Offers and deposit

F

flowkingrich

Can someone enlighten me.

I would like to put offers down on a couple of properties without actually buying all of them ( i wish). I have a weekend to strut between properties and havent got the time for vendors to make their minds up whilst other deals await... If I place an offer on a couple of properties and lay a deposit (cheque) with each offer am I obligated to pay that deposit to a vendor whom I donot proceed with (because a better deal has been accepted).

I am buying in WA. Thanks for your help
 
Do your purchases fall into a category where there's a cooling off period (I'm not sure what the parameters are in WA)? Can you put finance clauses in the offers?

These things could easily get you out of a contract you don't wish to fulfill.

Probably the most honest path is let the agent know you're looking at several properties and wanting to make offers on more than one. Tell them that you may withdraw the offer if another is accepted first. This also puts the pressure on the vendor to make a quick decision.
 
flowkingrich said:
I obligated to pay that deposit to a vendor whom I donot proceed with (because a better deal has been accepted).

I am buying in WA. Thanks for your help
Click to expand...

what do you mean by pay? the cheque will b written to a trust account and the agent has an obligation to present that cheque into their trust within a reasonable time frame. should you withdra your offer prior to acceptance then the agent will just have to write you a fresh cheque. obviuosky tho you will need a large cash float to be makign all these various deposits. Why not just write deposit payable within 3 working days of acceptance? i really dont think it will make a difference to your bargaining position
 
Thanks for replies so far. I think I need to clarify my issue.

In the very small amount of spare time I have to view "home opens" I would like to increase my chances of snaring a better deal by placing many offers down in a weekend. The offers will be discounted to the asking price and accompanied with a deposit. What then happens if I get more than one bite. If I dont proceed with the acceptance of an offer what then will happen to my deposit? Suppose I deposit $1000 with each offer and get 5 acceptances. Will I lose 4000.

Perhaps my strategy for purchasing needs a tweak. Can anyone suggest a better way to buy in a buyers market.
 
Perhaps my strategy for purchasing needs a tweak.
Click to expand...


Needs more than a tweak chief.


1. Mr Ausprop has already given you the answer to your question. It's the way most people word their offer in WA. Pay your deposit say 3 days after acceptance by the Vendor.

2. It may be a Buyers market...and good luck to you if you happen to stumble across a desparate Vendor who is willing to accept 1K as the deposit...but don't be disappointed if you come up against a decent negotiator. If the house is worth say 400K, then stumping up 1K isn't much of an inducement. Don't pretend that Vendors will be falling over themselves to clutch your massive 1K commitment to the deal. It's 0.25% of the price....not exactly a king's ransom.

3. I still question your timing aspect ;

3a. With supposedly such a large purchase, why are you not able to dedicate more time to the cause ?
3b. If indeed you are time strapped, how can you possibly be completing a thorough due diligence process on each of these properties.


Indeed, based on your insistence of lack of time, 3b should kill your prospects stone dead. Yes, your strategy needs a rather large tweak.
 
yes you need to think all this thru a bit more. if you get 5 acceptances then you have purchased 5 properties (subject to terms and conditions) and there is more at stake than just $1000.

seriously - and i know people think it's all too dull and boring - but read the joint form booklet from cover to cover. Particularly the section regarding buyer default. It's easy to dismiss these terms when wandering making offers but if you are ever unfortunate enough to have to drag a contract thru the courts it will suddenly take on a whole new gravity
 
Cheers all

Does anyone know of a good reference that delves into the buying matters a little further. I would imagine a previous posting exists out ther somewhere.
 
Don't put an offer in on all the houses

I am in WA and I would not recommend that you put more than one offer in at a time.

I put an offer in with a clause that the offer is only available for a 24 hour period. If the vendor is a shift worker then I give a 48 hour clause.

That way I am no longer liable for the offer and acceptance after this period of time. In WA you can write whatever you like into your clauses. Learn to fill in your own forms and have your own little 'subject to' list that you put on the form.

When I fill in the offer I state the deposit that I will give, which is a huge $1K. If the agent doesn't like it then they need to get over it. They have a legal obligation to present all offers. I quietly say that no, I am happy with the $1K and will go with that.

