approaching vendor for private sale

Hi all,

Happy New Year!! I hope you all have your visions set for a smashing 2014! I have no doubt of achieving visions where there is strong intention, vision coupled with emotion (to keep you going).

We've had our eyes on a corner lot around 1000 sqm where there is an existing house and enough room to build a second street facing dwelling, while retaining the existing house.

The house was on the market around mid 2013. When I saw the ad, I had thought what a perfect lot for us. But it hadn't crossed our mind we wanted to build. The asking price was 715k+. The vendor received multiple offers and after a few months around 715k as per the then listing agent. The vendor then changed their mind and took it off the market. We see there to be a 30% on the deal at the end of the build @ 750k purchase price.

Late in the year we spoke to a local agency owner who was happy to go door knocking for us. So the agent got one of the guys to go talk to the vendor (and a few other lots we had short listed). Got back a convoluted response and eventually we saw the agent who actually went and spoke and figured that the vendor was going to decide in the new year (although initially he said the vendor would decide in 6 months and then when we pressed for more info and that we are happy for a delayed settlement, that's when we heard they would decide in the new year).

Now we are thinking of calling the vendor directly....OR although not too comfortable with the idea, drive over and talk to the vendor. But concerned that we don't want them on the back foot; neither do we want them to think, suddenly their house is worth a million dollars...

Has anyone used this strategy before? I think we are offering well above fair market value at 750k and they would save agency fees...........

Appreciate your thoughts.

Many thanks,

MsAli.
 
Send a personalised letter (ie. using their names) to the vendor outlining your interest in their property. Give them a couple of alternative means to get back to you (phone, email or post). Include mention that you will follow up with telephone call in "x" days to ensure they have received your letter.

Be as genuine and non-business like as you can be (ie. try to come across as a family looking for a house in the area rather than an non-emotional IP investor.

An initial letter gives the chance to plant the seed and let them think about it before they (or you) follow up.
 
Thanks Joe. I have the following drafted. Thoughts?

"Dear Mr. <Seller Surname>,

To introduce ourselves, this is MsAli1 and MsAli2 writing to you. We are twins who live in
<xyzSuburbNextDoor>. We are looking to buy a family home for ourselves <and family>.

We note that your house at <Address>, was listed online last year. By the time our mum called to book an appointment for a viewing, we were told you had changed your mind from selling and may be ready to sell in early 2014.

Now that we are also ready to buy we thought of approaching you directly to see if you are considering selling and what your terms were. This may be a win-win situation with us getting a home and you be able to get your desired price, without the tag of the high agency fees.

We can be reached on 0400 xxx 123 (MsAli1) or 0400 xxx 123 (MsAli2). We can also be reached via email on MsAli1@email.com / MsAli2@email.com. Alternatively, our postal address is as above.

We would give you a ring to follow up on this end of the week to hear your thoughts.

Many thanks,

MsAli1 and MsAli2"
 
What was the agreement with the agent (either you and the agent or the owner and the agent)? As they may be entitled to a commission even if you approach the owner directly now.
 
What was the agreement with the agent (either you and the agent or the owner and the agent)? As they may be entitled to a commission even if you approach the owner directly now.

The agents who approached them on our behalf are different from the one who listed.

The agreement would be well expired.
 
Ms Ali

I think your approach and letter is fine although I would personalise and flower it up a bit as well as only having one point of contact.

I am assuming the property is the PPOR of the owner so you are trying to appeal to their emotions,

"Dear Mr. <Seller Surname>,

To introduce ourselves, this is MsAli1 writing to you. We are twins who live in <xyzSuburbNextDoor>. We are looking to buy a family home for ourselves <and family>.

We note that your house at <Address>, was listed online last year. By the time we called to book an appointment for a viewing, we were told you had changed your mind from selling but may be ready to sell in early 2014.

We love the area and street and would welcome the chance to meet with you and hopefully view the inside of your lovely property.

Your property has a lot of appeal and should everything internal be as good as it is from the outside we would be hopeful of discussing terms for the sale of the property. Should we be able to agree terms this could be of mutual benefit as it could allow you to sell at your desired price and timeline without incurring additional selling agency fees.

We can be reached on 0400 xxx 123 (MsAli1) . We can also be reached via email on MsAli1@email.com. Alternatively, our postal address is as above.

We welcome the chance to discuss this further and unless we hear from you beforehand we will ring end of the week to hear your thoughts.

Many thanks,

MsAli1 and MsAli2"
 
Thanks Joe. That's brilliant. Will update it in the morning and go drop off personally in their mail box :)
 
A quick update. We dropped the letter in the mail box earlier...The house looks a bit done up on the outside now as opposed to the old photos on RP Data / Price Finder.

