Buying from a "friend"

[KoopaTroopa]

So I know someone selling their house, I have a rough idea of what the value is worth, and I have a rough idea of what they are willing to accept.

The property is something that fits my current search criteria (location, size, price, potential)

However, normally I have a "don't mix business with pleasure" rule with all my friends (and acquaintances) because I feel the friendships and relationships are worth more than "making money".

In light of this, I like the property anyway.

I was thinking about how "ethical" it would be if we, both vendor and buyer, sort of negotiated privately then cut out the agent.

e.g. the Vendor takes the property off the market, pays out the agent, and then sells to me.

Let's say they wanted $300k, of which 2.75% commission would go to the agent ($8250). I figured I might work out a price with the vendor that would be less than $300k, let's say $293k. They still get more than they would've via the agent, and I pay less.

Does this kind of thing happen in the real world?

If so, what is the process? I make offer to vendor directly, they "accept", I sign the S32 (it's in Vic), and my solicitor/conveyancer deals directly with theirs, and we get the deal done?

I don't think we necessarily need an agent in this case...

What do you guys think?

 

[The Y-man]

Does this kind of thing happen in the real world?

If so, what is the process? I make offer to vendor directly, they "accept", I sign the S32 (it's in Vic), and my solicitor/conveyancer deals directly with theirs, and we get the deal done?

Yep - That's pretty much it.

The Y-man

 

[travelbug]

As long as you were introduced to the property by the friend and not the agent.
Did you attend an open home and sign the register? If so the agent will still be entitled to their commission.

 

[pennyk]

you also need to wait until any exclusive agency agreement has lapsed.

 

[Ocean Architect]

happens all the time. many people split the agents fee as a bonus for the seller and discount for the buyer. other times the seller usually has a figure in mind that they would like "in hand" post sale and so long as they get that, don't really care that the buyer got a discount. ime half the reason people have auctions these days is simply to guage what the market will accept and sell by private treaty when the property is passed in.

 

[wobbycarly]

As long as you were introduced to the property by the friend and not the agent.
Did you attend an open home and sign the register? If so the agent will still be entitled to their commission.

Ah-hah! Another reason they do that...!

 

[The Y-man]

Did you attend an open home and sign the register? If so the agent will still be entitled to their commission.

Might have signed the register as Firstname "Koopa" Surname "Troopa"

The Y-man

 

[KoopaTroopa]

Hmm well I did already see the agent on one of the inspection days!

I was asking, though, if the vendor "settles" with the agent, takes the property off the market, and pays outstanding bills with the agent.

If vendor then sold to me, is that OK? Vendor is no longer liable to agent for commission?

 

[Aaron_C]

Hmm well I did already see the agent on one of the inspection days!

I was asking, though, if the vendor "settles" with the agent, takes the property off the market, and pays outstanding bills with the agent.

If vendor then sold to me, is that OK? Vendor is no longer liable to agent for commission?

It depends. If the agent's exclusive period with the vendor is still on-foot, that means that any sale entitles the agent to a commission.

 

[Terryw]

Hmm well I did already see the agent on one of the inspection days!

Sounds not so good now! The agent will likely have a clause in his agreement with your mate that entitles him/her/it to commission if anyone he introduced to the property buys it within x months of the agreement ending.

Introduced could mean 'showed'.

 

[smg]

I would have the vendor cancel the agreement, sell to you after the agreement, the vendor pay for all advertising etc owed then one month after agreement is due to have expired go through your solicitors (of course talk to them about it and get their opinion). To get the right market price get a valuation from a valuer cost about $300 but could be worht it and tell them its for your bank. Your bank will do one anyway and it could be less then that would be uncomfortable

 

[Kristine..]

What's In It for The Vendor?

G’day

Well, here I am.

Decided to sell the house, had in a half dozen of the local Agents, chose that nice Mr Browning from Dodgem Brothers Real Estate, and away we go.

Mr Browning told me that they always get plenty of enquiry for this part of the neighbourhood, that it’s a nice house in good condition, should sell quickly

Asked me what are my priorities – holding out for the top dollar, selling quickly, or somewhere in the middle.

I said let’s wait and see until after a couple of Open for Inspection, see what the market says, I’d be happy with a sixty day sale and anything above $300,000 would be good.

So we scrub the place up, mow the grass, go out for a walk while hopefully lots of strangers traipse through our house.

Been on the market two weeks now, some people have already been back for a second inspection.

Mr Browning says that feedback is firming up in the $290,000 -$305,000 range. No woz, we are getting into the swing of making the beds and keeping everything tidy before we leave in the mornings.

So now I get a call from Koopa Troopa, a bloke I’ve met a few times. Not who I’d call a ‘friend’ but come across him around the traps.

He wants to offer about the same or a bit less than the Agent has estimated that the property would sell for, but I still have to pay the Agent separate to the deal.

Hmmm. If the place sold for $300,000 then after paying the Agent $8,250 I would see about $291,750.

If Koopa Troopa pays me $293,000, and I have to pay the Agent the same commission level based on the actual sale price – which I will, that’s what I agreed to when I engaged the Agent – so that’s $293,000 less $8,057 leaves me with $284,942.

Not sure how this would make a ‘good’ deal for me? Koopa is focussed on how to make a ‘good’ deal for him (fair enough) and perhaps save tuppence ha’penny in purchase price and Stamp Duties in the process.

So I try and think about this, but eventually tell Koopa that the property is on the open market, up for grabs to the highest bidder, please call and speak with Mr Browning.

It’s the only house I’ve got, and I want to get the best possible price for it. I can’t afford and don’t want to ‘cut any deals’ with anyone else, I just want to do the best I can for my family which is why I chose Mr Browning. He seems to get good results for vendors, which is what I am.

Of course, if Koopa came up with, say, $325,000 I would certainly listen, but attendances at the Opens has been good with positive feedback, we have looked after the house while we have lived here, the garden looks great, and I would really rather not spoil any social relationship with either Koopa or our mutual friends, so I would rather he just dealt with the Agent in the usual way and if I find out later that he bought it, well good on him and I hope he invites me to the house warming!

Let me know if I’ve missed anything here!


cheers
Kristine

 

[Aaron_C]

That's why you 'accidentally' knock down the tree/house AFTER you get approval to build something