Possibly the most terrible offer ever made!

[stevie_sloth]

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.

Hmm. No way. I know, I know...I have to compromise. We would never want to live IN Brisbane, let alone around it. We get the train sometimes up there from the Gold Coast and it's just not where we want to live. Just not for us.

We didn't move from Melbourne (which we loved) up here to live somewhere we really don't like in the slightest. We wanted to move somewhere we loved even more or in a different way.

And I must say - back when we moved, in 2003, prices were lower around here. We originally intended to buy shortly after we moved up, but...things didn't work out. It took me 3 months to get a stable job, but my partner took over 6 months and we chose to rent instead. Then properties seemed to increase quite a bit and we kept renting...this place we like, the current owner bought it for $315,000 in 2007. This is just before we started seriously looking to buy (we bought in 2008)...didn't even see it listed so it was either NOT listed (the owner is a real estate agent himself so maybe there was some kind of...thing...where it wasn't openly advertised or something, I don't know) or it was listed way higher but just ended up selling for lower.

$315,000 back then, we could've got it easily. Dammit.

 

[tom32]

You can go hard on price.

or

You can go hard on terms.

You cannot generally go hard on both which is what you are endeavoring to do.

If you had a 10% deposit in hand and were prepared to waive your cooling off period and walked in there with a bank cheque drawn in favour of the seller you might find the agent puts a whole lot of pressure on the seller...

 

[RumpledElf]

Move from your current place into a rental (does rent cover the mortgage?) and rent yourself?

Either that or sell, don't think you've got too many options here ...

 

[stevie_sloth]

Yeah, I know...this is why I said it's the worst offer ever made, as the terms AND the price suck!

You're right to say if we had the money and a 10% deposit ready to go, the agent may put pressure on the owner. This is why if this doesn't work out, we are going to put our place on the market very early next year so we CAN be cashed up buyers for future potential properties we like.

In terms of renting a place and renting our place out? Nope, the rent we would get for our current place wouldn't cover the mortgage repayments.

My partner pays $235 per week and I pay $180 per week (with no interest applicable on that). This is fairly low. (the total loan amount right now is just under $300,000). The rent we would get for our place is around $330 - $340 a week. We'd also be still paying $62 a week in strata fees and $45 a week in council rates. So the little bit of rent we'd earn wouldn't do much.

At best, the rent we'd earn from our place would cover most of the rent we would pay at a NEW place we'd rent...but nothing else.

 

[JWR]

Would you consider moving to Adelaide (much cheaper) or somewhere like North Qld where it is probably much cheaper? Or Perth perhaps. It seems like you have no family holding you back so you have a good opportunity to find good value elsewhere.

 

[Ed Barton]

Hmm. No way. I know, I know...I have to compromise. We would never want to live IN Brisbane, let alone around it. We get the train sometimes up there from the Gold Coast and it's just not where we want to live. Just not for us.

We didn't move from Melbourne (which we loved) up here to live somewhere we really don't like in the slightest. We wanted to move somewhere we loved even more or in a different way.

And I must say - back when we moved, in 2003, prices were lower around here. We originally intended to buy shortly after we moved up, but...things didn't work out. It took me 3 months to get a stable job, but my partner took over 6 months and we chose to rent instead. Then properties seemed to increase quite a bit and we kept renting...this place we like, the current owner bought it for $315,000 in 2007. This is just before we started seriously looking to buy (we bought in 2008)...didn't even see it listed so it was either NOT listed (the owner is a real estate agent himself so maybe there was some kind of...thing...where it wasn't openly advertised or something, I don't know) or it was listed way higher but just ended up selling for lower.

$315,000 back then, we could've got it easily. Dammit.

down down prices are down. do you realise GC is hell on the back of a Harley?

 

[stevie_sloth]

Ok, so how does this sound?

The agent has come back to us again and said the owner is fine with all our conditions…we would have 90 days to sell our property. We only have to pay a $1,000 deposit now, at the time of signing the contract, and then we would pay the balance of the 5% upon the sale of our property.

I don’t know when actual settlement would be…if we have 90 days to sell, it’d maybe be 30 days after that. We will confirm that should the deal go ahead.

I am also not sure why the owner is being so…easygoing with these conditions. They haven’t mentioned whether the property would be taken off the market during this 90 day period or not. Once we sign contracts, would it be illegal to NOT take it off the market? But surely the owner would be shooting himself in the foot to not take it off the market and put all his eggs in our basket, so to speak? He’d be potentially wasting 90 days of his time, and if we couldn’t sell (or at least not for a sufficient price), he wouldn’t even get to keep his $1,000 as there is no penalty if we don’t sell and we get that amount refunded.

Is he really THAT desperate? We will also ask if it is still going to be on the market once we sign contracts, if we get to that stage.

It’s a huge IF because the owner wants $333,000 now. That is a good price, and we MIGHT be able to just squeeze $330,000 in a sale in 90 days, but when you take off the agent commission and legals from that sale price, it actually becomes quite a bit less…and it’d be more likely we would only get $320,000, which after the fees becomes $308,000.

Also of course, adding on the various fees to the purchase price of $333,000 makes it really $326,000. So…

Oh, and yes, GC prices are hugely down. Some are just quite ridiculous. A 2 bedroom, 2 bathroom apartment in the heart of a very desirable area by the beach that a few years ago would’ve been over $450,000 has now sold for $325,000. Stuff like that.

