Best settlement terms for this deal?
- Thread starter ozi
- Start date
Thanks once again for the comments! I've just spoken with the vendor and he doesn't want to negotiate until he receives the valuation report. Fair enough, I'll wait.
I wouldn't sign a contract to purchase property without having a solicitor or conveyancer check over it first. Wouldn't the terms of settlement be in the contract prepared by the vendor's solicitor? I don't see how he can accuse me of tricking him to sign anything. I'm not giving him the legal advice, his solicitor should be doing that.
I guess there is a risk of him changing his mind over such a long period of time. I don't see how I can protect myself from this as it is out of my control. A contract is a legal binding document, so as far as I'm concerned, I should be protected if he does change his mind. Is this correct?
Thanks Y-Man! I was thinking the same thing earlier. I think overall, heritage overlays are both good and bad. It really depends on what your long term plans are with the property. I wouldn't be planning to demolish the house so I can build some flash townhouses, nor do I plan to change the façade in a way which would take away its character, so it shouldn't be a big deal. Its just a pain getting planning and building permits each time you wish to alter something externally.
Regards,
Ozi
I wouldn't sign a contract to purchase property without having a solicitor or conveyancer check over it first. Wouldn't the terms of settlement be in the contract prepared by the vendor's solicitor? I don't see how he can accuse me of tricking him to sign anything. I'm not giving him the legal advice, his solicitor should be doing that.
I guess there is a risk of him changing his mind over such a long period of time. I don't see how I can protect myself from this as it is out of my control. A contract is a legal binding document, so as far as I'm concerned, I should be protected if he does change his mind. Is this correct?
Thanks Y-Man! I was thinking the same thing earlier. I think overall, heritage overlays are both good and bad. It really depends on what your long term plans are with the property. I wouldn't be planning to demolish the house so I can build some flash townhouses, nor do I plan to change the façade in a way which would take away its character, so it shouldn't be a big deal. Its just a pain getting planning and building permits each time you wish to alter something externally.
Regards,
Ozi
UPDATE - I made the offer!
Hi all,
As I mentioned earlier, the owner was waiting for the valuation report (which arrived today) before we could negotiate price. I have just been on the phone with him discussing settlement terms and price. I first asked him whether he would be happy with a 12 month settlement and he was quite pleased
I also told him that I would be prepared to let him rent back for up to 6 months after settlement if needed.
Based on my calculations, I am guessing I need to spend around $20k-$30k renovating the place. So, I thought I'll go in with a low offer to see what he says. I offered him $280k To my suprise, he thought about it for a short moment then said if he was to rent out a similar place in that condition for $200 p.w., that would work out to about $10k a year in rent, so he will split the difference with me. Hence, his counter offer of $290k. I wasn't expecting that! Not that quickly!! I arranged to view the property again this Saturday, so I will get back to him then regarding price.
Ok, to me it sounds like he wants to play ball I'm just a little suprised as to how quickly he came down to $290k. He initially wanted above $300k. He wouldn't disclose the valuation he received, so I'm starting to think its below the $300k mark. What do you think? Should I stick to my guns and be firm at $280k? I could always meet him half way at 285k if he says no. I know this isn't a big amount, and not worth losing a good deal over, but its been a while since I've been in a position where I am in control with the negotiations Why not have a bit of fun along the way!
Any further advice would be appreciated.
Kind regards,
Ozi
Hi all,
As I mentioned earlier, the owner was waiting for the valuation report (which arrived today) before we could negotiate price. I have just been on the phone with him discussing settlement terms and price. I first asked him whether he would be happy with a 12 month settlement and he was quite pleased
I also told him that I would be prepared to let him rent back for up to 6 months after settlement if needed.Based on my calculations, I am guessing I need to spend around $20k-$30k renovating the place. So, I thought I'll go in with a low offer to see what he says. I offered him $280k
To my suprise, he thought about it for a short moment then said if he was to rent out a similar place in that condition for $200 p.w., that would work out to about $10k a year in rent, so he will split the difference with me. Hence, his counter offer of $290k. I wasn't expecting that! Not that quickly!! I arranged to view the property again this Saturday, so I will get back to him then regarding price. Ok, to me it sounds like he wants to play ball
I'm just a little suprised as to how quickly he came down to $290k. He initially wanted above $300k. He wouldn't disclose the valuation he received, so I'm starting to think its below the $300k mark. What do you think? Should I stick to my guns and be firm at $280k? I could always meet him half way at 285k if he says no. I know this isn't a big amount, and not worth losing a good deal over, but its been a while since I've been in a position where I am in control with the negotiations Why not have a bit of fun along the way!Any further advice would be appreciated.
