Losing 10% deposit
- Thread starter Oscar
- Start date
I think the problem here is people are trying to discuss ethics as if they are universal, which they are not. It goes without saying that a persons ethics will be based primarily upon the learnings instilled in them by their parents and culture. However those ethics will most definitely be personal and unique to them. To a psychopath it might be completely ethical to torture someone to death so long as you are polite whilst doing so.
As to the OP, I would be inclined to view the situation on its merits alone and make a decision based on covering my costs. In a nut shell that would probably be something like the interest holding costs, lost rent, reselling fees, etc along with an amount that I thought appropriate to cover my time, effort and inconvenience in reselling it. I'd then be fine with returning the rest.
As to the OP, I would be inclined to view the situation on its merits alone and make a decision based on covering my costs. In a nut shell that would probably be something like the interest holding costs, lost rent, reselling fees, etc along with an amount that I thought appropriate to cover my time, effort and inconvenience in reselling it. I'd then be fine with returning the rest.
This would be a big problem, but assume this is not the result, I'd show some mercy and cover only my actual losses. I've also never taken bond unnecessarily, or charged for re-letting fees. I'm a bit of a softie perhaps. I've also never had a house empty for long, so allowing a tenant to vacate is fine by me, especially as we self manage, so we are not paying re-let fees. In fact, we do it semi-regularly.
This is pretty much how I feel too. Perhaps those buying houses or having lots of rentals feel differently, but we are rarely disappointed by conduct of tenants or vendors.
What I've learnt the past few months gives me no hesitation in suggesting the "law" and "ethics" should never be put together in the same sentence
.This last sentence is pretty much how I would deal with this scenario too.
One big issue I believe is the situation Terry_w brought up where a line of settlements can be affected by a problem like this, where it might be bigger than just trying to smooth things between two parties.
Interesting replies - never thought this thread would attract much attention.
As it turns out, my purchaser is having problems with his purchaser as they are struggling to complete the settlement. I bet my purchaser is demanding his full 10% deposit
I am giving the purchaser a bit more time with a firm end point.
But let's explore the numbers to understand what a complete blood sucking life destroying parasite I am to humanity;
Deposit at risk $86,500
agents commission; $16,000
advertising; $5,000
lost rental; $8,500
legals; $2,000
perceived value loss during 2nd advertising campaign (say); $5,000
advertise again; $4,000
new agent fee; $16,000
further loss rental say 2 month sale campaign; $7,000
legals; $1,000
Total costs; $64,500
Net 10% deposit left for vendor (me); $22,000 or 2.5% of sale price.
I'll take it - and so would any reasonable investor.
As it turns out, my purchaser is having problems with his purchaser as they are struggling to complete the settlement. I bet my purchaser is demanding his full 10% deposit
I am giving the purchaser a bit more time with a firm end point.
But let's explore the numbers to understand what a complete blood sucking life destroying parasite I am to humanity;
Deposit at risk $86,500
agents commission; $16,000
advertising; $5,000
lost rental; $8,500
legals; $2,000
perceived value loss during 2nd advertising campaign (say); $5,000
advertise again; $4,000
new agent fee; $16,000
further loss rental say 2 month sale campaign; $7,000
legals; $1,000
Total costs; $64,500
Net 10% deposit left for vendor (me); $22,000 or 2.5% of sale price.
I'll take it - and so would any reasonable investor.
If those costs are genuine (double commission?) then you are entitled to them. I believe the problem some saw was the "I'd take it all even if I'm not out of pocket" attitude that may have been conveyed by some posters. I wouldn't take more than it atually cost me to lose.
Why charge for two lots of advertising? You would't have charged for the first lot had they settled. It is part if your selling costs. I can understand charging the second lot though.
I'd be looking for any cost over and above what it would have cost me had they settled.
Why charge for two lots of advertising? You would't have charged for the first lot had they settled. It is part if your selling costs. I can understand charging the second lot though.
I'd be looking for any cost over and above what it would have cost me had they settled.
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Fully agree Oscar.
It appears the blood sucking life destroying parasite to humanity is the agent taking full comm on the (non)sale.
But Im told eleswhere in these threads that one must suck this up as it is "in the contract"....
laughing very loudly (LVL)
Fully agree Oscar.
It appears the blood sucking life destroying parasite to humanity is the agent taking full comm on the (non)sale.
But Im told eleswhere in these threads that one must suck this up as it is "in the contract"....
If it IS in the contract, then I'm afraid the vendor signed it and is bound by it. Look at it from the agent's point of view though. They did the work, are expect to be paid. Why shouldn't they be paid if that is what is in the contract?
I've never been faced with such an issue when selling a property, but if I lost money through a purchaser not settling, I would take what I could from their deposit to cover what it cost me but not take any more than that. If that included commission, then I'd take it. Why should I be out of pocket to the tune of $20K commission on a sale that falls through courtesy of the purchaser and then pay it again.
I also believed until I entered the legal system that fairness, morals and "what is right" and "following the legal wishes or someone via a will" were pretty black and white. Silly me
.Interesting replies - never thought this thread would attract much attention.
As it turns out, my purchaser is having problems with his purchaser as they are struggling to complete the settlement. I bet my purchaser is demanding his full 10% deposit
I am giving the purchaser a bit more time with a firm end point.
