"Plain English" conditions that don't scare mum'n'dad sellers.

Hi folks,

I'm curious to see what sort of conditions others out there use to buy land and property. I'm trying to get creative in how I negotiate deals, but need to make sure I don't freak people out with 6 pages of jargon.

This post, and all others in this thread, does not constitute legal advice. Just ideas that we can work with our solicitors on...

The example below had a funky settlement clause due to risk of christmas shut-down period, and offered a small amt of money during the deal rather than an upfront deposit. I find people respond well to this because the deposit doesn't help with holding costs (e.g. mowing etc) during a long settlement period, but direct payments do offer a little temptation for their personal interest.

I don't have anyone else to discuss these things with, so pleeeeeeease post if you find this interesting!

Have a happy day, :)
PJ

Here's my latest effort:

Deposit: $1600 payable upon settlement

Finance Amount: Sufficient to complete contract.

Financier: Buyer’s choice.

Finance Date: 63 DAYS FROM CONTRACT DATE

Settlement Date: 17 Days from the date the contract becomes unconditional. (Excluding Public Holidays, Buyer and/or Seller’s Solicitor’s Christmas shut-down period, and weekends)

Special Conditions:

The parties agree that execution of facsimile and/or email (pdf) copies of the Contract will constitute a valid and binding contract.

This contract is subject to the approval of the Rockhampton City Council for the erection of a house on the land, with the approval and conditions being suitable to the buyer. In the event a Council’s decision of satisfaction to the buyer is not obtained, the Buyer may terminate the Contract by giving notice in writing to the Seller or the Seller's solicitors within 5 days after receipt of Council's decision by or on behalf of the buyer.

The seller agrees to sign the consents required to the making of a development application, to permit access from the date of this contract to the property by the buyer and buyer’s experts, agents and contractors and by officers and councillors of the Rockhampton City Council and to co-operate with the buyer in seeking approval. The access would not be for building work, only inspections.

The buyer agrees to pay fortnightly contributions of $100 per fortnight towards the purchase money by instalments. These instalments would be paid via electronic transfer directly into a bank account nominated by the seller. The period of these instalments being from the 31st October 2009 until the contract becomes unconditional.

This Contract is subject to and conditional upon the Buyer obtaining finance from the financial institution of the buyer’s choice within 63 days of this Contract to the satisfaction of the buyer. In the event finance of satisfaction to the buyer is not obtained, the Buyer may terminate the Contract by giving notice in writing to the Seller or the Seller's solicitors within 63 days of the date of this contract.

This Contract is subject to and conditional upon the Buyer obtaining search results with the results of these searches being to the Buyer's satisfaction within 21 days of this Contract. In the event that any of these search results are not to the satisfaction of the Buyer, the Buyer may terminate the Contract by giving notice in writing to the Seller or the Seller's solicitors within 21 days of the date of this contract.

This Contract is subject to and conditional upon the Seller providing the Buyer's solicitor with a facsimile or email (pdf) copy of this Contract (signed by the Seller) before 10am on Thursday 22nd October 2009.
 
OK, so I have a house for sale.

You want me to take it off the market for more than two months while you decide whether or not to proceed - you can always crash it on finance.

Absolutely NO deposit - $1600 on settlement is NOT a deposit.

You want me to take time off work to be home to let in countless people to poke around at will.

For this you are prepared to pay me the grand sum of $450. This is not extra money. If the sale proceeds it comes off the total owing.

My question is - would YOU accept that contract?

You can get as creative as you like, but you HAVE to look at things from the seller's point of view as well if you want to achieve a contract, not simply a wish list of all the conditions you can think of in your favour.
Marg
 
OK, so I have a house for sale.

You want me to take it off the market for more than two months while you decide whether or not to proceed - you can always crash it on finance.

Absolutely NO deposit - $1600 on settlement is NOT a deposit.

You want me to take time off work to be home to let in countless people to poke around at will.