Kind regards,
Ozi
Hi Ozi,
Congrats on getting as far as you have! It probably depends on the prices of the properties in the area and if you're thinking you have a bargain - but you could always go back to the vendor with a statement such as 'was going to offer $270k (based on needed reno's, property prices in the area - reno and unreno, etc) and factored in the rent you would have to pay over the next year, so was being generous at the $280k mark'
Or, go back, pick out some faults you didn't mention before, offer $285k, and as it sounds like he's keen to negotiate, you may have yourself an IP!
Good luck, and let us know what happens!
Where is the IP by the way?
Cheers,
Jen
Congrats on getting as far as you have! It probably depends on the prices of the properties in the area and if you're thinking you have a bargain - but you could always go back to the vendor with a statement such as 'was going to offer $270k (based on needed reno's, property prices in the area - reno and unreno, etc) and factored in the rent you would have to pay over the next year, so was being generous at the $280k mark'
Or, go back, pick out some faults you didn't mention before, offer $285k, and as it sounds like he's keen to negotiate, you may have yourself an IP!
Good luck, and let us know what happens!
Where is the IP by the way?
Cheers,
Jen
Thanks for the support I will know soon enough whether its a done deal or not.
I did some more thinking last night and thought about asking for early access before settlement. Since settlement will be 12 months away, the chance of me finding another property to buy before then is highly likely, so I could always make that one my PPOR and get the FHOG sooner rather than later. If this was the case, it would make sense to get this property rented ASAP after settlement. I would sign the contract "and/or nominee" which would give me more time to organise any structures needed which I am yet to decide on.
If I ask for early access, at what stage should I request access? e.g. 3 months before settlement? 1 month before? Do you need to state this in the contract?
JenD, I will post details on location once the deal is secured I hope you understand why
Kind regards,
Ozi
I will know soon enough whether its a done deal or not. I did some more thinking last night and thought about asking for early access before settlement. Since settlement will be 12 months away, the chance of me finding another property to buy before then is highly likely, so I could always make that one my PPOR and get the FHOG sooner rather than later. If this was the case, it would make sense to get this property rented ASAP after settlement. I would sign the contract "and/or nominee" which would give me more time to organise any structures needed which I am yet to decide on.
If I ask for early access, at what stage should I request access? e.g. 3 months before settlement? 1 month before? Do you need to state this in the contract?
JenD, I will post details on location once the deal is secured
I hope you understand why Kind regards,
Ozi
If this was the case, it would make sense to get this property rented ASAP after settlement. I would sign the contract "and/or nominee" which would give me more time to organise any structures needed which I am yet to decide on.
If I ask for early access, at what stage should I request access? e.g. 3 months before settlement? 1 month before? Do you need to state this in the contract?
JenD, I will post details on location once the deal is secured
Kind regards,
Ozi
Of course Ozi!
A couple of things - you'd definitly want to put your request for access in the contract - period of time would depend on how long you expect it would take to find a tenant? Based on the Melbourne rental market now, shouldn't take longer than a month, but not sure in a years time? The vendor may not be happy to have his home open to the public for 3 months either.
Also, be careful by signing "and/or nominee" - you'll want to have your structure setup before you sign the contract, or it's possibly you could be find yourself in a world of trouble. Speak to your accountant/lawyer about this before you sign anything.
Congrats and good luck!
Cheers,
Jen
Thanks Jen!
Just regarding signing the contract "and/or nominee", I thought the whole point of this was so that you could nominate someone else prior to settlement? I don't see how having the structure setup prior to signing the contract would be of concern. I thought that as long as the structure is setup before settlement date, everything should be fine (?)
I will speak to a solicitor about this. I should probably also re-read the recent thread about this very topic by Kenneth
Regards,
Ozi
Just regarding signing the contract "and/or nominee", I thought the whole point of this was so that you could nominate someone else prior to settlement? I don't see how having the structure setup prior to signing the contract would be of concern. I thought that as long as the structure is setup before settlement date, everything should be fine (?)
I will speak to a solicitor about this. I should probably also re-read the recent thread about this very topic by Kenneth
Regards,
Ozi
Hi Ozi,
Definitly check with your accountant/lawyer - I know that last year when we signed a contract on a property as and/or nominee - and hadn't yet created a structure, we were unable to create one after the fact to purchase that propery with - it had to have been created before the contract was signed.
Cheers,
Jen
Definitly check with your accountant/lawyer - I know that last year when we signed a contract on a property as and/or nominee - and hadn't yet created a structure, we were unable to create one after the fact to purchase that propery with - it had to have been created before the contract was signed.