But let's explore the numbers to understand what a complete blood sucking life destroying parasite I am to humanity;
Deposit at risk $86,500
agents commission; $16,000
advertising; $5,000
lost rental; $8,500
legals; $2,000
perceived value loss during 2nd advertising campaign (say); $5,000
advertise again; $4,000
new agent fee; $16,000
further loss rental say 2 month sale campaign; $7,000
legals; $1,000
Total costs; $64,500
Net 10% deposit left for vendor (me); $22,000 or 2.5% of sale price.
I'll take it - and so would any reasonable investor.
I'm not too sure how you justify charging the costs of the future sale to the guy. You would have been liable to pay out of your own pocket the advertising, agents fee, loss of rental, and legals for at least one sale anyway. Now you charge him those costs not only for the sale that fell through, but for a future sale as well.
To sell your house would cost about $31 500 according to you. That's a price you were required to pay no matter what the circumstance was. The buyer fell through so he pays those costs for you. Plus $5000 extra you added just for "potential" loss.
You are now starting from scratch, where you were before this buyer ever met you. But that's not good enough for you. You demand that the buyer pays another $28 000 to sell your house for you. So unlike everybody else in the world, it ends up costing you nothing to sell your house (yep sure that's fair). And on top of that $28 000 bonus you just pocketed, you demand a further $22 000 I guess for emotional hardship because it was so hard pocketing the first $28000 bonus.
So you are out of pocket about $31 500. But you charge the guy the full $86 500.
You charge the guy $55 000 more than the failed sale cost you and in your mind that's perfectly fair and reasonable. And then you make jokes and laugh about it. Boy you seem like a real stand up guy!
If the sale falls through, the agent goes back to finding another buyer for you, and then earns the commission from that sale - not from this failed sale. As such, it's not the right thing to do to hang onto the purchaser's money to cover your agent's commission. He'll get his commission, when the property sells to someone else.
Interesting replies - never thought this thread would attract much attention.
As it turns out, my purchaser is having problems with his purchaser as they are struggling to complete the settlement. I bet my purchaser is demanding his full 10% deposit
I am giving the purchaser a bit more time with a firm end point.
But let's explore the numbers to understand what a complete blood sucking life destroying parasite I am to humanity;
Deposit at risk $86,500
agents commission; $16,000
advertising; $5,000
lost rental; $8,500
legals; $2,000
perceived value loss during 2nd advertising campaign (say); $5,000
advertise again; $4,000
new agent fee; $16,000
further loss rental say 2 month sale campaign; $7,000
legals; $1,000
Total costs; $64,500
Net 10% deposit left for vendor (me); $22,000 or 2.5% of sale price.
I'll take it - and so would any reasonable investor.
You're right.
Any reasonable investor would take it.
This type of attitude separates the investors from the 'rest'
As I understand, the commission is earnt and payable once the contract becomes unconditional.
When does the commission payable to a BA become due?
Depends on the BA.
Generally some portion of the fee is payable upfront, which assists with operating costs while hunting for a property for the client.
I see a big part of my role as looking after the whole process all the way through As for me - my balance is payable at settlement - not upon going unconditional.
Interesting post....
I was in a similar situation a few years ago. Had a purchasor sign a cash, unconditional contract in WA. The purchase price was 210k.
Come to settlement he couldn't settle. He had some problems with valuations on his other properties. No idea why he signed an unconditional contract.
The deposit was only 1k but the contract had a 10% penalty for not completing.
I didn't pursue it and accepted the 1k in compensation.
I later sold the property for 190k so yes I lost out by not enforcing the contract.
I was in a similar situation a few years ago. Had a purchasor sign a cash, unconditional contract in WA. The purchase price was 210k.
Come to settlement he couldn't settle. He had some problems with valuations on his other properties. No idea why he signed an unconditional contract.
The deposit was only 1k but the contract had a 10% penalty for not completing.
I didn't pursue it and accepted the 1k in compensation.
I later sold the property for 190k so yes I lost out by not enforcing the contract.
Replies from some posters baffle me, but I guess that's why my post count is so low after 10 years of forum membership. Interesting human behavior to jump on the negative perception and down play the positive by a few posters.
Not a single comment on my quote above. Perhaps I was too humble. I gave the purchaser a bit more time - in fact an additional *8 weeks* for settlement. Biggest xmas present he's ever received and enough for him in his opinion to complete.
But why comment on that? It doesn't make for a good argument.
Over and out from me on this topic, the natives have gone troppo.
You should not only waive the entire deposit and return in full to the "purchaser" with a big smile, you should also purchase some toilet paper and wipe his backside, that too with a smiling face
At least 50k for your troubles but perhaps take the full 100k and keep 50 donating the remainder to a worthwhile charity. That dufus will be soon parted with his dough anyway - best to give it to people who really need it
At least 50k for your troubles but perhaps take the full 100k and keep 50 donating the remainder to a worthwhile charity. That dufus will be soon parted with his dough anyway - best to give it to people who really need it
I had noticed that you were giving extra time, but I didn't realise that you were giving so much time. That's very generous.
And also that it's out of your purchaser's hands.
You are entitled to get compensation for late settlement- there's probably a clause in your contract.
I thought that an agent only earned full commission on settlement though?
Yes silly me getting distracted by the fact that you are still insisting on charging the guy $55 000 more than the failed sale costs you. I'm sorry I didn't praise you for giving the guy an extra 8 weeks. Notice how no one made any positive comments on my community work. Do I care? No. Because it has nothing to do with the heart of the argument that you still persist in charging the guy $55k more than it cost you, and to a lot of people that just doesn't sit right with them.
And yes we must all have gone troppo if we don't agree with charging a person $55 000 extra. That's the only possible explanation.
