Possibly the most terrible offer ever made!

S

stevie_sloth

Alright, so we like a property. It was originally $369,000, then it came down to $349,000, went under contract (I think for $359,000) but finance fell through, and now it's back on at $349,000.

So...we have inspected the property twice, and like it. We're not IN LOVE with it, though I must admit we cried when we saw it was under contract.

We have always been up front with the agent, saying we cannot offer the asking price. We have said we would need to sell our place first, and we would only be open to the VERY low $300,000s.

The agent told us the other buyer's finance fell through and if we're still interested, to make an offer if we like.

We were looking into the idea of being able to possibly purchase the property for a very low price, without needing to sell our own place, but this is not going to be possible upon further investigation.

So now...here is our offer...

$295,000
- Subject to the sale of our property
- Subject to all the normal things - building & pest, title search, body corp searches, etc

The seller will put in a Sunset Clause, and so will we...but it's more important to the seller to choose how long we have to sell our place, since we don't mind...the longer the better for us, since nothing is selling around here in less than 60+ days. If they chose 30 days for instance, there would just be no chance for us. We will only put in the Sunset Clause so we don't lose our deposit if we can't sell and complete the deal.

We also assume the seller will put in a clause that states should they receive a more favourable offer in the meantime, while we are attempting to sell, that they can take it and we can walk away. Even if it's within the accepted timeframe on the Sunset Clause.

We haven't even put our property on the market yet either, which is another reason 30 days to sell would be ludicrous.

But how terrible is this offer of our's, eh? We know it sucks. We're not expecting anything, but we can't offer anything else at this stage. Our line of thinking is...we probably won't get it but at least we've done all we could. And if we DO get it, by some crazy miracle, then WOO HOO for us!!!
 
Is there a chance you could sell your place and they are able to sell theirs at a higher price and you end up with neither property?
 
Hi Stevie

Do you need to sell your current property to purchase the next?

Have you explored the option of tapping into the equity in your current property and using it as the deposit/purchasing costs for your next property?

You can then convert your current property into an IP and either keep it or sell it at your leisure. That way, you won't feel pressured to sell.

Obviously this comes down to your borrowing capacity, available equity and tolerance to risk.

Cheers

Jamie
 
Hi Stevie,

The apartment is around the GC I am assuming. The market is really stuffed at the moment there - I would be only offering $250k!

Maybe post the link so that the pro's can tell you their perception of value.

Perhaps it is not a great idea to have exposure to two properties in GC as if the market falls further you will lose money from both properties. If you think the market up there is likely to recover though it may be a masterstroke! Depends on your thoughts.
 
Thanks everyone for your replies!

$250,000 for this would be way too low, even in this current abysmal market.

Here is the link…

http://www.realestate.com.au/property-townhouse-qld-broadbeach+waters-107712296

I know it’s on the main road, it’s only 2 bedrooms (though technically 3 bedrooms) and the complex is waterfront but this unit is at the front and not actually ON the water, but it’s in Broadbeach Waters, which is not a cheap area, and most places along this street go for high $300s, even nowadays.

Anyway, bridging finance is a no go. We can’t actually get it anyway (we tried last year when we found a property we fell in love with).

Also, in this market, we could realistically take a REALLY long time to sell…bridging finance would potentially kill us even if we were able to get it.

Our incomes are low. Our current home loan is through my mum, so not a bank or proper lender. She cannot afford to lend us the money for this new place, not knowing when we’ll be able to sell our’s and pay her back for that loan.

We paid $337,000 for our current place in mid-2008. It hasn’t gone up at all in that time due to the market here. It may have gone down…it’s hard to tell. Comparable properties in our area (almost identical, some of them) are going for around $300,000…but one sold for $412,000 2 months ago, which was odd, and some others listed at $335,000 (in our own building) and $340,000 have been sitting on the market for 9 months. So it doesn’t look good.

We have paid off a total of $30,000 since that time. Our equity is low. We enquired last year about how much we could borrow from various lenders, and the problem was not that they wouldn’t lend us enough, but rather, we simply could not afford to pay back 2 loans at the rate required (in order for any lender to give us a loan, they insisted they take over my mum’s home loan and pay her out, and then take on BOTH loans for us). It would have been almost double what we earned per week, the repayments, and that’s just the interest!