For this you are prepared to pay me the grand sum of $450. This is not extra money. If the sale proceeds it comes off the total owing.

My question is - would YOU accept that contract?

You can get as creative as you like, but you HAVE to look at things from the seller's point of view as well if you want to achieve a contract, not simply a wish list of all the conditions you can think of in your favour.
Marg

Hi marg4000. Thanks for posting. :)

You're right about this being pretty unattractive for an owner occupier seller. I don't use these conditions for houses, because it wouldn't suit at all.

This set is for buying vacant land. A seller agreed to a set similar to this last week. It's cheeky, but seems to work. Sometimes just offering a gesture to mow the lawn can be a factor in a seller signing. It's amazing.

What standard conditions do you use and recommend?
 
Hi folks,

I'm curious to see what sort of conditions others out there use to buy land and property. I'm trying to get creative in how I negotiate deals, but need to make sure I don't freak people out with 6 pages of jargon.

This post, and all others in this thread, does not constitute legal advice. Just ideas that we can work with our solicitors on...

The example below had a funky settlement clause due to risk of christmas shut-down period, and offered a small amt of money during the deal rather than an upfront deposit. I find people respond well to this because the deposit doesn't help with holding costs (e.g. mowing etc) during a long settlement period, but direct payments do offer a little temptation for their personal interest.

I don't have anyone else to discuss these things with, so pleeeeeeease post if you find this interesting!

Have a happy day, :)
PJ

Here's my latest effort:

Deposit: $1600 payable upon settlement

Finance Amount: Sufficient to complete contract.

Financier: Buyer’s choice.

Finance Date: 63 DAYS FROM CONTRACT DATE

Settlement Date: 17 Days from the date the contract becomes unconditional. (Excluding Public Holidays, Buyer and/or Seller’s Solicitor’s Christmas shut-down period, and weekends)

Special Conditions:

The parties agree that execution of facsimile and/or email (pdf) copies of the Contract will constitute a valid and binding contract.

This contract is subject to the approval of the Rockhampton City Council for the erection of a house on the land, with the approval and conditions being suitable to the buyer. In the event a Council’s decision of satisfaction to the buyer is not obtained, the Buyer may terminate the Contract by giving notice in writing to the Seller or the Seller's solicitors within 5 days after receipt of Council's decision by or on behalf of the buyer.
The buyer agrees to pay fortnightly contributions of $100 per fortnight towards the purchase money by instalments. These instalments would be paid via electronic transfer directly into a bank account nominated by the seller. The period of these instalments being from the 31st October 2009 until the contract becomes unconditional.

This Contract is subject to and conditional upon the Buyer obtaining finance from the financial institution of the buyer’s choice within 63 days of this Contract to the satisfaction of the buyer. In the event finance of satisfaction to the buyer is not obtained, the Buyer may terminate the Contract by giving notice in writing to the Seller or the Seller's solicitors within 63 days of the date of this contract.
If you were dealing with anyone that knows a small amount about property then they may sign up on those terms,63 days for finance no way,the development application no way,as with the RSC approval no way,if i saw a contract like this with so many trap-doors then why would anyone sign something like this which gives the buyers so many ways out of the contract and your name is not even on the title:rolleyes:,plus take the property off the market for that time frame without knowing 100%,that the buyers can settle on the property,,,

Deposit: $1600 payable upon settlement:rolleyes:
The buyer agrees to pay fortnightly contributions of $100 per fortnight towards the purchase money by instalments:rolleyes:
..imho..willair..
 
If you were dealing with anyone that knows a small amount about property then they may sign up on those terms,63 days for finance no way,the development application no way,as with the RSC approval no way,if i saw a contract like this with so many trap-doors then why would anyone sign something like this which gives the buyers so many ways out of the contract and your name is not even on the title:rolleyes:,plus take the property off the market for that time frame without knowing 100%,that the buyers can settle on the property,,,

Deposit: $1600 payable upon settlement:rolleyes:
The buyer agrees to pay fortnightly contributions of $100 per fortnight towards the purchase money by instalments:rolleyes:
..imho..willair..

