Can settlement be any length of time?
- Thread starter Delilah
- Start date
Just beware if you go for a long term settlement in a falling market.
Recently I valued a property for the bank that was purchased in Feb 2011 at the peak of the market for this suburb.
THe market has been going downhill ever since. Settlement is soon.
The purchasers paid $1.7m for it and it's current market valuation for the lending bank for the loan was $1.45m.
BTW, I always buy on 90 day settlement with 5% deposit, this gives me time to arrange finance.
Recently I valued a property for the bank that was purchased in Feb 2011 at the peak of the market for this suburb.
THe market has been going downhill ever since. Settlement is soon.
The purchasers paid $1.7m for it and it's current market valuation for the lending bank for the loan was $1.45m.
BTW, I always buy on 90 day settlement with 5% deposit, this gives me time to arrange finance.
I wonder what would happen if I accept an offer and then the buyer says they want 3 month settlement and I want 30 days? I guess the only option for me is to either agree to the 3 months or I put it back on the market! It seems a little grey as maybe this should be part of the offer so I can then decide before accepting the offer or not.
Did they challenge your valuation?
Not yet.
And if they do they can whistle.
Even the agent that sold it acknowledged that the market had fallen heaps, which in this suburb it has. I can show plenty of analysis to show that land values are now under $1,200 per sqm, whereas they were around $1,500/sqm.
Hard to justify the purchase price on 800sqm with a 1960's original house when nearby a near new huge architect designed one on 1000sqm sold for only $1.8m!
Anyone who believe the newspapers that the market has only fallen 5% has no grasp on the situation in the market in Melbourne; more like 10-15% plus.
For example in the next suburb I looked at a comparable sale (for another val) it sold for $980k, in Oct 2011, whereas it was purchased at the start of 2008 for $900k, nearly 4 years before.
And if they do they can whistle.
Even the agent that sold it acknowledged that the market had fallen heaps, which in this suburb it has. I can show plenty of analysis to show that land values are now under $1,200 per sqm, whereas they were around $1,500/sqm.
Hard to justify the purchase price on 800sqm with a 1960's original house when nearby a near new huge architect designed one on 1000sqm sold for only $1.8m!
Anyone who believe the newspapers that the market has only fallen 5% has no grasp on the situation in the market in Melbourne; more like 10-15% plus.
For example in the next suburb I looked at a comparable sale (for another val) it sold for $980k, in Oct 2011, whereas it was purchased at the start of 2008 for $900k, nearly 4 years before.
Stamp duty may need to be paid prior to settlement if you have a long settlement.
We had this problem, (or at least a dodgy valuation)..
Because we were planning a longer settlement, we didnt get a valuation right away. We had loans approved subject to valuation, and when the valuation was done, 3 months or so later, it was a lot lower than we expected..it wasnt an issue of the market dropping.. the valuation was clearly flawed. But the bank wouldnt do another one.
we ended up having to go to a different bank and go through the process of applying for finance again.
I could imagine in this market, that could be quite a common issue, if you havent done the final loan approval.....
We had this problem, (or at least a dodgy valuation)..
Because we were planning a longer settlement, we didnt get a valuation right away. We had loans approved subject to valuation, and when the valuation was done, 3 months or so later, it was a lot lower than we expected..it wasnt an issue of the market dropping.. the valuation was clearly flawed. But the bank wouldnt do another one.
we ended up having to go to a different bank and go through the process of applying for finance again.
I could imagine in this market, that could be quite a common issue, if you havent done the final loan approval.....
That's no good. Your analysis sounds like the property was in Glen Waverley, if I'm not mistaken. The market has really tanked down there.
edit: Balwyn is the other suburb that comes to mind as well.
I value in the West of Melbourne, a little bit in the inner north as well. Not done a job in Glen Waverley in nearly 8 years, last one in Balwyn was 2007.
BTW, Stuff I used to value in Balwyn North in the school zone 10 years ago at $350k is now probably well over $1m
The offer will include terms, so you negotiate terms as much as you negotiate price. Basically, these are the 2 areas of negotiation. In your example, you might be happy to accept a lower price for the shorter settlement.
OK, I'm starting to see that the offer part seems to be like a contract in itself. Well, in my case I was glad to hear the buyer wants 35 days anyway which suits me.
I've done settlements from a matter of days to 2 years. Depends what you are able to negotiate. Some of my older IP's I got as long as settlement as posssible (they were vacant), so I could refurbish and have them up and running, ready for renting. I've done many different, varied things in negotiations, price, settlement time, access to the property, include furniture etc..
We negotiated a 3 month settlement but then they would not let us in there to renovate prior.
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