Need your advice on negotiation

[Liz]

We have a huge tract of land with rainforest and ocean views that in time will realise big money. We dropped the price significantly to sell as we are close (3yrs) to retirement, which bought forward a younger buyer who has been very keen for some time even at the higher listed price and has now contracted us at the lower price. The contract was subject to finance which has been difficult for the buyers.

Unfortunately, they purchased another block of land in the same area for $190,00 prior to our price drop. Now they really want our block but the bank won't give them the funds for the two blocks, ours plus the one they bought previously.

We are thinking.......negotiation wise......we could assume their block into the purchase equation. Because currently they would be looking at a loan of $650,000 with the two blocks compared to a loan of $450,000 for our 8000 sq mtr block with rainforest and ocean views.

If we were to offer this it leaves us with a cash deposit and a block to sell. As we are not in that much of a hurry. What do you ppl think? We feel we could quit that block within 2 years (before the convenant sets in) and allow our buyers the opportunity to take our block which to us, is much harder to sell.

Would really appreciate your opinions on this negotiation strategy.

 

[boomtown]

You can certainly agree to buy their block simultaneous with them buying yours. Make sure its SIMULTANEOUS. Dont let your solicitor **** it up.

Just keep in mind you end up paying commission twice. Factor that in. And the CGT consequences.

 

[Liz]

Many thanks for your prompt reply because I only probably have just over 24 hrs to make this decision so the pressure is on. The land sits in our super fund so I think its CGT free. Yes, we were planning on simultaneous settlement. They originally settled at 25,000 below our asking price. We have since raised that in this new settlement offer to the original buy of $450,000. We think this will act as a buffer to us having to fire sale their block before we have to build on it as per convenant. We think that their bank may see this as a more favouable deal. $450,000 loan compared to our block $425,000 + their block $190,000=$615.000.

It was something said on this site (or maybe elsewhere) that held true for me. As a committed seller, make it easy for the buyer.

 

[boomtown]

Yeah dont forget you pay stamp duty on the purchase too. Not sure about GST on raw land - I dont do raw land myself.

 

[Perp]

Good on you, Liz, for being flexible and creative. I think you may have found a win-win outcome. In my experience, too many vendors won't think outside the square, to their detriment. And, unfortunately, real estate agents often won't encourage these kind of deals; they want something "normal".

Sure, if you can sell for full asking for a cash contract, then you would. But I've seen "distressed sellers" sit on a property, dropping and dropping the price over many many months, making themselves sick with stress over the "property that won't sell", but refusing to entertain offers that are anything other than cash. It's really self-defeating to be so inflexible.

Good luck with it, Liz.

 

[Liz]

Well thank you Ozperp, for those encouraging words. We presented our offer to the buyers to-day (who had already listed their block in the hope of selling it to buy ours which is what gave us the idea in the first place). Naturally, they were very surprised at our offer, and I think, a little suspicious as people are want to be. Yet this is no swiftie on our part. Just trying to get the deal done and move on. I suspect their calculator will run hot tonight and they will come back to us with a reduced price on our block, probably sufficient to cover their losses on their original buy. I dunno. Feeling a bit disinclined to drop our price given we are taking the risk, but........sigh! Given the current climate, it's likely we would lose out in the long run as you point out.