Off the Plan Purchase (gone wrong)

[topcropper]

I can see the headline now "Developer gets screwed"

Yeah, and not just the developer. All the little contractors that the developer owes money to. The developer only went ahead because all you blokes signed the contracts.


The reason I mentioned the wheat and farmers was because that is a situation I know about. The wheat growers made a bad decision. But at the other end of that contract was some little small business owners who probably had some contracts signed with Woolworths or what ever commiting them to deliver a product. They knew they had to secure grain at $200 a tonne to make their own profit.
If the farmers got out of their contracts, then those next in line would have to buy grain at $400 a tonne instead at $200. So then they go bust. Contracts are there to protect business owners from getting screwed, otherwise they would be screwed all the time.


It's strange that on the 'reflections of the Perth market' your bragging about how well you did from the boom, but then here your trying to diddle some business people out of their hard earned. Fairs fair I say.

See ya's.

 

[Francesca C]

Topcopper

Wasn't bragging if you read my post, it will say that I was a sheep, driven by greed.

That's what drives any market including stocks fear and greed.

Yes I did do well, a monkey would have done well in the Perth market before the boom.

 

[Sunfish]

Ah! The old Not being able to recognise risk and tops trap. Will get you every time.

 

[bailz66]

My question

Your property is $100k overpaid for

Your interest on that portion is about 8k per year.

If you did go through with the settlement then that is only an 8000 a year penalty. So after about 12.5 years you have paid the 100k you currently plan on paying to get nothing. Do you think the value of the property will go up by 100k in 12.5 years?

I Don't know enough about it but mathematically i would rather pay 100k extra for something than 100k or 30k extra and get nothing in return.

You can obviously afford it (You purchased it in the first place)

I think perhaps im missing the point completely

Good luck with your en devours

 

[oasis1frog]

Francesca,
Sorry I don't have any suggestion as I have never been a developer.
Just to give you moral support for whatever you decide, good luck in this matter. As to other people's responses just take in the positives and ignore the negatives.

 

[Francesca C]

Thanks Froggy.

I think you are all great, love this forum and all comments have been taken on board.

I guess everyone responds in accordance with their own experience and dealings.

 

[Lily House]

Francesca,
$100k - ouch that hurts.

But if you don't go through with the contract - what is it going to cost you? I'm not just talking about the legal costs (which from what others have posted seem substantial), but the damage to your reputation.

Are you planning on doing more investing in the future? Would this non-payment go on your credit record? Would it mean that you would have trouble finding finance etc for future projects?

Good luck.
Lily

 

[Francesca C]

Hi Lily

Yes, it is a fair amount however, I have learnt a very big lesson.

It was the first off the plan purchase I had ever made and I guess, I just didnt realise what I was getting myself into at the time. I didnt have defined enough strategies, whereas now I do. I have set parameters for everything, live and learn I guess.

I spoke to a property lawyer and he said that my credit rating cannot be affected because I have not taken credit from them.

My credit rating is more important to me than the money to tell you the truth.

I have decided that I will try to negotiate with the developer myself and see what happens from there.

 

[Refugee]

I was in a similar situation.

I was not even living in Australia at the time but a crowd from a Melbourne developer pitched up in London holding investment seminars. I got absolutely conned through my fault of not reseatching it. This was in 2002 with settlement in 2004.

2004 arrives and the Melbourne unit market had dived to the point where the first valuation for a morthage priced it at $80K less than we had bought it for. This is when I starting reading the contract in fine detail but soon realised there was no out. It was a bit cheeky but the developer had a mortgage supplier in their back pockets who had a valuator in their back pockets who finally valued the property at closer to the purchase price thus allowing me to at least get a mortgage on it.

Roll on to 2007 and whilst I could have done a lot better with my invested money, it has by no means ruined me.

Its a horrible feeling thinking you have been ripped off, you feel a tight knot in your stomache whenever you think about it but apart from going canoeing and getting a missing persons report that you are no longer, it seems approaching the developer is in your best interests to work out an ideal plan towards a suitable outcome. Go in saying you will not be able to secure finance so there is no point even trying to make you settle and hopefully he will come around to your way of thinking.