Oh, and in terms of buying something and moving out and keeping it as an IP, ideally we’d like to do this, as the area will increase in value quite a bit in the next 10 years or so (and we CANNOT live here for 10 years. God no. We have been wanting to get out for 2 years already, desperately!), BUT…we can’t afford the expenses versus the rental income. We have done our sums. We’d be cash flow negative and our incomes just don’t allow us to survive in that situation, unfortunately. $530 per week expenses just for that property (home loan payments, body corporate, council rates, insurance and nothing put aside in this amount for maintenance or emergency repairs), and $330-$340 per week rent. Not enough income. Plus the expenses on the new property on top of it would be another $500 per week (same stuff…home loan payments, body corporate, rates, insurance, and all the other things)…and that’s assuming we could keep paying the same amount back in home loan repayments that we do now to my mum ($410 a week), which we certainly could not to a bank.

And yes, this is a MAJOR concern for us if our offer gets accepted…the owner would obviously have to be able to accept another offer while waiting for us to sell our place…and then we could end up selling for the bare minimum we would need to get the new place, and then have the owner say sorry, we’ve been offered $350,000, see ya! And we’re left with a lower than ideal sale price AND nowhere to move to!

So…hmm.
 
This is where you sell, move out, and rent while you're looking for the next perfect house.

We built while still owning our old house just recently but we were lucky enough to find a rather forgiving lender. Very strange conditions on the loan, our payments are quite a lot less than the interest we're being charged, as our payments are pegged to our income not our loan.
 
My next purchase plan would be to have at least half a dozen properties on a short list that are like this and make a very low offer on the one on the top of my list, if that is not accepted moved into the next. I think it's good to have a strategy, a plan B, C and D. ;)
 
Yeah, we will have to sell, move out (or stay put if the buyer is an investor and will let us), rent and then look around intensively till we buy something else.

Still waiting to hear back from the agent on our offer. He may laugh secretly at it, it's so bad, but whatever. All we can do is what we can do, you know?

In terms of having a list of properties and making low offers and going through that list, that'd be a good thing to do IF we actually HAD other properties we like and that are suitable. It's so slow here...new things come onto the market that are even remotely suitable for us (but not really what we want at all) VERY slowly...in the past year we've found 2 properties we have liked enough and were suitable enough (size, location, allows pets, not too expensive body corporate, NEAR our maximum budget, etc) for us to want to buy. That's not a lot.
 
stevie_sloth said:
Yeah, we will have to sell, move out (or stay put if the buyer is an investor and will let us), rent and then look around intensively till we buy something else.

Still waiting to hear back from the agent on our offer. He may laugh secretly at it, it's so bad, but whatever. All we can do is what we can do, you know?

In terms of having a list of properties and making low offers and going through that list, that'd be a good thing to do IF we actually HAD other properties we like and that are suitable. It's so slow here...new things come onto the market that are even remotely suitable for us (but not really what we want at all) VERY slowly...in the past year we've found 2 properties we have liked enough and were suitable enough (size, location, allows pets, not too expensive body corporate, NEAR our maximum budget, etc) for us to want to buy. That's not a lot.
Click to expand...

it sounds like you will definitely have to sell before you buy. i can't understand why you are having so much trouble finding something to buy, the style of place you have been listing are a dime a dozen in that area.
 
stevie_sloth said:
...Still waiting to hear back from the agent on our offer. ..
Click to expand...

Stevie

You have posted a link to the property, plus details of your offer, so what makes you think that you won't now be gazumped by someone who has read this thread?

Only post links to properties you are interested in if you are not really interested ie just browsing.

More than one Somersoft contributor has been gazumped by someone who read about their offer on this forum.

That's what the interet is about - sharing information. Methinks you are too trusting and have possibly shot yourself in the foot.

Kristine
 
Is this the same unit you posted about several months ago? If so, has it been on the market all that time?

I know it is hard for us reading this to understand all the intricacies of your situation and loan set-up, but on the figures you quoted, I would be looking at selling your place, renting somewhere as cheap as you can whilst sitting with cash to pounce on something.

Why do you want to get into another situation where the costs are high, ie. body corporate.

What about a little house where you don't have those added costs, can keep whatever pets you want, and don't have anybody else on the body corporate dictating to you?

With the market so flat on the coast, I would have thought you could snaffle a little house (but have no idea as it is not my area).
 
Ed Barton said:
it sounds like you will definitely have to sell before you buy. i can't understand why you are having so much trouble finding something to buy, the style of place you have been listing are a dime a dozen in that area.
Click to expand...

Hmm...dime a dozen? Not in our price range, they're not. They're only getting very close now because the market's so flat.

The style of place we are looking at is basically...

- Minimum 2 bedrooms (preferably 3 or an attached internal access garage we can convert to a 3rd bedroom / music room / study). Other things like separate laundry and more than 1 bathroom are ideal, but depending, can be negotiable.

- We don't drive so yes, location is vital. We have to be near certain places, and not all sections of our desired areas are practical...