LOL WillAir. I wouldn't sign it myself... but it only takes one signed contract out of the offers I submit and I'm rolling.

Also, the agents know me and know I don't enter into a contract I don't intend to follow through. Agents who don't know me initially think I'm a shmuck, but once they've dealt with me then the offer has a better chance.

I ususally offer at least the valuation price in the situations where there's a very long settlement or strange conditions - wouldn't ask for such conditions and also give an offer that's predatory as well. I'm conservative, but not that cheap. lol :eek: That's my trade-off, I pay full market price in order to get better conditions.

Investing is business. Not charity. They will not sign unless it's attractive to them. Some people seem to hate the fact the agent holds the deposit and love the fact they instead benefit during the contract period, even if it's only small, just to get one over their agent before having to hand over thousands in commission. ;)

People act in mysterious ways.
 
Sheesh, I don't think I've ever put down any conditions other than "subject to finance" :eek:

Hi RumpledElf (cool name btw),

Walk in my shoes and you might need a few more conditions. lol

When I initially started looking into property it was in SEQ. The Gold Coast and Brisbane areas are full of sharks. They'd see this young short little blonde lass walk in on her own, assume I was naïve, and try to off-load their worst deals in order to get them off their books.

Some experiences:
  • A block of land 'great to build on', that the Council had notified the seller and agent could not be built upon ever (fraud advertising) - 'searches' condition saved me. It wasn't on the zoning etc, but it did come up when the Council search came in because the council staff member attached a copy of the notice. phew!!!
  • A lovely studio apartment in a small building, renting well. Turns out that, in the 70's, the original development application for the building was for a hotel. While the public zoning maps showed 'residential', the original building approval was thus 'short term residential'. That means they could not be occupied for more than 2.5 weeks per instance. All of the rentals were illegal!!! If the situation was ever to change, then the lot owners would have had to put in an impact assessable 'change of use' development with the council... an expensive exercise with an uncertain outcome. Also, the agent didn't disclose that her husband was the owner... another illegal aspect.
  • A house for sale, normal price range. Renting well. Advertised as '2bed home'. Building inspector found that the ceiling height was illegal (just, but still lower than legal) in the 2nd bedroom and lounge, and sure enough the my measurements came out the same as his. This meant it would be illegal for me to sell or advertise for rent as a 2bedroom home - only a 1bedroom with 'kitchen and storage'. It would have cost me at least $40,000 to raise the ceilings throughout the home. The advertising was another fraud. Nuts. Building & pest inspection condition saved me on that one.
...and the list could go on... but I'm too lazy.

Can you imagine how you'd be after these? You should be happy that you're not a rubbish-deal-magnet like me. :)

If agents don't know me, I still get patronising borderline-fraud service today. When they see conditions like these, the realisation that I'm going to do my due dilligence dawns and it's pointless for them to allocate time and effort into pushing dud deals on me that they know will fall through anyway.

I don't have the patience to be stuffed around any more.

PJ
 
Hrm. I've bought 4 properties over the years - 2 with HIA (improvement) orders on them that turned out fine despite the long list of things to fix, and one that probably should have had an order on as it was missing some fundamental stuff like ... external doors ... hot water service ... pump ... etc. I think the only thing I was looking for was a heritage order, but fortunately the oldest one was just 'notable' and printed on the local tourist map as a landmark but wasn't actually listed.

I just like dodgy old houses, and would happily buy another one if the opportunity came up. I guess they're a different kettle of fish to land though. I get to play with a block of land in a few months :D

ETA: ceilings too low here just gets you a HIA order, if the tenant gets the authorities involved, which caps the rent. My first house had the laundry ceiling too low.
 
The real question is:
How many have you bought so far?

Hi Piston Broke,

I define my portfolio by what I reject, due to what a horrible position I'd be in now if I'd had no escape from the bad deals dodgey agents tried to saddle me with in 2006-07.

