Pre Foreclose Sale

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From: The Undergraduate


Hi Forumites,

At last I have something to post, after lurking around for so long, listening to all great advises/info given.

I have the opportunity to purchases two properties on one block of land in Nunawading. The bank will Foreclose this Friday and owner wanted to sell their properties by this Thursday. They wanted $300K minimum to discharge their loan plus have enough to clear up all their credit cards debts.

I don't have Sec 32 yet but here are the info:

Brick House in the front have 3 bedrooms, built in 70s, in good shape.

Brick House in the back have 4-5 bedrooms, about 6 Yrs old.

Assumed both houses on sep. titles (to be confirm) rental for 1st about $250/week 2nd about $350/week. Properties close to train station & bus (walking distant)and shopping. It is also about 5 min drive to Eastern FWY. They wanted 10% cash deposit with 30 days settlement.

Questions:
1. Does this sound like a good deal?
2. Am I rushing into this?
3. Because I know these people, will I have trouble with them later on, if they wanted to rent one of the house.
4. Anything else I should consider?

If I wanted to buy, I will have to sign on the dotted line by this Thursday the latest.
Any pointer and opinion will be great appreciated.

The Undergraduate :eek:)
 
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Reply: 1
From: Robert Forward


Hi Undergratuate

If you aren't going to take the deal send me an email Robert_Forward@Optusnet.com.au. I'll sign it before Thursday no probs.

Cheers
Robert

The Sydney "Freestylers" Group Leader.
 
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Reply: 1.1
From: Dale Gatherum-Goss


Hi Robert!

You beat me to the punch!!!!

Yes, Undergraduate, at face value this looks like a good deal for you. Congrats on your imminent success!!

Dale
 
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Reply: 2
From: Simon St John


Hi everyone

As I am on training wheels, can someone check my analysis of this deal and add/comment on anything I have missed?

The deal seems great to me.....

Rent p.a (50 weeks allowing for vacancy at $600pw) $30,000

Repayments $16,410 (i only at 5.47%/25) or $22,042.60 (p and i at 5.47%/25)

Result = +ve cash flow before expenses $13,590 (i only) or $7957.4 (p and i).

How could you say no?

Is there any 'rule of thumb' figure for rates/operating expenses that others use to quickly pencil in a net cash flow (eg: 10% or rental income per year or such).

Cheers, Simon
 
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Reply: 3
From: GoAnna !


Hi The Undergraduate

Sounds like an excellent deal. Congratulations :eek:)

In regards to your concern about renting to the vendors i think the easiest way to handle the situation is to hand over the management to a good property manager and give them the details. It would be best to keep the relationship professional and if you know them personally try to keep it separate to your role as landlord. Just my thoughts.

If you are seriously interested i would be signing as soon as you are satisfied with the supporting documentation or flipping it to some-one else for a fee.

Would love to hear how the story ends.

GoAnna !
"Obstacles are those frightful things you see when you take your eyes off your goal."
-Henry Ford
 
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Reply: 3.1
From: Justin O'K


Hi Under G

1.I know the area well & it seems like a good
deal on face value.
2. Don't know if your rushing in.
Only you can tell if you capable of settling
etc. etc.
3. If you know the people I'd try if you
can & if it won't upset the apple cart to
try & negotiate directly with the Vendor
there in person & not with a fictitious person.
You'll find out much more this way
& bring the agent along if he wants to be there. You may want to ask them if they're
willing to rent. ie great to have
a pre-rental contract before settlement.
As long as you know they'll be good tenants.
It probably would be good to have a managing
agent on the property to not deal with
their personal problems in the future.
4. Careful of the Gazumping trick,
ie not a good idea to tell to much info.
I'm sure people could find it if they
really wanted to beat you to the punch.

Lot's of pressure on this one
as they're pushing for a Signature.

Get some Legal advice quickly,
not much time.

Quick, Quick, Hurry, Hurry.

Don't you love the pressure on
these deals.

Justin
 
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Reply: 3.1.1
From: The Undergraduate


Thanks everyone for the encouragement, I am really stress out at the moment.

