Offer on a house without seeing the section 32?

Hi all,

We were out pounding the streets again on Saturday and would like to put an offer in on a place we saw.

We’re keen to move quickly, as it has a lot of potential, has only been on the market for 4 days an already had an offer on Friday, (which was withdrawn later that day as the purchasers own house sale fell through).

The house is 5 minutes walk from schools, station & shopping.

Asking Price is $349k with rental expectation of 300-320 per week. It a very small 3 bed, but tidy and has recent kitchen.

The draw card is that it is on a 17.7 x 48.7m block. The current house is in the front right corner, with a driveway down the whole left side to a tandem garage at the rear left corner. It looks like a great sub-divide potential without having to demolish the existing house.

At the moment, behind the house, is an enormous shed & workshop.

We’d like to put in an offer in the low 300’s, we’d like to make it work on the rental figures alone without taking into account potential to sub divide as it may not be possible anyway.

The problem is, the REA does not have the section 32 yet. I’m a bit worried that it will go under offer before we get chance to lay our hands on a copy.

Would we be stupid in putting a lowball offer in without first seeing the section 32? Coming from the UK and having not bought an existing house here before, I don’t even know what we should be looking at on a section 32.

I’m going to give the council a call this morning to see what their thoughts on sub-dividing this block would be, or to ask I there has even been a sub-division request put in previously. It looks like an ideal division; the 2 blocks next door would have been of similar size originally, it looks like they had been bought together and had 6 units spread across them, 3 up each side with a central driveway. By my reckoning, sub-dividing this block would give a rear area of about 380m2 to build on, (excluding driveway access down the side of the existing house. The existing house has enough room at the front for a carport to then service that house.

Being our first IP, I just don’t know if it is too much of a gamble? I like the idea of having the sub-division potential as I am really interested in having a go at that, and building ourselves on the block. If we could get it for the right price it stacks up close to most of the other house we have looked at anyway in terms of gross yield, so sub-division would be the icing on the cake.

There are still a few great buys around this area at the moment though, but it’s a gamble as they get snapped straight up. At the moment, we’re thinking an offer on this one would be a good idea regardless of whether we could sub-divide – as long as we could get it for the right price.

So, it's just the lack of a section 32 at the moment that is off-putting.

I’ll chase the agent this morning to see when they think they can get hold of it, and in the mean time we’ll have a think about what we would put in as an opening offer.

Cheers.
 
Unfortunately, you can't make a valid offer without a signed s32 statement from the vendors. You can discuss in principle, but I'm afraid that it won't count for anything until all of the paperwork is duly signed.
 
Unfortunately, you can't make a valid offer without a signed s32 statement from the vendors. You can discuss in principle, but I'm afraid that it won't count for anything until all of the paperwork is duly signed.

Interesting, thanks.

Does that mean then, that we could put an offer in today, and in principle that offer is accepted, but until we sign a section 32 we could withdraw that offer at any point even of the vendor has 'accepted' it?

Similarly though, it would mean the vendor can also accept another offer still in the mean time?

Thanks.
 
Would we be stupid in putting a lowball offer in without first seeing the section 32? .........
There are still a few great buys around this area at the moment though, but it’s a gamble as they get snapped straight up.

So the good ones get snapped straight up and your strategy is to make a low ball offer? :confused: Good luck - you're going to need it.

Yes, not having a Sec 32 is a bit off-putting. But if it is a good buy regardless of whether you can sub-divide or not (according to your post) - what is the issue? It will be under offer soon - so your decision might be made for you.
 
As I understand it, the offer would only be 'verbal', or informal. Ie, not drawn up and signed on the official contract document.

Which, yes, means that the deal is not binding to either party until such paperwork has been properly signed.

Some agents that I know will have both you and the vendor sign the contract without dating it until the s32 comes in. I'm not sure of the legality of this but the idea is to get you both feeling committed to the contract despite the ability to pull out of it. In practical terms, it doesn't count for much.
 
T & E, the s32 will have the following in it;

* restrictions on the land eg easements, covenants....
* Planning and road access
* rates, taxes, outgoings and statutory charges
* current services to the property eg utilities, telephone, sewerage
* Building approval information (if relevant)
* statement from the Titles office about the details of the land eg land description, encumbances, caveats & notices
* (previous) mortgage of land documentation from the existing owners (if relevant)
* plans of subdivision if relevant
* owners corporation infornation if relevant, OC AGM meeting minutes, OC charges (eg unit, flat or apartment)
* planning certificate gives details about the zoning of the property eg residential 1 Zone
* Water authority Information statement outlining parks charges and drainage charges & sewer information sheet

Seems a lot, but once you see it, it is pretty straightforward as Y-Man indicated.
 
or maybe offer a contract subject to reading the section 32.
That gives YOU the out if there is something in it that you don't like.