My IPs are two blocks of land (one that I'm building on & one doing nothing until I get more time), three units (2x2bed + 1x4bed), and a hillside house. I have a construction finance based hillside land purchase coming online shortly, which I'll be putting a simple little house on. I also had an apartment in Spring Hill (brissy), which I sold after renovating.

Nothing spectacular, but things could be worse if I hadn't met my caring & thorough lawyer in 2006!

You?

PJ
 
Hi Piston Broke,
I define my portfolio by what I reject, due to what a horrible position I'd be in now if I'd had no escape from the bad deals dodgey agents tried to saddle me with in 2006-07.

I'm no agent's friend, but i though that was just par DD.
Granted SEQ seems to be scammers paradise for RE.
I was referring to how many with those "creative conditions"?
As I and others seem to think you'd have a hard time getting them accepted.
 
I'm no agent's friend, but i though that was just par DD.
Granted SEQ seems to be scammers paradise for RE.
I was referring to how many with those "creative conditions"?
As I and others seem to think you'd have a hard time getting them accepted.

Oh. :eek:
Sorry, I'm not a forum lingo talented person. What does DD mean?
I've only ever had one seller refuse on the basis of the conditions. I've had lots of questions each time though, but they're usually okay about it in the end. The sticking point tends to be price (or they claim it's price but really have something to hide re the conditions). The units and house were all bought with similar conditions, excluding the DA and 100 per fort elements obviously. I bought the hillside home with $500 down and the biggest 'win' factor for the absent seller was the fact I offered to mow her lawn for her!

There's no harm in trying. If it doesn't suit one seller, there's plenty more out there. I'd rather leave the deal than get into something that doesn't suit my investment criteria. I'm low stress like that.

But hey, I'm the one asking for new ideas here! lol That's why I posted the thread. Am I the only person who uses contract conditions in this way on here?
 
Hrm. I've bought 4 properties over the years - 2 with HIA (improvement) orders on them that turned out fine despite the long list of things to fix, and one that probably should have had an order on as it was missing some fundamental stuff like ... external doors ... hot water service ... pump ... etc. I think the only thing I was looking for was a heritage order, but fortunately the oldest one was just 'notable' and printed on the local tourist map as a landmark but wasn't actually listed.

I just like dodgy old houses, and would happily buy another one if the opportunity came up. I guess they're a different kettle of fish to land though. I get to play with a block of land in a few months :D

ETA: ceilings too low here just gets you a HIA order, if the tenant gets the authorities involved, which caps the rent. My first house had the laundry ceiling too low.


Oh, and that sounds like an effective strategy to build equity fast RumpledElf. I'd love to restore places like that, but I must admit I'm too lazy to DIY and too cheap to subby it out. :eek: You know those 2nd hand kind of heritage hardware shops? I'm like a kid in a candy store in those places.

Thanks for the HIA info. This is new to me. I'll google to see what's involved in HIA orders.
 
We bought a huge old house a couple of years back.
It had been sitting on the market on and off for a couple of years.It had 7 huge bedroom, and was too large for a single family home. It cost a fiortune to heat in winter. ($7000) and it wasn't even warm.
We wanted to develope the property and turn every room into a furnished bachelor suite.First we had to convince the owner to provide 80% financing.Wasn't easy, but we also offered his full asking price.
In order to renovate this to an apartment building we had to make application to have the zoning changed.This was a 4+month process.
If we couldn't change the zoning we had 48 hrs to decide whether we wanted to purchase anyways.We could have then just rented the rooms out individually (rooming house)

So the deal was we purchase 30 days after the zoning was changed and received approval to change of use.
We put our purchase offer in mid Nov 2006 and we closed end of May 2007.

