advises 'The roof will require replacement due to rust'. Guess what. In order for the Inspector to be covered by his Indemnity Insurance he must make stupid statements such as this. All 100 year old houses with original iron roofs need re-roofing.
Jon
Hi Melbally,
As I would suspect, Jon's comments are usually pretty good – and I agree. It's all relative.
Areas where housing is more expensive, and vendors have some unrealistic price expectations, have much more 'margin' built into the price for negotiation – than areas where perhaps already the price is at or below median for the area.
You cannot get the bargain of the century every time, but you can get good value easily – and that sounds like what you have.
Vic, and tas particularly regional areas are usually priced in a way that they can 'sell' fairly quickly, and do not anticipate having offers 10 or 20 % less than asking price. Real estate agents too are usually trying to get vendors pricing ideas so they 'meet the market' a bit more than previously.
We have just purchased our first property for a while, and the price was only negotiable $2k less than the 'must sell it now price' the vendor had instructed the agent to get. Yet I have had valuer I knwo do a 'drive by' without telling him what we paid, and it would appear we got it around 15% less than what he reckoned it would 'be worth'. Rather that, than have paid an over inflated price and done 'hard negotiating' to get another 5 or 10 grand off.
If you want the house, and it is good value (which in all fairness there is not a lot of choice in Melton worth a cracker under the $200k now is there) and have done your sums……..why not buy your home and enjoy.
All the best, whatever you decide.
Cheers
In all markets (rising or falling) it comes down to what is agreed (willing buyer/seller, not over anxious etc). The property has been put on the market at a particular asking price by the vendor/agent. The condition of the property as inspected is a known factor, the unknowns which the building inspection may have revealed such as termites, settlement cracks, subsidence, infestations, poor workmanship etc would be what would be revealed by an 'expert building inspection'.
In all honesty, if the premises has been fairly priced (whether for a quick sale or otherwise), the agent has been forthright in their assessment of the value of the property, market conditions etc then there should be little reason for the vendor to reconsider their price.
If you like the house, go for it.
It is likely that 30 year old house will require some renovations etc…Thanks everyone for your help – you're advice has been very re-assuring.
To be honest, we were a little rattled because although we expected to have to do some repairs it was the things that we couldn't see (such as rotted flooring under the bathroom) that surprised us…
We've decided to go for it anyway and focus on the positives of the property.
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