At least we would have some response (I'm hoping). If it's a decline, then we'd know we can move on without investing much time and energy in this deal... :)
 
Don't want to burst your bubble....but do you realise that Sydney is a very hot market??

Every two bit developer will be looking for 1000 sqm house with development potential. Vendors are not silly anything with a R4 rating is going to sell for at least $1m+ if not $1.3m. Besides why would you buy in a hot market...that is insanity to me???

May I suggest that you look at Brissie .... 1000 sqm lots are still very affordable.

Hi all,

Happy New Year!! I hope you all have your visions set for a smashing 2014! I have no doubt of achieving visions where there is strong intention, vision coupled with emotion (to keep you going).

We've had our eyes on a corner lot around 1000 sqm where there is an existing house and enough room to build a second street facing dwelling, while retaining the existing house.

The house was on the market around mid 2013. When I saw the ad, I had thought what a perfect lot for us. But it hadn't crossed our mind we wanted to build. The asking price was 715k+. The vendor received multiple offers and after a few months around 715k as per the then listing agent. The vendor then changed their mind and took it off the market. We see there to be a 30% on the deal at the end of the build @ 750k purchase price.

Late in the year we spoke to a local agency owner who was happy to go door knocking for us. So the agent got one of the guys to go talk to the vendor (and a few other lots we had short listed). Got back a convoluted response and eventually we saw the agent who actually went and spoke and figured that the vendor was going to decide in the new year (although initially he said the vendor would decide in 6 months and then when we pressed for more info and that we are happy for a delayed settlement, that's when we heard they would decide in the new year).

Now we are thinking of calling the vendor directly....OR although not too comfortable with the idea, drive over and talk to the vendor. But concerned that we don't want them on the back foot; neither do we want them to think, suddenly their house is worth a million dollars...

Has anyone used this strategy before? I think we are offering well above fair market value at 750k and they would save agency fees...........

Appreciate your thoughts.

Many thanks,

MsAli.
 
Sash, this is for PPOR. So hot or not, we have to buy. Also, I never said it's R4 zoning. I don't think it's worth more than 800k at most.

Only if I could move to Brissy and work in Sydney :p
 
Because they are potential buying in a hot market with no or limited competition if they are able to purchase from the vendor direct.
 
PPOR purchasing is even worse...lots of buyers with I am going to miss out syndrome. I would wait....another 18 months ...I am almost certain rates will rise sometime in Q3/Q4. My crystal ball tells me it would hit about 7% from high 4s. That is over a 40% increase in mortgages....that is when you can Cherrypicking.

If you are looking at the Pazzamatta market lots of South Asians pushing it up and paying silly prices.....I would wait. Maybe buy in Brissie take the profit and maybe buy outright in Pazzamatta when it tanks. N'est pas??


Sash, this is for PPOR. So hot or not, we have to buy. Also, I never said it's R4 zoning. I don't think it's worth more than 800k at most.

Only if I could move to Brissy and work in Sydney :p
 
Thanks for the caution guys. We will definitely go where numbers work. Will walk away where unreasonable.

Thanks for putting Pazzamatta, Sash. Really appreciate :)
 
Msali did you enclose a photo of a kitten with todays paper in front and a gun to its head and a note saying "sell or the kitteh gets it"
 
Sash way I see it is if rates are to increase to 7% the economy has to have picked up, if the economy has picked up more people will have more money. More people with money means more people shopping. More people shopping more demand, more demand higher prices.

But yes I do see people getting caught out but I don't see it at 7% banks have assessment rates which means they have to show that the people can't afford the loans at higher rates then they are actually on. Alot of people will be under financial pressure at 7% sure but don't think it will be the breaking point.

By waiting you need to consider the opportunity loss, I find this to be greater.
 
Sydney is a boom bust market.

To test your theory lets do the math. Let use a couple on $150k (lets say 75k each). After taxes they will key about $115k. Lets say they buy a 650k home with a loan of 600k over 30 yrs.

At 5% they will pay about 36k in interest at 7% they will pay about 48k in interest.

Their disposable income crunches down from 79k to 57k that is a lot if disposable income. A lot of people would be going backwards. Pay rises over 2 years for a couple would be 10k but after tax they will only be left with 6k. So there is still a short fall and more than half of this would be taken by inflation.

So the opportunity cost of not managing is a bigger risk.


Sash way I see it is if rates are to increase to 7% the economy has to have picked up, if the economy has picked up more people will have more money. More people with money means more people shopping. More people shopping more demand, more demand higher prices.

But yes I do see people getting caught out but I don't see it at 7% banks have assessment rates which means they have to show that the people can't afford the loans at higher rates then they are actually on. Alot of people will be under financial pressure at 7% sure but don't think it will be the breaking point.

By waiting you need to consider the opportunity loss, I find this to be greater.
 
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