Depending on the conditions, how long it has been on the market,and the seller's need to sell quickly, you seem to have a niche market and doing quite well.
Congratulations.:)
 
I'm not a forum lingo talented person. What does DD mean?
Due Diligence.
Qld does also seem to have fairly tight regulations these days.
I'd rather leave the deal than get into something that doesn't suit my investment criteria. I'm low stress like that.
Can't agree more.
I'm the one asking for new ideas here! lol That's why I posted the thread. Am I the only person who uses contract conditions in this way on here?
Personally I look at the location, price & yield first.
Vendor finance sometimes, longer or shorter settlement sometimes.
I just find it complicates things when people see odd clauses.
But compliments on yours.
 
We bought a huge old house a couple of years back.
It had been sitting on the market on and off for a couple of years.It had 7 huge bedroom, and was too large for a single family home. It cost a fiortune to heat in winter. ($7000) and it wasn't even warm.
We wanted to develope the property and turn every room into a furnished bachelor suite.First we had to convince the owner to provide 80% financing.Wasn't easy, but we also offered his full asking price.
In order to renovate this to an apartment building we had to make application to have the zoning changed.This was a 4+month process.
If we couldn't change the zoning we had 48 hrs to decide whether we wanted to purchase anyways.We could have then just rented the rooms out individually (rooming house)

So the deal was we purchase 30 days after the zoning was changed and received approval to change of use.
We put our purchase offer in mid Nov 2006 and we closed end of May 2007.

Depending on the conditions, how long it has been on the market,and the seller's need to sell quickly, you seem to have a niche market and doing quite well.
Congratulations.:)

Hi Kathryn,
Thanks so much for your post! That's a bold plan, but tempered with a careful approach to the deal. While I've read about it in USA published books I've never tried vendor financing before, but your deal has given me the incentive to check it out. I hope the suites have gone very well for you. :)
PJ
 
Due Diligence.
Qld does also seem to have fairly tight regulations these days.

Can't agree more.

Personally I look at the location, price & yield first.
Vendor finance sometimes, longer or shorter settlement sometimes.
I just find it complicates things when people see odd clauses.
But compliments on yours.

Hiya Piston Broke,
Agreed. I too look at the location, price, & (potential) yield first... but then I get all cheap about keeping down the costs of securing the deal. lol
It does complicate things. You use vendor finance too? I must look into that. Much to learn...
Oh, and I managed to sign a land deal today with these conditions. It'll settle in Feb next year, if all goes to plan (which - knowing Council's - is rare). The neighbours will be horrified when I put a pre-fab rental in their wealthy hillside street... no covenants and weak character code offer the perfect opportunity.
PJ
 
Hi Kathryn,
Thanks so much for your post! That's a bold plan, but tempered with a careful approach to the deal. While I've read about it in USA published books I've never tried vendor financing before, but your deal has given me the incentive to check it out. I hope the suites have gone very well for you. :)
PJ

It is always full, but we self manage.
Very happy with the cash flow!!
 
Mate, good idea to have these thoughts, however, go to a solicitor, request plain english drafting of these ideas, and be done with it. The agreement is full of holes, but I certainly can't fault the creativity of it all.
 
Mate, good idea to have these thoughts, however, go to a solicitor, request plain english drafting of these ideas, and be done with it. The agreement is full of holes, but I certainly can't fault the creativity of it all.

Hi Jack 321,
Agreed. I tried that first, before coming here. My solicitors are wonderful, but struggle with plain english. The 3 pages of conditions they crafted for me were a little over the top - and included provisions to protect the seller. I don't volunteer to include such clauses upfront - I'll leave it up to the seller to add them with the help of their solicitor. :cool:
I took what the solicitor had written and condensed it into a simpler form, excluding most of the clauses that states stuff that's already a regulatory requirement. My solicitor liked my re-write, with a few suggested changes, but didn't believe anyone would sign such conditions. Two deals later and he's still shaking his head! lol
Then, exasperated... I came here to find ideas for the future. Solicitors aren't the best folk to come up with creative ideas, hopefully fellow investors can! :) But, other than Kathryn's post, I haven't actually heard much at all about ideas for the use of conditions here either. :(
PJ
 
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