Cheers,
Jen
Hi Jen,
Can you please clarify - were you unable to nominate the trust prior to settlement because it didn't exist at the time you signed the contract to go un-conditional? Do you know the reason behind this? Was it because the trust wasn't or wouldn't have been issued by settlement date? I'm just curious because I spoke to a solicitor earlier and was advised that I could create a trust after I signed the contract, as long as it was issued before settlement. There are some additional administrative fees nominating someone else, but no stamp duty is payable if there is no exchange of money.
Does anyone else know the answer to this?
Regards,
Ozi
G'day Ozi,
I'd heard similar words to JenD when making my last purchase. The wording re "the nominee" is obviously open to interpretation. And, of course, this could vary from state to state.
In my case, even though the eventual buyer (my new Trust) didn't exist when I signed the contract, it DID exist at the time "of nomination" (which occured before settlement). According to MY Solicitor, this was fine !!
But I agree with JenD - it is worth checking this out to the "nth" degree ahead of putting your signature on a contract.
Regards,
I'd heard similar words to JenD when making my last purchase. The wording re "the nominee" is obviously open to interpretation. And, of course, this could vary from state to state.
In my case, even though the eventual buyer (my new Trust) didn't exist when I signed the contract, it DID exist at the time "of nomination" (which occured before settlement). According to MY Solicitor, this was fine !!
But I agree with JenD - it is worth checking this out to the "nth" degree ahead of putting your signature on a contract.
...and it sounds like you've done this, so no probs.Ozi said:
Regards,
Hi Ozi,
In our situation, we purchased a property, signed in my fiances name "and or nominee". We thought this would be ok to set up a trust in the meantime - we spoke to an accountant (well known for hybrid trusts), he said no, the structure must have been set up before the property contract was signed - that was ok for us as we were going to use the FHOG, so weren't worried much, and have since set up our trusts/company trustees to be ready for the next purchase. Perhaps it depends on the type of trust you're using. For us, we're using a hybrid trust - therefore the contract is signed by the "XYZ Company Pty Ltd" as trustee for XYZ Trust. That company (which is the trustee for the trust) signs the contract, and must be set up before signing the contract.
This could also depend on the state - we live in VIC, property purchased in VIC - we were told that do not sign contract "and/or nominee" and then set up your structure as that could be seen as an attempt to avoid tax and therefore eligilble for double stamp duty. If you're buying in Melbourne, have a chat with DaleGG - he's incredibly helpful, and will respond to you immediately. We're clients of his (after the fact of our first purchase) - and he answered a million questions for us before we ever set up the trust - a very genuine and nice guy, always happy to answer even the dumbest of questions
I'm definitly NOT and accountant, and only speak from experience
Cheers,
Jen
If you're buying in Melbourne, have a chat with DaleGG - he's incredibly helpful, and will respond to you immediately. We're clients of his (after the fact of our first purchase) - and he answered a million questions for us before we ever set up the trust - a very genuine and nice guy, always happy to answer even the dumbest of questions
I'm definitly NOT and accountant, and only speak from experience
Cheers,
Jen
Ha ha ha..
I can relate to that; Dale and the Team at Gatherumgoss must be sick of my e-mails by now; definetly one of the nicest guys around.
Hi Jen,
Thanks for clarifying. I guess I must have missunderstood the requirements when speaking to the solicitor. I'm glad you pointed this out as I should definately get all this sorted out before signing anything. I am yet to decide on whether I will use a trust at all, it is just something I have been contemplating for a while.
I met Dale a few months ago and agree with you, he is a great guy. Very helpful! I will get in contact with him and see what he says.
Regards,
Ozi
Thanks for clarifying. I guess I must have missunderstood the requirements when speaking to the solicitor. I'm glad you pointed this out as I should definately get all this sorted out before signing anything. I am yet to decide on whether I will use a trust at all, it is just something I have been contemplating for a while.
I met Dale a few months ago and agree with you, he is a great guy. Very helpful! I will get in contact with him and see what he says.
Regards,
Ozi
Almost there
Hi again,
I met with the owner this morning so I could view the property a 2nd time and also talk about the price. He told me that he met with his financial planner yesterday to plan his retirement. He retires at the end of the year and it looks like he has more super than he originally thought, so he is no longer in a position where he has to sell in order to pay for the new house. He appears quite firm on his counter offer of $290k with 12 month settlement and made it clear he wouldn't accept anything below $290k. If he doesn't get his price, he will either fix the place up when he moves to his new house and sell it, or just rent it out. He didn't seem too phased which option he took.
I was going to offer $285k but don't want to tick to owner off enough so that he decides not to sell. I am thinking about just offering him $290k to get it over with. I do however want to request early access now in order start renovations. Do you think thats fair?
I spoke to him briefly about early access so that I could come in to measure and get quotes. He said it should be fine, as long as tradesman aren't coming through every week and disturbing him. I said that no work would commence until settlement. Now I'm hoping I can commence work before settlement, even if its just external work such as painting, landscaping, etc...
