While I was browsing the site, I came across this article. It potentially can have quite interesting consequences.
http://www.jenman.com.au/NewsNews1.php?id=222
http://www.jenman.com.au/NewsNews1.php?id=222
from the Neil Jenman site Melbourne OTP buyers pay attention
- Thread starter Tibor
- Start date
I'm supprised that there hasn't been a follow up to this article yet. Given the past history of Jenmans comments on Henry Kaye and other investors using this strategy, these sort of circumstances might be seen as vilification.
PT_Bear,PT_Bear said:
Vilification or vindication?
If vilification see this thread where I've commented about how pointless it is to actually confront Jenman: http://www.somersoft.com/forums/showthread.php?t=14812&highlight=jenman
Cheers,
Aceyducey
Good points Acey. I've looked at wrapping and whilst there are bad operators out there, there's plenty of good ones too. I certainly understand why Neil is very anti wrapping, but personally I think it would be prefereable for all to work with wrappers and 'bring ethics to wrapping'. As to how pointless arguing can be, I think other comments in that thread say it all... 
Now I'm not even sure if I ment vilification or vindication
As for OTP, a few years ago people were able to make very high returns through the use of deposit bonds etc. There are success stories out there. Unfortunatly with high return comes high risk. Even two years ago some of the suppliers of deposit bonds were saying that they basically determined if you'd actually be able to settle before approving it. I think you always need an alternative if plan A goes wrong, so anyone unable to settle now only has themselves to blame. They were simply getting too greedy and now it's payday.
I'm glad they've closed the loophole on OTP purchases. The 'spirit' of the contract was that a 10% deposit was required, and at completion, the property would be settled one way or the other. The loophole didn't change the intention of the contract, and I have a lot of difficulty that anyone using a deposit bond struture doesn't understand the intention of 10% down now and settle on dd/mm/yyyy at completion.
Now I'm not even sure if I ment vilification or vindication
As for OTP, a few years ago people were able to make very high returns through the use of deposit bonds etc. There are success stories out there. Unfortunatly with high return comes high risk. Even two years ago some of the suppliers of deposit bonds were saying that they basically determined if you'd actually be able to settle before approving it. I think you always need an alternative if plan A goes wrong, so anyone unable to settle now only has themselves to blame. They were simply getting too greedy and now it's payday.
I'm glad they've closed the loophole on OTP purchases. The 'spirit' of the contract was that a 10% deposit was required, and at completion, the property would be settled one way or the other. The loophole didn't change the intention of the contract, and I have a lot of difficulty that anyone using a deposit bond struture doesn't understand the intention of 10% down now and settle on dd/mm/yyyy at completion.
It wasn't so much the article that shocked me, but the fact that people could pull out of contracts THEY made the decision to enter, on their own. If people are in the position that they are facing financial ruin, essentially the only person who needs to take repsonsibility for this is the person they see when they look in the mirror.
What this loophole allows (allowed? has it been shut down yet?) is for people to shift the responsibility of their own actions onto the developer, who is blameless in the case of their (the owners) positions, unless the developer held a gun to their heads and made them sign the contract.
Well, this is one loophole being blocked that I am personally in favour of. If everyone actually took the time to do the research before jumping into the market, situations like this would become rare, if not non-existant (and we wouldn't have most of those ugly apartment towers ruining the landscape either, ha ha!).
What this loophole allows (allowed? has it been shut down yet?) is for people to shift the responsibility of their own actions onto the developer, who is blameless in the case of their (the owners) positions, unless the developer held a gun to their heads and made them sign the contract.
Well, this is one loophole being blocked that I am personally in favour of. If everyone actually took the time to do the research before jumping into the market, situations like this would become rare, if not non-existant (and we wouldn't have most of those ugly apartment towers ruining the landscape either, ha ha!).
