Check out this contract of sale.

From: Anthony C


Hi All,
I'm selling one of my IP's for personal reasons. One offer i got was a bit different, in the contract of sale.
Under the Price and Deposit Section:

Price is $260,000 (for example)payable as follows:
(a) a deposit of $10,000 held in the real estate trust
(b) the balance on completion (60 days) and
(c) the Vendor shall on completion lend to the purchaser $52,000 on security of a second mortgage over the property, such sum to be repaid on 1/1/2005 and to bear any interest in the meantime at the rate of 3% per annum above Comm bank three month term deposit rate (reducible to 1% per annum above comm bank three month term deposit rate if paid within 14 days of the due date) which interest shall be paid quarterly in arrears and such mortgage shall contain all such terms and conditions as such mortgage shall contain in similar securities and as shall accord with good conveyancing practice and any dispute with respect therto shall be settled by an Arbitrator to be appointed.
----------

Sounds like i'm lending him the 20% deposit without any real security. Might use it myself for my next purchase.
Anyone got ideas for a counter offer?
Cheers
Ant.






"Let us so live that when we come to die even the undertaker will be sorry."
--Mark Twain
AntC.gif
 
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Reply: 1
From: Geoff Whitfield


I've just submitted something similar today- the first time I've tried it.

If successful, it will enable me to avoid mortgage insurance. And it will leave my deposit money in place for another property. It may suit the vendor as well- his capital gain will be only partially realised now and partly later.
 
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Reply: 1.1
From: Duncan M




Surely, the full capital gain will be realised as soon as the property
settles? Just because he's given you a loan doesnt mean he's not had he
benefit of the Capital Gain and he will thus be liable for the all of the
tax?

Regards,

Duncan
 
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Reply: 1.1.1
From: Dale Gatherum-Goss


Hi

That is correct. The tax office take the full value at the date the contract is signed, or unconditional, regardless of when the funds are handed over.

Still, that is his problem, Geoff and not yours.

Dale
 
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Reply: 2
From: Yuch .


Anthony,

3 months term deposit for $52,000, Combank is only offering 3% interest. 3% above Combank's 3 month term deposit is only 6%, it is a very cheap second mortgage! Good try!!

What about making a counter offer of:

1) 3% above Combank's standard variable rate, which is roughly about 6.5%, therefore his interest rate will be 9.5%.

2) Purchaser pays for Vendor's legal cost.

And you also need to place a caveat over the title.

Regards
yuchun
~ The secret to success is to start from scratch and keep on scratching. ~
 
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Reply: 1.1.1.1
From: Geoff Whitfield


OK, thanks Dale.

I guess that makes my offer a little less attractive to him then.

Geoff
 
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Reply: 1.2
From: Always Learning


Who has had success with such "No Money Down" IP holding techniques?
<p>
Anthony, Geoff Are we talking the same IP here?<p>

Just a point of interest, but is there any good ways to "buy" properties from the "I want to keep my pension elderly". I feel there are many old people who want to keep the pension but if they sell up will be too rich for the pension. Hence I think that some creative finance method (if legal) could be used to allow you to "hold"/control the property, get the rent, pay the pensioner a small income, for a set amount of time. eg. 10 years. (sorry if this sounds confused, but I hope everyone understand what I am thinking)

<p>

<hr width=50%>
<ul>
<li> Unless you change how you are, you'll always have what you've got.
<li>
To have more than you've got, become more than you are.
</ul>
 
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Reply: 2.1
From: Anthony C


Thanks yuchun
Exactly what i was thinking.
Cheers
Ant.
P.S. BTW, His second offer with no vendor finance was $20k lower. Obviously stabbing in the dark hoping to stumble across a desperate seller.
Worth a try i guess..



"Let us so live that when we come to die even the undertaker will be sorry."
--Mark Twain
AntC.gif
 
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Reply: 2.1.1
From: Yuch .


Anthony,

Also add one more item:

3) Purchaser pays RE agent's commission.

Knew that I've forgotten something...

Regards
yuchun
~ The secret to success is to start from scratch and keep on scratching. ~
 
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