Because I am not sure wether this deal will even go through. Situation are:

Eviction notice has been issue for this Friday 10:00AM.
Owner have decided last minute to put their house up for sale this Monday arvo, their solicitor don't have much time to prepare sale documentation.
As of this morning the agent cannot accept my 10% deposit as he has no doc for me to sign. We need everything sign & seal and express courier to B.O.M HQ in SA by tomorrow afternoon, so they can apply to the court to have Eviction Notice cancel.

If not then it looks like the bank will evict them and put both houses on the market.
Which mean I am missing out on a very good deal, due to time constraint. Bummer....heres hopping we can have everything sewn up by today.

Do any of you Guru out there know what I can do, to ensure I don't miss out. Instead of just waiting for the Vendor's solicitor to get their act together.

The Undergraduate
 
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Reply: 3.1.1.1
From: Craig Askings


Borrow someone's kids (2-3 yrs old) and camp out in the Vendors
Solicitor's office until they give you the docs you need.

Oh be sure the get them lots of red cordial before hand :)

Craig.

propertyforum Listmanager wrote:

>From: "The Undergraduate" <vannida13@hotmail.com>
>
>Thanks everyone for the encouragement, I am really stress out at the moment.
>
>Because I am not sure wether this deal will even go through. Situation are:
>
>Eviction notice has been issue for this Friday 10:00AM.
>Owner have decided last minute to put their house up for sale this Monday arvo, their solicitor don't have much time to prepare sale documentation.
>As of this morning the agent cannot accept my 10% deposit as he has no doc for me to sign. We need everything sign & seal and express courier to B.O.M HQ in SA by tomorrow afternoon, so they can apply to the court to have Eviction Notice cancel.
>
>If not then it looks like the bank will evict them and put both houses on the market.
>Which mean I am missing out on a very good deal, due to time constraint. Bummer....heres hopping we can have everything sewn up by today.
>
>Do any of you Guru out there know what I can do, to ensure I don't miss out. Instead of just waiting for the Vendor's solicitor to get their act together.
>
>The Undergraduate
>
>
>
>To reply: mailto:propertyforum.23453@bne003w.webcentral.com.au
>To start a new topic: mailto:propertyforum@bne003w.webcentral.com.au
>To login: http://bne003w.webcentral.com.au:80/~wb013
>
 
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Reply: 3.1.1.2
From: The Wife


If this is a good deal, and you really want it, you need to enlist the help of as many of the players as possible,
push push push,
if something needs to be taken from floor 1 to floor 5 of the solicitors building, you do it, dont trust them to do it, you need to be hands on, and all key players should be pushing equally as hard,
time to pull out the emotional tactics as well, ie: this is to save someone from the clutches of whatever, we have to do this, do it now,
there will be a big thankyou coming to you for this, lots of new business when i tell everyone how you helped me, i am going to do a write up in my investment networks newsletter letting them know how you helped me so much ( use freestyler network for example).
Thank everyone in advance , tell everyone you will have to buy them a bottle of red, or a big basket of bath bubblies, this means everyone who can help you, receptionsists, PA's, everyone, push push bribe and push.( if it works come thru with the goods! buy everyone you promised a little something)

We call this "Cow Eyed" in my family, ( its a long story), its being Humble Helpless and very very Persistent. When I use Cow Eye, everything gets done real fast.

Hope that makes sense,

Good luck, please let us know how you go,

Cheers, TW
~Before you criticize people, you should walk a mile in their shoes. That way, when you criticize them, you're a mile away. And you have their shoes~
 
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Reply: 3.1.1.2.1
From: Justin O'K


How about a bulls eye??

Justin
 
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Reply: 3.1.1.2.1.1
From: Justin O'K


Or for many.... A Chickens??
 
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Reply: 3.1.1.2.1.1.1
From: Jakk Bass - The SLUM LORD


G'Day all,

I was personally involved in a similar situation mid last year.
Time was running out, documentation was no where in sight and even though a handshake deal was done with the vendors, it looked like they would be losing control of the property within days.
The loan was from a housing Co Op and out of desperation to get the property I decided to phone them and inform them of the deal that I had struck with the Vendors.
The long and the short of it was that they agreed to a stay of execution to allow the documentation to be finalised.
I put the offer to the Vendors in writing and even though this written offer wasn't binding upon me, it was there as evidence that the Vendors had a Purchaser to buy their property at a certain price.
Had the Mortgagee taken possession and sold the property and not achieved a sale price close to what I was prepared to pay, then the chances are that the Vendors might have been able to instigate legal proceedings against the Mortgagee for not acting in the Vendors best interests.
Whether the legalities of this is right or wrong, I have no idea, but I reckon I bluffed the Mortgagee enough to allow the extra few days that I required to finalise the sale documentation.
Anyway, winners are grinners!
paid $97,000 spent $14,000 on tidy up
Sold $159.500 5 months later.