And this is why it’d be good for us to get into this particular property, because a few years ago it would’ve been in the high $300s – low $400s…so once the market recovers, it’ll go up. And much further up than our current place, which was slow to rise even before the market crashed.

 

[RumpledElf]

Get that house of yours on the market ASAP and start fishing for creative financing at the same time then - try as many avenues as possible.

If you get stuck with the last house unsold at worst you can rent it out, wear the shortfall, and you might be able to get a new loan, you never know.

 

[stevie_sloth]

Do you think the owner is being incredibly good / desperate to do this? To allow all our concessions?

Or is something else going on??

I have been doing sums...I will return when they are done.

 

[tom32]

would it be illegal to not take it off the market?

As I understand it no, it would be illegal to take it off the market. It is under offer, not sold.

Stevie, I know it is heartbreaking to analyse some of these things when you are in the middle of it and but some of the posts above that sound rude are probably the best advice you can get.

Prices are down where you are. Try to sell your property first, then take stock and work out what you want to do next, worst case you save your $1000.00 and cannot sell, best case you sell.

If you are able to secure a property at that price with all those conditions an unconditional offer would probably nett you an even greater saving.

It is not for the main that median house prices have even fallen that far, the issue is the illiquidity of it for those who need to sell.

If you need to sell in this market it is not pretty.

The trick to all this; if you want to buy, get your ducks in a row first and find someone who needs to sell. In this way you can buy at good value. Valuers look at all these outliers in an illiquid market and it is one of the reasons valuer numbers come in supposedly low at the moment. They cannot ignore that unit that went for 250k everyone says wow thats low at (assuming it was an arms length transaction). Ultimately you want to be the one buying at the right price, not just another mug buying at the median value in an illiquid market.

In a sellers market there is little opportunity to be a hard nosed buyer, stuff the seller around and they have other offers on the table to pick from.

In a buyers market, go hard, make an absolute ***** of yourself and then buy value only when you know what your current prop is worth in this same market.

 

[Ed Barton]

Do you think the owner is being incredibly good / desperate to do this? To allow all our concessions?

Or is something else going on??

I have been doing sums...I will return when they are done.

the vendor knows you have likely overpaid and will accept your conditions. after all it's the GC where you will accept anything in hope of a sale. weren't they a rea?

do you think the market conditions will be different when you go to sell your place?

i hope this doesn't end in tears.

 

[JWR]

Sloth,

It sounds like they will go lower if they are accepting your conditions - they probably have not had any offers or any near the price you are asking. They are probably desperate - which is what you will be if you sign the contract too and have to sell at a ridiculously low price (which will most likely happen to you too)

Stick to your 300k range but try and start selling your property now (since you said you hate your current property you may as well sell it even if you don't find a house to buy yet.)

If you cannot get this house, rent somewhere until you find a place to buy (with the market being so bad atm, the house prices will probably keep falling.) At least sell the house first for the sake of knowing what your budget is. They will most likely give into your 300k asking after another month or two, by which time you will hopefully be well on the way to selling the property.

 

[stevie_sloth]

JWR, ok...that's a good way to do things and what we were thinking as well...try and get this place...but if it falls through, we will be selling anyway, just with somewhat less pressure on us. And yes, then we'll rent and then find somewhere else to buy.

Ed...will it end in tears? Who knows. Were we to sell under the conditions of this contract or 2 months later in the very early new year, we are still trying to sell in this current market, either way.

We don't have anything to lose by trying to sell now to secure this property we want. We pay $1,000 now, and if we don't sell in the required 90 days or if we don't get an offer sufficient, we get the $1,000 back and we either continue to try and sell after this and then plan to rent once we do sell, or we wait, take it off the market and try again later. It's all ok in the end (I hope).

 

[stevie_sloth]

Ok, so latest update...

We have offered $310,000. This is our absolute maximum now. We're saying it is.

We've said settlement on the property must come after settlement on our own property, should we sell within the 90 day period, as otherwise we have no way of paying the money.

Anyway, so we once again wait.

 

[stevie_sloth]

Well, no luck.

$310,000 is still too low. No surprise there really. A shame though.

We will say if anything should change in the owner's circumstances, our offer still stands.

 

[JWR]

Just sit and wait. I'm sure in a month or so they will come round. Now just focus on selling your current property.

 

[stevie_sloth]

Yeah, thank you

That's what we'll do. If there's no interest, maybe they'll come back to us. Who knows. We can but wait.

 

[RumpledElf]

Here's hoping for a fast sale on your current house then

 

[vaughan]

We don't have anything to lose by trying to sell now to secure this property we want. We pay $1,000 now, and if we don't sell in the required 90 days or if we don't get an offer sufficient, we get the $1,000 back and we either continue to try and sell after this and then plan to rent once we do sell, or we wait, take it off the market and try again later. It's all ok in the end (I hope).

You're talking as though you can simply pull out of the purchase if you cannot sell your house... I'm not sure about that.

If you sign the contract then you buy the property. If you break the contract then, yes, you lose the $1,000 you have paid PLUS the rest of the 5% of the purchase price. You also pay for the cost of the vendor to advertise the property *again* and you also pay for any shortfall in the subsequent purchase price (ie if they only get $300K then you have to pay the difference from your sale price). This is in addition to the 5% deposit.

So on a $320,000 house you would be up for $16,000 deposit plus cost of second sale, and if it only sells for $300,000 then you also pay the $20,000 -- all up at least $36,000.

 

[wobbycarly]

Not if you've got a suitable "subject to sale of another property" clause.