To add to the story, he said that once his new house is at the lock-up stage, he will vacate this house and move into the new one. I figured this would be a good time for me to start with the renovations, but the problem is I don't know when this will be. There is also the risk of his new house not being complete by settlement date, therefore early access may be an issue.
Can anyone offer some advice on which way to go?
Thanks in advance!
Regards,
Ozi
Hi again,
I met with the owner this morning so I could view the property a 2nd time and also talk about the price. He told me that he met with his financial planner yesterday to plan his retirement. He retires at the end of the year and it looks like he has more super than he originally thought, so he is no longer in a position where he has to sell in order to pay for the new house. He appears quite firm on his counter offer of $290k with 12 month settlement and made it clear he wouldn't accept anything below $290k. If he doesn't get his price, he will either fix the place up when he moves to his new house and sell it, or just rent it out. He didn't seem too phased which option he took.
I was going to offer $285k but don't want to tick to owner off enough so that he decides not to sell. I am thinking about just offering him $290k to get it over with. I do however want to request early access now in order start renovations. Do you think thats fair?
I spoke to him briefly about early access so that I could come in to measure and get quotes. He said it should be fine, as long as tradesman aren't coming through every week and disturbing him. I said that no work would commence until settlement. Now I'm hoping I can commence work before settlement, even if its just external work such as painting, landscaping, etc...
To add to the story, he said that once his new house is at the lock-up stage, he will vacate this house and move into the new one. I figured this would be a good time for me to start with the renovations, but the problem is I don't know when this will be. There is also the risk of his new house not being complete by settlement date, therefore early access may be an issue.
Can anyone offer some advice on which way to go?
Thanks in advance!
Regards,
Ozi
You know, if I were him, I wouldn't want tradies coming to the property at all. You have offered a delay of 12 months for settlement plus the option to rent for a further 6 months. You could probably start measuring up for your quotes 4 weeks from settlement or his termination date. To do so earlier is not going to provide any benefit to you as prices may change before you are able to get the work done.
If after settlement he continues as a tenant, then why not show him a little courtesy & delay the renos until he is gone. If you wish to make an early start on the reno, then maybe start on the external of the property. This way you are not disrupting him.
If after settlement he continues as a tenant, then why not show him a little courtesy & delay the renos until he is gone. If you wish to make an early start on the reno, then maybe start on the external of the property. This way you are not disrupting him.
Hi Skater,
Thanks for the advice. Yes, I think asking to commence work on the outside only might be the best option. If he moves out before settlement, then I could start on the inside (if he agrees).
If I will be using this as my PPOR and moving in for 6 months (to claim FHOG), early access doesn't really bother me as I will have plenty of time to reno after settlement. However, if I buy another property before this one settles and claim the FHOG on that instead, then I would want to get this one renovated and rent-ready as soon as possible.
Kind regards,
Ozi
Thanks for the advice. Yes, I think asking to commence work on the outside only might be the best option. If he moves out before settlement, then I could start on the inside (if he agrees).
If I will be using this as my PPOR and moving in for 6 months (to claim FHOG), early access doesn't really bother me as I will have plenty of time to reno after settlement. However, if I buy another property before this one settles and claim the FHOG on that instead, then I would want to get this one renovated and rent-ready as soon as possible.
Kind regards,
Ozi
Ozi, you mentioned a win win situation here.
All I have heard about is your future.
Why not think about the vendor's future and interests.
Maybe you can help him, and you, by doing some smart leg work to get his house built in the country earlier and at a price he can afford...a price that sweetens the deal for you....
If he is near retirement, and doesn't read Somersoft, maybe you can source a cheaper builder, sooner, that'll do his retirement villa.....
Think of him as you would your father, and maybe he'll do a deal with you as if you were his son.........
All I have heard about is your future.
Why not think about the vendor's future and interests.
Maybe you can help him, and you, by doing some smart leg work to get his house built in the country earlier and at a price he can afford...a price that sweetens the deal for you....
If he is near retirement, and doesn't read Somersoft, maybe you can source a cheaper builder, sooner, that'll do his retirement villa.....
Think of him as you would your father, and maybe he'll do a deal with you as if you were his son.........
Hi thefirstbruce,
You are right, I have been a bit selfish
I should be thinking about the owner too, not just me. Although your suggestion sounds creative, I'm not sure how I would put something like that forward to him. He also mentioned that he will start getting drawings and plans done over Christmas. I'm not sure why he doesn't start them now. One reason may be that he doesn't have the money right now and is waiting for retirement so he can access his SUPER. You have given me something to think about so I'll see if I can come up with something along those line
Thanks.Regards,
Ozi
