$1.5M Property East Syd - Best Buy?

[JWR]

Hi guys,

My Dad is looking to buy a 4bdr+ house in Eastern Sydney at the moment for up to $1.6ish million. Only him, his wife and my 6 year old Sister will live there, with my brother and I living there semi-permanently (and living with our Mum the other time.)

Even a 3bdr place with big land so we can build a granny flat or 2 would be acceptable to buy.

He will pay for it in cash so will be looking for desperate vendors who need to offload quick.

He is not concerned about which suburb, although my little sister goes to school in Randwick, so should be within 10-15 minutes drive of it. Maroubra is probably the furthest he will buy, but if a good deal came up a little further he may consider it (like Matraville or Malabar.)

He would prefer a renovated house, but I would prefer something with a big block of land and a not so flash house (which we can do up ourselves)

It seems a pretty good time to look for these types of houses, but would welcome everyone's opinions on suburb selection, type of house and anything else.

I have a few questions.

What is the best way to negotiate on these houses? He can do a quick settlement so that's an advantage. I'm thinking the offer should include the place fully furnished (because who wants to move all their stuff out only to see it doesn't fit etc... and will try to get a car included as well - a nice Merc would be great for me!)

There would be some vendors who would not be putting their houses on the market as they are too proud to accept they have hit rough times (and looking for a discreet private sale) but are desperate to sell - how do I get to these guys?

Also, he is planning on buying it 33% in my name, 33% my brothers name and 33% in my sisters name. This is mainly so that if he divorces from his current wife she couldn't take half the house (like my mum got lol).

Is this the best way to do it?

Should I ring every agent in the suburbs we may buy in and tell them the situation and see what they have?

The problem with these types of houses is that they go to auction - so you cannot get a good gauge of price.

Is it best to hire a buyers agent?

Thanks for the help as always,
James

 

[coastymike]

Jwr

Please get the structuring right. That structure could be disastarous. Your sister meets a guy, sets up a new will, he inherits her 33 per cent on death and then he says "ok guys times to sell" then let the games begin. Or worse your brother and sister have a falling out with you and your dad 15 years later and force you to sell and throw your dad out.

I would be discussing a unique unit trust structure to work around those issues. Whatever you don't acquire in personal names.

Also get the gifting done right or it will all come undone and the wife will be able to make a claim anyway.

 

[Propertunity]

What is the best way to negotiate on these houses? He can do a quick settlement so that's an advantage.

It is only an advantage IF the vendors want a quick settlement. For example, they may want to stay for Christmas and pretend all is well at home for the relatives, and then sell and relocate for the new school year starting February. You need to know the vendor's motivation so that you can structure your offer.

I'm thinking the offer should include the place fully furnished (because who wants to move all their stuff out only to see it doesn't fit etc... and will try to get a car included as well - a nice Merc would be great for me!)

This happens occassionally but rarely. If it happens - fine but don't make it a condition, it may put sellers off.

There would be some vendors who would not be putting their houses on the market as they are too proud to accept they have hit rough times (and looking for a discreet private sale) but are desperate to sell - how do I get to these guys?

YOU probably don't get to them. There are 2 groups of people that do get to them:
1. A select group of investors who can keep a secret and who actually prove over time (to the selling agents) that they buy various properties offered to them. (If they don't ever buy, they no longer get invited to the private viewings.)
2. Buyers Agents

Also, he is planning on buying it 33% in my name, 33% my brothers name and 33% in my sisters name. This is mainly so that if he divorces from his current wife she couldn't take half the house (like my mum got lol). Is this the best way to do it?

NO. Take accounting & legal advice.

Should I ring every agent in the suburbs we may buy in and tell them the situation and see what they have?

That would be a good place to start.

The problem with these types of houses is that they go to auction - so you cannot get a good gauge of price.

You need to have access to all this data (like an industry database that selling agents and buyers agents subscribe to) and/or attend lots of auctions, then you will get a good gauge of price.

Many times you will see properties sold but the price is withheld. Again, it will come down to your relationship with the selling agents as to what you can find out. Recently, I asked an Eastern suburbs agent what a property sold for (I could not make the auction). I got the usual reply about the vendor wanting to keep it unpublished. When I mentioned I was a BA, they went away and came back saying they could not give me an exact figure but they could give me a price range,......... which was "$1.3M to $1.30M, if you know what I mean"........

Is it best to hire a buyers agent?

Its up to you and what you think they can add in the way of value to your search.

 

[JWR]

Hi Mike,

Don't know the exact details - but my uncle is a lawyer so he will do it right. I know it would include some kind of clause that we can't kick our parents out - a lifetime residency I think.

The main point of the post was to find best place in Sydney for around 1.5M or under (that's really worth $2M+)

 

[JWR]

Hi Alan,

So you got any of those properties for me? I'll get you your fee in cash the minute you find one . Is this how buyers agents work - they only get paid when the customer has bought the house? Or is it upfront.

My other thought - if we all get 33%, do we lose our FHB benefits? I am planning to buy one soon but would my bro and sis lose their benefits?

 

[Propertunity]

Hi Alan,
So you got any of those properties for me?

Hi James. I might have.

I'll get you your fee in cash the minute you find one . Is this how buyers agents work

It is not how buyer's agents work - no. BAs need to comply with lots of legislation and regulation, and need a signed agreement in place before they can work for you or offer you property.

- they only get paid when the customer has bought the house? Or is it upfront.

There is usually an upfront component which is a non-refundable retainer. The balance is paid once you exchange contracts on a property you actually want to buy.

My other thought - if we all get 33%, do we lose our FHB benefits? I am planning to buy one soon but would my bro and sis lose their benefits?

You can buy IPs and still get your FHOG later when you buy a PPOR, but you can't have your name on title on a PPOR to live and get the grant later.

 

[JWR]

My sister would be living there, but my brother and I would still be officially living with my mum - so would this be ok for my brother and I to buy a PPOR in the future with FHB benefits?

 

[Propertunity]

My sister would be living there, but my brother and I would still be officially living with my mum - so would this be ok for my brother and I to buy a PPOR in the future with FHB benefits?

If you and your brother's names are on title? Mmmmmm - seek specific legal and accounting advice on this issue. Plently of people have not, and have not been entitled to the grant when they come to buy their own PPOR in later years.

 

[Aaron_C]

When buying a property of $1.5m magnitude what's $7,000?

 

[JWR]

Totally agree - but not if a house isn't found.

 

[DanielS]

When buying a property of $1.5m magnitude what's $7,000?

I'd pay $7000 to make sure I have a legal stake on a $1.5m property ...

 

[Propertunity]

Totally agree - but not if a house isn't found.

I don't recall ever taking on a client and not finding a property. We've had a small number of clients terminate a search because their personal circumstances changed after engaging us - loss of employment being the main reason. A few others have had to hit the "pause" button due mainly to a change of career and having to requalify for finance, but that's about it.

Part of the process that any good BA would go through, is to seek a very detailed brief from their client and then advise if they are likely to get that type of property within the budget or not.

 

[coastymike]

Lifetime tenancy !!! arrggghhh CGT nightmare for all.