Making offer then do reports

Discussion in 'The Buying/Selling Process' started by tempura, 21st Oct, 2014.

  1. tempura

    tempura Member

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    Is there anything wrong with this way of purchasing property:
    1. Make offer
    2. If accepted, then sign contract.
    3. Quickly do Building & Pest, Strata, Valuation reports.
    4. Consult Solicitor.
    5. If something is pear shape then cool off.

    ?

    The risk of the above is: penalty of cool-off (0.25% off the agreed price) + building & pest inspection fees + strata report fees + valuation report fees.

    Am I missing anything?
     
  2. The Y-man

    The Y-man Member

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    Which state are you going to be buying in?
    Cool-off periods vary.


    The Y-man
     
  3. tempura

    tempura Member

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    New South Wales
     
  4. Scott No Mates

    Scott No Mates ...and people wonder why?

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    Time starts running once you & the vendor have signed the contract. You would usually flick a copy of the contract to your solicitor prior to making an offer (as the conditions of contract may affect what you should offer for the property eg. subject to a life estate).

    In a slow market, it is not unusual to agree the price and be given a few days to undertake your due diligence/finance/pest etc then to exchange unconditionally.
     
  5. Truly Exotic

    Truly Exotic Property Deal Finder

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    depending on the state, and whether im going to lose a holding deposit or not

    but I put responsbility back on the agents for most offers,

    if the agent is promoting the fact that it has no problems, I will tell the agent, my offer is subject to Building / Pest or I will pull out within the cooling period,
    so he/she had better be upfront with me,

    obviously if the agent honestly thinks its got no problems and it does, then thats just bad luck for everyone involved
     
  6. tempura

    tempura Member

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    Did you mean in a sellers fast market, where someone's offer will be gazumped by other offers which will then be gazumped by another offer?

    Hence to agree on the price, without undertaking the due diligence, to take the unit off the market to avoid gazumping then during the 5 days cooling off period, do the due diligence.
     
  7. Brady

    Brady Big 4 Banker

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    Works well in SA no penalty.
     
  8. Scott No Mates

    Scott No Mates ...and people wonder why?

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    No, in a slow market (stale property, or few buyers), you can often make the offer and negotiate to have a period of exclusive dealing (ie take it off market), then complete your due diligence and exchange unconditionally (no cooling off).

    Why buy in a hot market, people only get burned (unless you've got a screaming bargain).
     
  9. tempura

    tempura Member

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    If only I could give your advice to these people ... you won't believe how many people are lining up to go into open inspection just for 2 bedrooms unit in Liverpool, NSW.

    The more the interest, the higher the price going to be.

    People are willing to go massively over the valuation and willing to cover the massive gap with their liquid. 1 word for it: massively overpriced !
     
  10. Hooray

    Hooray Member

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    and you want to jump with the rest of the lemmings because........
     
  11. tempura

    tempura Member

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    because i am curious on how much people are willing to go over the board, over the valuation and still purchase the property !

    I saw an auction went 70K over the valuation ... what is the logic behind this? what would you still want to purchase an overpriced property? With the hope of keeping it for 10 - 20 years and price went up more than 70K?

    These days I don't go to the up-hype properties ... the more people there is, the less chance I be able to purchase the property but this would also mean that the less desired location compared to the up-hype ones.
     
  12. Hooray

    Hooray Member

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    Or, they think it's there 'home'.

    How do you know what the valuation is?
     
  13. tempura

    tempura Member

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    Valuation Report on how much the bank value the property.

    I would assume each bank has their own preferred provider but the valuation report shouldn't differ by much.

    That just doesn't make any logical sense ... unless these 'sort' of people don't know where to spend their money at ... hence they splurge it to property. I don't think you're that type of person, otherwise I would want to dig more from you since I am intrigued in knowing the logical reason behind it.
     
  14. onion33

    onion33 Member

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    For my own education- is losing your holding deposit a NSW thing? What are the rules in Vic?
     
  15. techie

    techie Member

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    In NSW, you pay 0.25% of the offer and then get a 5-day cooling off period. You can withdraw in these 5 days but you will lose that 0.25%.

    In a slow market your solicitor might be able to get the cooling off period extended to continue your DD or financing or whatever.

    I do inspections prior to making an offer. So all that was left was getting the valuation done and sorting out finance while the solicitors do their dance.
     
  16. Waldo

    Waldo Rock Analyst

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    In a hot market, I always do this as long as the state has a cooling off (even with penalty).

    Its all about weighting up the risk of paying for lots of inspections on the properties that you miss out on, vs paying a penalty fee if you have to cool off.

    Alot of the time I try to travel to the property after getting it under contract, so a cooling off period is a huge bonus when buying interstate. In hot markets you dont want to visit a site just to find the offer isnt accepted.
     
  17. tempura

    tempura Member

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    This would only work in slow market, where in the open inspection there is only 1 or 2 parties visiting; otherwise, if 50 groups are present in the open, there is no way you be able to do all due diligence. you'll just get stumped by other buyers with their silent bidding.
     
  18. The Y-man

    The Y-man Member

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    Which is why I always buy in a slow market......

    The Y-man
     
  19. Ed Barton

    Ed Barton Advance Australia fair

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    Because valuations are based (often conservatively) on what comparable properties sold for yesterday. What buyers are willing to pay is based on competition today.

    Arguably, if no properties sold for higher than valuation then there would be no price appreciation.
     
  20. tempura

    tempura Member

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    Agent seems to be creating all sort of obstacles to ensure valuation didn't happen.

    At one stage, he mentioned that the tenant is only available at 8:30 pm ...

    Today, he stated that he picked the wrong key to the unit ...

    I am fully committed and full steam ahead with this purchase, but with this matter, I don't know whether I should go ahead with 10% deposit and 66W.