Good luck.
Caroline
 
Honestly, it should only take a week for a s32 to be done i don't know why this is such a common story. :rolleyes: Anyhoo, there is a section that you sign on the contract of sale (what your official offer is actually written on) that states you have been given a copy of the s32 beforehand. So you can guess the answer to the legality of writing up the offer anyway & then dating it later...
Sorry, i know this doesn't help you much. I suggest that if you see anything at all in the s32 that you don't understand it's worthwhile sending it to your conveyancer/solicitor straight away.
 
Well, the agent reckons the vendors solicitor is waiting on two more documents to finalize the S32 so I guess it could come through at any time.

The house is on for $349k and we offered $295k, based on the fact that the similar sized houses that were sold, (according to realestate.com), were sold in the region of $280k - $300k. I don't know how accurate those figures are though. This is the first time we've bought a house here, so we didn't really know how high/low to start.

Anyway, we probably shot ourselves in the foot going in so low. The vendor came back to say way too low and wants around $340k. We'd pay $340k for it, but would like to get it for around $330k.

We didn't want to go in too high straight off with a counter offer, thereby making it look like we can just magic up tons more cash at the drop of a hat, so yesterday afternoon we offered $320k but the agent could not get hold of the vendor.

We'll see what today brings.

In the mean time, after we made the first offer, the council planners returned my call and said there are no restrictions on minimum block size for sub-division at the property, I reckon it would have about 400m2 to play with at the back with great access passed the existing house. So, we're quite keen to get this one through is we can as there is good potential there.

The current house is very, very small but tidy enough and in a great spot. Walking distance to schools, shops & train and in a road that has seen a lot of knock down rebuilds and sub-divisions, so I looks like a good buy (if we can get it that is).

Will update the thread with whatever transpires today.

Cheers.
 
The agent isn't going to come back when you offer over $50k below the asking and say "almost there, another $5k should do it"

They are going to atleast test you to see how much more cash you front up, that's their job.
 
Well, after a hard week of negotiating resulting in me being played like a violin by the REA, the vendor accepted an offer of $335k yesterday evening. I'm pretty sure I fell for the oldest trick in the book - after we increased our offer to $320k, the agent came back to say the vendor would accept $338. We were about to counter that afternoon with $330k with the hope we'd get it over the line at that, but willing to go to $335 max as a final offer.

I was about to send the offer trough at $330k when the agent called with the old "there's been another offer" line and if we were serious we'd need to get our best offer in by 5pm for the vendors consideration.

I really, really wanted to call their bluff and stick our offer of $330k in, but the property has good potential, is in a great spot and the figures even at asking price of $349 are within the parameters we set for what would be acceptable as an investment for us. So, we put in our final offer of $335k. The vendor accepted this yesterday lunch time, but then they had to get it over the line with the ex missus - she accepted last night.

There's still no section 32, they say it should be through by Monday.

Verbally, our offer is accepted along with all our conditions - but as yet, we have not signed anything and with no S32 we're still not counting our chickens.

So hopefully, all being well, we'll have an S32 and signed offer by mid next week and be well on our way to our first Australian IP.

Time to start researching the sub-division aspect now. That'll keep me occupied whilst we wait for the equity to build enough for the next IP!

Cheers.
 
No probs shmick.....conditions of our offer were as below.

Although they have accepted our offer, we still have no section 32 so who knows what will end up on the final signed offer (although technically it should be no different to below).

We also added on our offer that we were flexible with settlement times and we broke down the finance requirement.

I have just chased the agent again for an update on the S32. It's starting to look like a delay tactic to me, as they are still advertising open inspections. I obviously can't ask them not to, as the offer is not binding without S32, but it I'm getting a bit annoyed that the S32 is taking this long. Somethings not adding up.

------------

1. Subject to legal review of the Section 32 and contract to the purchasers satisfaction
2. Subject to finance by MECU ltd, further details below
3. Subject to the property valuation by MECU being equal to, or greater than, the offer amount of $xxxxxxxx
4. Subject to a satisfactory building inspection, to be arranged by the purchaser. If the purchaser deems the building inspection report to be unsatisfactory, the purchaser may rescind this contract and all monies are to be refunded to the purchaser.
5. Subject to a satisfactory pest inspection, to be arranged by the purchaser. If the purchaser deems the pest inspection report to be unsatisfactory, the purchaser may rescind this contract and all monies are to be refunded to the purchaser.
6. Inclusion of fixtures & fittings as apparent during inspection, On 8/11/09 - such as air conditioning, and outbuildings apparent during inspection being included.
7. Subject to all relevant permits being in place for additions/outbuildings as required at the time of erection.
 
so who knows what will end up on the final signed offer (although technically it should be no different to below).


I know that this was an informal offer and the official contracts yet to be signed; but, I am curious. Did you draft the wording of those conditions, or did your solicitor do that for you?
 
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