Good Luck

regards
Jakk


**Contract: an agreement that is binding on the weaker party. - FREDERICK SAWYER
 
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Reply: 3.1.1.2.1.1.1.1
From: The Undergraduate


Hi All,

I had to wait until my blood pressure reduce enough to write you all this story, as you probably guess by now I have miss out on this great deal. Not because I was "Gazump" by someone, but because the agent I dealt with have pull a fast one on me.

As late as last Wednesday afternoon I rang the agent asking him when can I give him the 10% deposit, he said doc. not ready could not accept my 10% yet. Will ring ASAP if he has everything ready.

Tiem is of the essence, since everything have to be submitted to the vendor bank by Thursday afternoon or the vendor will be evict from their home. I was quite worried about this, as I know the family; I don't want to see them kick out of their home. So I tried to ring the Vendor Rep. all day and couldn't contact her cause she was in the Operating room (she is a nurse) all afternoon. Eventually managed to talk to her at 6:00PM. Told her the story basically she will need to push the agent harder or the deal won't go through and her relative will be in deep sh** (excuse my French :eek:))

She immediately rang her nephew and he told her the agent came to see him with paper to sign at 4:00PM, effectively he has sold their houses, don't know to whom when asked by his aunt. The agent virtually told him he have to sign on the dotted line or the paper will not get to the Bank's solicitor in time, therefore his family will be evict come Friday.

I rang the agent the next morning asking him why he didn't contact me as I requested when doc. are in. His excuse was didn't have time, he already have a buyer who was only living 5 min away from his office. Then have to take doc. to the solicitor to process, then to port Melbourne to courier express them to B.O.M HQ in SA etc.

I think the agent knows this is a good deal, so already arrange this b/w his friend, family (someone he know anyway). I think he lied to me and rush the whole thing through, once he realised they could lose this deal
(if the vendor realise the delay is with the agent, not me). Why do I think the agent already have this deal sewn up? Because I talked to the vendor rep afterward, she was the one who demanded $300K minimum, but the agent told her he can sale both props for $280K. The agent was quite surprise when the vendor rep told him, she already found a buyer who is happy to give them $300K the next day.

I will be putting a formal complaint to his agency, if I don't achieve anything with this, at least I know that the Real Estate Agency he worked for are aware of their staff conduct and integrity (although from majority of opinions, there are no such thing as good/honest real estate agent).

I think this agent is dishonest and unethical because:

- He didn't act in the best interest of vendor; the agent could have achieved a better price for the vendor, rather then the minimum request by them (I was prepare to offer more).
- I put in the highest bid first; the agent didn't even give me the option of counter offer.
- The vendor rep told the agent she is happy to accept my offer and that he is not to sale to anyone else unless he can get a better offer. And yet the final price he achieved for them was $300K, same as my first offer.
- The agent didn't even inform either the vendor rep, or myself that there are other party interests in this deal.
- It would have only taken me only 15min to get to his office, not much diff b/w 5 & 15 minute, if he were looking for the best deal for his vendor.
- The agent used the vendor fear of eviction and naivety to pressure the nephey to agree to the sale
- The agent didn't even give me the curtesy of letting me know that he has sold the props to someone else.

I have never ever dealt with an agent who is blatantly dishonest before; I know I could have protected this deal if I were more experience. I am sure some of you Gurus out there probably shake your head at my naivety and I agreed with all of you; this is one lesson that has cost me $$$ and I will certainly remember this.

As a lesson to all of us, do any of you gurus out there have any suggestion or comment on what I could/should have done to protect this deal? I will not be offended and any suggestions/comments will be gladly accepted.

The Undergraduate
PS: I will have to study harder, if I ever want to graduate and exit the rate race :eek:)

PS.PS It will be interesting to find out who is the other party, I will ask the vendor and let you all know.
 
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