Mark,Mark Laszczuk said:
Speaking from a business perspective:
If I was operating a business where I had signed a purchase contract drawn up by the other party, then the external conditions changed for the worst & we discovered that the contract was unenforceable...I'd be out of it like a shot in most situations as well
If there were longer term relationship issues at stake, I'd go back to the negotiating table and try to work out an equitable LEGAL deal which cuts down the downside for my business in return for the other party keeping the sale.
Investing is a business. If you make a bad decision you minimise your exposure & move on.
In this case, I believe that the people made a poor business decision to invest where they did - but made a better business decision to get out if they could.
I wouldn't have been surprised if any court case arrising out of the issue is settled with a redrawn contract where everyone gives up a little to keep a bit.
Cheers,
Aceyducey
Acey,
You mentioned very much what I think will and should happen. The sooner this area of real estate can be properly legislated (direc or indirect via precedent cases) is the better.
While I see the point that people partially out of greed, stupidity, laziness, etc, have made bad decisions, at the same time I'd like to mention that the selling part is also can blame themselves being very greedy and they also had a great advantage by having smooth talking sales people to do their job, who obviously did a great job.
For a longer term point of view, I would prefer that people would not get hurt in real estate (as a matter of fact any other) investment, or to minimise the cases, otherwise the industry just been caught up in a bad name. It is society's best interest that people be financially educated and the vast majority be able to provide for their own well being during their working life and in retirement. When scum bags fleecing people, it goes out from this long term wealth creation to line some greedy people's pocket today.
I know it never will happen 100%, but every time when it gets better I personally applaud it.
2c
You mentioned very much what I think will and should happen. The sooner this area of real estate can be properly legislated (direc or indirect via precedent cases) is the better.
While I see the point that people partially out of greed, stupidity, laziness, etc, have made bad decisions, at the same time I'd like to mention that the selling part is also can blame themselves being very greedy and they also had a great advantage by having smooth talking sales people to do their job, who obviously did a great job.
For a longer term point of view, I would prefer that people would not get hurt in real estate (as a matter of fact any other) investment, or to minimise the cases, otherwise the industry just been caught up in a bad name. It is society's best interest that people be financially educated and the vast majority be able to provide for their own well being during their working life and in retirement. When scum bags fleecing people, it goes out from this long term wealth creation to line some greedy people's pocket today.
I know it never will happen 100%, but every time when it gets better I personally applaud it.
2c
Maybe they did a great job. Maybe they did a lousy job!Tibor said:
One of the things often forgotten is that there are at least two parties involved in any transaction.
It's not always sellers screwing buyers, both sides at times have the upper hand.
In this situation you have to wonder whether those sales people did such a good job....if you manage to sell to someone who can't settle that's not good for the seller either.
It's best for both the buyer and seller for sales to only occur to people who can afford to buy what is being sold - which is not necessarily in the interest of the salesperson involved who gets paid to get a signature.
Frankly I can't see Mirvac being too happy if many of the people who have bought from them can't settle....they may look at strategies for helping people settle, but legal action is expensive and unlikely to get cash from someone who has none.
They don't really want the worst case to happen - having to take the stock back out into the market and resell it at this point in the cycle
Cheers,
Aceyducey
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Aceyducey said:
I read in the paper over the weekend (Sorry not sure where now) that Mirvac had successfully settled most properties, a small few were engaged in the legal process utilising the legal loophold re 10% deposit cooling off, some had applied for an extension on settlement, and some were selling for a reduced purchase price offered by Mirvac (probably in the case of where a large drop had been experience). Overall it was not terribly doom and gloom and Mirvac appear to be coming out of this ok.
"In this situation you have wonder whether those sales people did such a good job....if you manage to sell to someone who can't settle that's not good for the seller either."
Acey,
This is true when not commissioned sales people are used. Commissioned sales people could not give a stuff about what is happening in 2 years time. They already got their commission so it is someone else's problem.
Seen it too many times, albeit not in real estate, but other industries.
Acey,
This is true when not commissioned sales people are used. Commissioned sales people could not give a stuff about what is happening in 2 years time. They already got their commission so it is someone else's problem.
Seen it too many times, albeit not in real estate, but other industries.
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