Non release of contract price clause.

[Risky Business]

Thinkers, I am chasing some help if you have the time.

I read in an API mag a few months/year ago about a bloke who inserted a QLD contract clause that the contract price was not to be released from the vendor party. This meant that the bank's valuation was based purely on the valuer's opinion rather than just valuing the property at the predictable contract price. In his case, the property valued higher than contract.

Does anyone have a clause that would suit the scenario. I'm hoping that someone with Rob Balanda's clauses made simple might have something.

Thanks all.

 

[ozsupra]

I don't think so. The contract is one thing, finance is another.
If the bank asks for a copy of the contract and the purchase price has been removed or hidden then the bank is likely to walk away. I'm sure the clause was inserted for another reason.
A.

 

[Rolf Latham]

Thinkers, I am chasing some help if you have the time.

I read in an API mag a few months/year ago about a bloke who inserted a QLD contract clause that the contract price was not to be released from the vendor party. This meant that the bank's valuation was based purely on the valuer's opinion rather than just valuing the property at the predictable contract price. In his case, the property valued higher than contract.

Does anyone have a clause that would suit the scenario. I'm hoping that someone with Rob Balanda's clauses made simple might have something.

Thanks all.

why ? is there an implication that the valuer wont do a good job ?

lack of a contract or supply of some form of sales advice often smells of "contract stacking" or other fishy business and many valuers / lenders may take a conservative view of such an approach, thus you may end up with a lower val than you expect.

ta
rolf


ta
rolf

 

[BMW]

From memory, he agreed to buy the property quite a lot less than the advertised price. The valuation came in lower than the advertised price but still higher than the agreed purchase price. He than subsequently pulled out the remaining equity. The property was a little unusual and probably hard to value, hence wanting to keep the agreed purchase price hidden.

 

[Rolf Latham]

From memory, he agreed to buy the property quite a lot less than the advertised price. The valuation came in lower than the advertised price but still higher than the agreed purchase price. He than subsequently pulled out the remaining equity. The property was a little unusual and probably hard to value, hence wanting to keep the agreed purchase price hidden.

nice in theory, but from my recollection the few lenders that do val over contract is now pretty close to zero. Favourable purchases from relos are different.

There are ways to play this game but its not simple and can usually only work in a refi scenario

ta
rolf

 

[Risky Business]

Thanks for responding.

Yeah, that's the one BMW. I think he must have used the contract price as the valuation to get the deal done, but was able to use the valuation to squeeze the equity out of the bank shortly afterwards.

I like the idea of the clause as I would get a valuation which is not affected by a recent contract price. If I felt that I'd secured a bargain, I'd like to benefit from the access to equity. All of my valuations have come in at contract price which becomes predictable. My mate recently bought a property which he had problems securing finance. 3 banks completed valuations through different valuers which all selected the contract price. Maybe they all thought that it was worth the same price, but I'd love to see a real opinion thrown in.

As you said Rolf, it sounds nice in theory but I didn't think the bank would like the attitude considering I would be putting my hand out for money.

Perhaps the person in the article used the contract clause, obtained a valuation from someone on the bank's panel and then took that valuation to the bank to settle, and then argued to use the same valuation to access equity.

Thanks all

 

[Aaron_C]

Ha! Imagine this exchange:

Client: Hi, Mr Banker, I'd like to borrow money to fund the purchase of this property I bought.
Banker: Sure, how much did you buy the place for?
Client: I can't tell you that. I want you to do a valuation to guess what I paid and lend on that.
Banker: Sorry sir, that isn't our policy. What is the price?
Client: I can't disclose that because I signed a non-disclosure clause with the vendor.
Banker: Did you buy this off a relative?
Client: No, it was an arms-length transaction.
Banker: Then why not tell me?
Client: Because of the non-disclosure clause.
Banker: Next.......