Here is the story line of the current deal I'm going into and i have a question with regards to getting an exit clause on the contract.
- The property is listed at the agency for an auction set in mid June.
- The agent rings 10 minutes after being listed.
- I submitted an offer to the Vendor and explained that i would not be attending the auction but would be prepared to negotiate further a few days after the auction.
- Vendor accepted the offer!
- Agent will not accept a 'subject to finance'. Keeps enforcing and stressing that it must go unconditional because of the auction process.
- Agent has said that the vendor is willing to write up the contract but not sign it and only have my signature on it. Then use that to process the loan application but if another buyer comes along will be prepared to sell it?
I would have thought that a 'Subject to Finance' clause could have been achieved on the contract. Is the agent bluffing… is the agent legally bound to not allow the clause because of the auction process? I won't risk going unconditional.
Hi JAffa,
What state are we in?
Cheers
How ya doen?
It's Victoria!
HI Jaffa,
Sounds like the agent is being contankerous then – assuming that is what the vendor has told them to do/say.
You could always use a due dillignece type clause instead of the 'finance clause' however if they want unconditionla, I imagine that they will treat that the same as a finace clause. I seriously would have thought, if the vendor accpeted your offer (ie a firm price) and it was on the contract, with a 'subject clause' as long as it was over and done before when the auction would have taken place (ie you have the finance approved and ready to go unconditional) it sould be a 'win win' situation. Something does'nt quite sound right there to me. Keep us posted, and all the best mate.Cheers
That's not a bad idea and it makes sense but with what conversations i'v been having… the agent is firm firm firm on all this about it being the auction process. He's only a young bloke 9 months in the Industry.
Well, i say the vendor is saying it must go unconditional but they are probably under the agents suggested strategy! The bank is taking 21 days to look at applications and the agent has not prepared the section 32 yet and says there solicitor is often slow.
I can't be under auction rules. There has been no auction terms and conditions read out and or stating a start of an auction. I don't think the agent is making sense according to the action act.
Still a vendor is quiet within there right to object to a subject to finance request.
I had a similar situation, however in qld a couple of months ago.
Vendor was going to auction but the agent WOULD accept a finance & bldg/pest clause as long as the contract went unconditional before the contract date.
I can understand that there is money involved with advertising an auction and why they would want the guarantee of going one way or another, but given the current market im very suprised that the agent isnt offering you more flexibility with contracts!Maybe the the Victorian Real Estate Institute could give you some advice, or just find another property going to auction and ring up the agent asking about contract conditions if you went to paper before the auction….. Maybe you should be prepared to walk, or at least make it look that way.
Good Luck
What happens if you sign the contract and cannot get finance? You are stuck then. Don;t exchange before finance as too risky.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
can u start organising a pre-approval type loan application before signing? cos they arent ready yet with a contract anyways. get the ball rolling. thats what we did with the property we are currently in the middle of purchasing. we are financing with CUA and they ahve been great about it.
I've got access to 80% of the purchase price in cash and can make somewhere between $150-$200 +CF per week after all expenses with 20% left in but i need to pull that other 60% money out of it but could leave 25%-30% deposit money after the Reno which is mainly all cosmetic and I'd give myself three months from today to get it all done, maybe less.
Pre-approval is in process but we can not submit a application because the agent can not get the details of the property lot, volume, folio etc. The mortgage will be subject to valuation most probably anyway.
Really just want to leave 20% in the deal!
Jaffa, I know that the NSW Dept of Lands website has a portal which allows you to view the title details (although it does not allow access to owners names or dimensions of the block), other sites such as Dial Before You Dig also provide you with a heap of information. Check what info that you can find online, you may come across the title particulars that you're after.
SNM
Thanks SNM. The only thing that i know of like that is http://services.land.vic.gov.au/landchannel/jsp/map/PlanningMapsIntro.jsp but the most you can get with this is zoning! Not sure of any other ones but that info would get the application process going.
And thanks Terry your post made me certainly not go unconditional.
Australia wide title stuff here for a cost. I think there is a reason the agent will not go 'subject to finance'. I can walk so i will walk now and or untill they provide a sensable process for buying a property!
http://www.landregistryau.com/services_vic.asp
Also:
https://www.landata.vic.gov.au/tpc/tpc_specify_property.aspxThe banks might want to use my first property as security. If i let them this is cross collateralize and i know everyone advices not to do that. But if i do not have many choices what will it mean down the road say when the value is up from renovations and or refinance and things and have settled in for a year or two and everything's going well?
Jaffa,
To prevent x-collate you need to take out a 2nd loan on your 1st property. This loan then funds your deposit so your LVR is @ 80%. The two loans dont even need to be with the same lender, who ever will provide you with the best value for each loan.
Thanks gibbo, not having the first loan now enables more of a chance of a loan on this one! But i want a loan on the first property. I just thought i would get a little further down the track before that application would go in. Strategy on the first property is to pull out 25k in cash on a loan using 80% of the newly renovated value. If it was cross collateralized it would defanently end that theory wouldn't it or is their any other way.
Vendor decided to go to Auction. It's game over!
REIV said agent has done everything right. Gave me some stories how this is happening from time to time and how sometimes agents are calling in asking that they are about to go to auction and do not have section 32 prepared because the solicitor has not got one ready. Advised to ask if they have a section 32 for any future deal and just do not even look at it if it hasn't.
I learn something in here and that a new rule should be handed down for all property listings to be with a section 32 from the very day of being listed or not allowed to entice people to try buy. I wasted my teams time!
I will keep an eye on the auction for interest such. Would not have mattered if i had a chance to sign unconditional, there was no contract prepared to sign and no section 32 to sign.
I know that the victorians are a little bit victorian with their systems but I didn't think that you could bring a property to the market without having a contract in play ie the vendor has to stump up with a contact with full disclosure (title details, sewer diagram, S149 certificate etc). How do you know what you are buying until you have a contract in your hands?
Well come auction day Saturday 13th, i rang the pub and it was not on. "There's a note in the window saying post poned" the publicain tells me over the phone.
I went up to someones place to have snoop through the garage sale adds and or any clearance sales (because i wanted to find some things for a current Reno). There was none so i got bored and said "what else can i do today". Someone said, "here's a property go for a drive in the sun to have a look"". So we went over and checked it out and submitted an offer via phone within two hours that was accepted by saturday night at 7PM.
I did the rounds on Monday morning! Phoned my conveyancor, collected the 10% deposit from Westpac and walked over to NAB. Westpac was going to charge $45 to print the statement to take a statement out. The NAB bank manager said i could sit in the bank managers chair in the office and log on to show him statements. I had a discussion and out came some words "that's approved".
I've checked the add for the auction and it says under contract under offer. Ummm hang on wasn't that not allowed to have a contract secured against it. Anyway i walked and moved on and found that fate bought me another.
That's the deal and the deal is done!
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