Good luck.

 

[singingtheblues]

hey refugee - i was in london at that time & went to a melbourne investment seminar - what company was it ? - something like central equity?

 

[karina]

My brother was in a very similar situation to you not that long ago. Unfortunatly he went along to see Henry Kaye and they ended up selling him an off the plan unit in melbourne.
At the end of the day I think the unit was around 440k and only valued at $400k they approached the developer and advised they simply could not find the 40k to settle the loan. The developer was keen to have the sales settled and offered them a discount to the valuation so it turned out ok for them luckily.

I would imagine if everyone said they couldn't settle then the developer would be more willing to negotiate on price. Perhaps you can get in touch with the other contract holders and see if you all took the same action would he be willing to cave in and reduce the price.

I agree with the others in the forum about staying in control. Being sued is a big unknown and the stress alone could cause you many sleepless nights. Perhaps if there is no other avenue and you are able to settle the loan that may be the way to go. At least that way you still hold the assett and time will fix the problem.

I would try and negotiate a reduction in the price with the developer as a first step. Good luck and let us know how you go.

 

[dingo pro]

Hi Fran. Great to see you are getting advice

Hi Fran, so you look at this forum too. Great to see that you are getting some great advice.

From your DVD sharing partner.

 

[Francesca C]

Hello Dingo

Thought I would throw it out there to get some advice and opinions.

The dvd's will be on the way soon :>

 

[dingo pro]

itsa a good forum and hopefully you will find your answer.

I hope that you didn't mind the post that I just put up. As you know I am positive about OTP.

 

[s_t]

There are contributers to this forum who do developments.

Have seen a few 'purchaser refuses to settle' type threads here in the past, and what do you think SS'ers views (in general) of such purchasers is? If the developer is a SS'er would that change things and why? Sure it's unlikely, but is possible!

 

[warrioress]

I find this whole not being able to come up with the money at settlement, and then being able to re-negotiate with the developer confusing. I mean if you sign a contract aren't you legally bound to it? How are you able to re-negotiate ?

If I was settling an IP and couldn't come up with the funds, wouldn't the Seller be able to re-coup funds from me any which way they liked ?

I'd be interested in hearing how you go Francesca. All the best.

 

[karina]

yes you are legally bound to the contract.

However.... imagine a developer has built 100 units and they are all 100k over market at settlement and people don't have the funds to settle as the banks wont lend them the extra 100k, what choices does the developer have? He probably has a mortgage to pay and may not be able to wait years to sue everybody, perhaps its in his best interest to get all 100 sales at a lower price than have no sales at all and 100 law suits to co-ordinate.

 

[MickInvestor]

You are able to renegotiate if the developer is commercially minded i.e. if he weighs up the costs to sue you and the risks he may lose then a settlement is possible. If you say no then the only option he has is to go to court and no-one likes that option because of the costs and the associated risks

 

[Refugee]

central equity?

The one and only...

 

[kph]

Hi Guys

The reason it has dropped so much is because I probably paid 50k too much for it (stupidly thinking it would go up) and the market in Perth in AVERAGE areas has dropped a little.

I know that I signed it and had all good intentions.. I have had it valued and have research prices around the around using RP data and it is out by 100k

i dont usually buy off the plan, I think it is an average strategy... I planned to build a house for myself on it.

I do realise it is my own fault and I am not blamming the big, bad developer.. However, I have made a mistake.

Now tell me, would you guys settle?????

Sorry to add to the negative fedback, but this does not sound like investing but more like speculating. Cash offer and no due dill ?

And if the intention was to build a PPOR on it, then why the change of heart just because it wen't down in value and not up as 'stupidly' expected ?
I dont get it.

Its hard to imagine any blocks being released in and around Perth coming on the market $100k overpriced ...( unless it was Dalyellup maybe ?)

kp