Hi all – how do I go about offering a 5% deposit, is it acceptable to offer 5%? Also getting access to a property prior to settlement to begin renovations? Has anyone does this before?
I'd appreciate any help!
Cheers,
JessOf course you can offer 5%. It's becoming pretty common these days, apparently. When you are making your offer, you could indicate that you will require access to the property for the purpose of tradesmen measuring quoting etc prior to settlement, and that your offer is subject to that. And after your offer is accepted, you could go into great detail about just how much access you will require and when, and be sure it is written into the contract. That way if the current owner doesn't make access possible for you, they are in breach of contract and you can take legal action to recoup costs if necessary.
Getting access for tradesmen to measure up and so forth should not be a problem, and will allow them to start making your kitchen, placing order for carpet or whatever, such that it's all ready for installation after settlement. It is indeed possible to also negotiate to be permitted to commence the renovation before settlement, but understand that if someone is living in the property, this will incovenience them, and they might want something in return. eg a bigger deposit.
Remember also a powerful negotiating tool can be a longer settlement period. Hopefully the property will go up in value a bit while settlement is dragging its heels. Also your tradies will have longer to prepare everything.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
I just bought a place last week and offered 5% upon signing the contract & another 5% upon getting unconditional approval but on the condition I can get to keep the keys and access the place on my own accord. No one is living in the house. I'm not aloud to actually do any work but I have just spent a week getting quotes from builders, painters, blinds people etc, etc. What a difference it makes to be able to access the place before hand. I have time to digest all the quotes coming through. Its awesome and I will do it all the time now when purchasing an empty house.
You just put it in the special conditions of the contract.
Usually they won't agree to reduce the deposit to 5%, but will often accept 5% on exchange and the other 5% at settlement with the other funds. This is so that if you do not complete they can still sue you for the full 10% deposit.
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 all – thanks for your responses. Looks like I have a couple of options. The house I'm looking at will be empty, and I would like to gain early access – even begin some reno's if possible. I'll also be looking into subdividing the block so I could get the ball rolling for that.
I think I'll try the pay 5% on exchange of contracts, and pay the other 5% at settlement with the other funds as Terryw has suggested.
Ok… time to make an offer!!! Wish me luck….
Thanks guys,
Cheers
JessGood luck! Let us know how you go
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hi JessM, how did you go?
From my experience, 5% is not hard to get at all. Just got our solicitor to negotiate on our behave all the time.
secondly, most of the time early access won't be a problem if the property is vacant. However, I doubt you would be allowed to carry out any renovation work prior to settlement. because you don't legally own the property prior to settlement, if any of your tradie or any uninvited guests got injured in the house while they are carrying out renovation work for you, the previous owner of the property is liable for it, because he/she is still the legall owner. For this reason, most owners will only give you access to measure up or take quote and they have other restrictions such as the RE agent must be there and must be monday to friday working hour etc, but won't allow you to carry out any actual work.
saying that, there are some owners who have no idea about their legal responsibility and don't mind you renovating prior to settlement, if that's the case, you are lucky!
Hi JessW
One thing to add to danviv1's post is that you may be in a stronger barganing position with respect to early access for renovations if you offer to take out insurance for the early access period and document it as a licence to access to renovate. Insurance may address the landlord's concerns regarding liability and protect you if something does go wrong and someone gets injured.
Anther sweetner you could offer the vendor is payment of 'licence fees' during the access period. In other words, you are paying them rent for the period you are accessing property for renovations.
I'd also try to 'sell' it to the landlord along the lines of 'I am going to be improving your property. If I do this and then fail to settle, you get the benefit of my improvements…'
Hope this helps
Cheers
EvaCD
Hi everyone…. wow what a day! I put an offer in on the house I was looking at, with a 5% deposit payable now, 5% upon signing , 90 day settlement (which is what I was after), along with early access! I've negotiated to access the property for the last month of settlement period to do some minor improvements.
Asking price was $220,000 to $235,000. I offered $225,000 to begin with, and went up to $228,000 – which was what I was happy to pay. So I feel I did a great job!
This is IP #2 for me, and it has all happened very quickly…. exciting!!
Cheers everyone for your feedback,
Jess
You must be logged in to reply to this topic. If you don't have an account, you can register here.