- Body corporate shouldn't be too high. Oh, and someone asked why we'd want to jump out of our current situation and into another similar property? We're not wanting to move because of JUST the property. It's the area as well we're not suited to. And also, we don't want to pay any body corporate fees at all of course, but ALL properties have them here, and most are not cheap. The cheap ones are properties we simply could not fit into (tiny 1-2 bedders), or stand alone houses, which are either WAY out of our price range or in areas we cannot access or just do not want to live in.

Wylie, thanks for those links! We don't drive, no, and those 2 properties (not sure where the second one is situated exactly) are somewhat awkward for public transport. We have experienced being reliant on one single bus service that goes less than once an hour, and it sucks. We wouldn't put ourselves in that situation again.

We moved up here just over 8 years ago (from Melbourne) to basically live in a specific area we loved...we rented in that area for 5 happy years. We moved away (because we couldn't afford to buy there, and we wanted to buy as rents were becoming ridiculous and we didn't want to rent forever anyway) but by then had kind of forgotten part of why we moved up in the first place...the area. If when we moved here, we'd had to have lived where we bought, we would've moved back in 6 months.

We want to live in that area again...we don't want to live in the places we could just manage a stand alone house...no way. We may as well live anywhere, in any suburban area in Australia, in that case.

Basically, yes...we can't afford what we really want. We're just trying to make ourselves happy in the ways we can...

And in the meantime, the agent came back with a counter offer (to our $295k) of $339k, with our other conditions acceptable. We have sent an email back...$339k is a good price for the property, but we can't afford it. With the extra stamp duty, that's more like $349k before any legals etc even add onto it.

We can't expect to get that much for our own property. No way. Not now.

We emailed back with more details of things, requests for clarification on other things, and an offer of $299k. :)
 
Kristine.. said:
Stevie

You have posted a link to the property, plus details of your offer, so what makes you think that you won't now be gazumped by someone who has read this thread?

Only post links to properties you are interested in if you are not really interested ie just browsing.

More than one Somersoft contributor has been gazumped by someone who read about their offer on this forum.

That's what the interet is about - sharing information. Methinks you are too trusting and have possibly shot yourself in the foot.

Kristine
Click to expand...

Hey Kristine

You know, I never even contemplated that possibility! I AM too trusting.

However, being gazumped does not concern me. We are ruled entirely by our very limited maximum budget and if anyone DID gazump us, well...we wouldn't be in the game anymore anyway. If they can pay more? We're out. Doesn't matter.
 
stevie_sloth said:
Basically, yes...we can't afford what we really want. We're just trying to make ourselves happy in the ways we can...
Click to expand...

SS

$$$$$$ -----> what you want
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$$ ------> what you can afford


You seem to want champagne wishes on a beer budget.

No amount of wishing it wasn't so will make this gap go away.

You'll remain sad and aimless until YOU take action to close this gap!

Either buy somewhere cheaper or increase your ability to pay more.

I don't know your household situation, but there exist couples who have 1br units as they value location over space. Or conversely those who value space over access to transport.

Almost all homebuyers have accepted less than their ideal in the interests of getting into their own place.

And guess what? Most are happier and wealthier for having done so. Why not join them?

Some problems at purchase have even righted themselves with time. Eg house size may be less important after kids have left, the area has gentrified, more facilities have come or transport has improved.

BUT if property size in the location you want is really so important, then rent there and keep the existing place as an IP.

Your cashflow may be better than now with rent coming in and expenses tax deductible.

Which may increase the capacity to buy in the area you like in the future.

To summarise, those who hanker for what isn't and can't be so generally achieve nothing. Whereas those who start work on that which is possible often achieve it.
 
Have you considered moving a little away from GC where it is cheaper? You can probably find freestanding homes in that price range for that price only a few train/bus stops away. You will be sacrificing location today but in a few years time as urban sprawl takes effect, it will be a great area to live. I am not familiar with the market there but Margaret Lomas is always talking about some suburbs around Brisbane being good for investments at the moment.
 
Stevie it's so obvious to everyone here that you have fallen in love with the place. You don't need to pretend that you're trying to be smart about it by making a low-ball offer...if you were really an 'investor' you would have walked away from this ages ago like many posters here have indicated. You simply can't afford it - move onto something else.
 
Haha!

We’re still waiting on the agent’s further reply.

Anyway, I’m actually NOT in love with this property…I was in love with one last year, but this one…I like it, we’d be happier there than we are in our current place, but it’s not an “in love” feeling. The only reason we are making these low-ball offers is because we cannot go any higher. Literally.

If I was in love, I’d be anguished at not being able to offer more than we have.
 
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