I also say that I will give the deposit on acceptance of the offer (another subject to clause) so that I actually give no money with the offer. If the agent objects, again, quietly state that you are prepared to accept any risks and to please go ahead and present the offer.

I let the agent know that 'I need a response within this time frame because I am ready to buy now and need to move onto doing other offers. I have carefully look at my options and I think this house is an excellent deal.'

If you are looking at 5 houses in a weekend and you want to put an offer in on all of them. Prioritise and decide which order you will put an offer on and get the card of each agent. Fill out and fax through your offers to each agent as you get rejected from the previous one, of course if you do not wish to counter offer. Make sure you phone the agent to ensure that they have received your fax and draw his attention to the time clause.

Don't put an offer in on all of them as you are liable for all if they accept. Yes they can be rejected through the system of not getting your loan approved through the bank but this stuffs people around big time. You wouldn't like it done to you so don't do it to others.

Good luck.
 
You can go view all the houses and then coordinate with the REAs to make offers when you get back home.

Theres no reason why you have to be there in person to make an offer. Theres no good reason for you to be in such a rush.
 
When I fill in the offer I state the deposit that I will give, which is a huge $1K. If the agent doesn't like it then they need to get over it. They have a legal obligation to present all offers. I quietly say that no, I am happy with the $1K and will go with that.
Click to expand...

Forget the REA - they are irrelevant....have you ever come up against a Vendor silly enough to accept such a teensy deposit ??



I let the agent know that 'I need a response within this time frame because I am ready to buy now and need to move onto doing other offers. I have carefully look at my options and I think this house is an excellent deal.'
Click to expand...

I don't quite follow this redlake2. You've supposedly done some amount of DD before offering to purchase the asset, something that you may keep for 60 years or so.....but you give the Vendor 24 hrs to make up their mind before your offer lapses and you begin the process of commencing your DD again on another different property.....and all that entails ??

I can only assume one of a few things ;

  • Your time is incredibly cheap
  • Your DD process is shallow, or very efficient, one of the two
  • All of the assets you are looking at are all essentially the same


Our DD process usually involves 1 or 2 months compiling a detailed dossier before buying. I could never imagine finding and investigating 5 great deals and being in a legal and financial position to actually make an offer.

Unless of course your Offers are totally dripping with "subject to" clauses....in which case I'd assume most sane competent Vendors would reject them out of hand, or if in the case of being incompetent, being guided by a competent advisor or REA representating their interests.

To me - there is a disconnect somewhere in this process. Your comments on your systematic approach would be good to read about.
 
Just being honest

The above is the system I use and it works.

The vendor is interested in the sale, not the deposit. If they take the size of the deposit as to how genuine I am then too bad. In Western Australia every agent has to legally present the offer regardless. I don't make offers unless I intend to follow through with the purchase and already have verbal approval from the bank.

I rarely use the short time frame unless I have several choices. I personally prefer to take a slower approach. It is just annoying when the agent does not get back to you in the shortest possible time frame to let you know what the vendor's decision has been. I have not had to use the time frame in Western Australia but interstate they just don't get back to you to let you know what is happening. My offers usually remain open for 5 days in this case.

I was simply suggesting another option to flowkingrich so that he was aware that there are other options available to him.
 
FKR, I have often made simultaneous offers.
There's one gotcha I'll tell you about.
I offered the same REA offers on two of his listed properties.
He thought I was trying to play two of his vendors off against each other, even though I told him I genuinely wanted both, for the right price.

To cut a long story short, I reckon he gazzumped me on one of the properties.

On the house I lost, the vendor rejected my initial offer, but the REA left a message for me that if I offered $1500 more, he'd sign.
Three hours later when I rang back, the REA had taken an offer from someone else to the vendor for $1500 more, and the vendor had signed.

IMHO, the market wasn't particularly hot, and I thought the REA screwed me. Yeah I know you could argue he didn't etc......

You might not have the same problem if you make two offers through the same REA in this market, but just keep it in mind REAs don't necessarily appreciate your strategy to put a vendor under pressure. And on that basis, you could be better off not saying anything about having other offers out.
 
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