Property Valuation issue

Hi guys,

I need help/advice.

I purchased a property off the plan 13 months ago. It is a townhouse development of 16 in the western suburbs of Melbourne, through a well known builder.
I payed 10% deposit then (32k).
Now. I have been able to obtain pre approval (subject to valuation) for a loan with an LVR of 80% due to some defaults. I do have the additional 10% to settle this.

My issue now is, that i have found out that the builder is now clearing out the remaining few units for $42,000 less than what i initially paid for mine.
With buiding expected to finish in 8 weeks and a valuation to take place then, im very concerned because i do not have any further funds to cover this.

What are my options?
What can I do?

Your thoughts on this would be greatly appreciated.

Thanks.
 
You may have to use a non-conforming lender to get the 90% loan, but it will be more expensive. Or use a credit card and/or personal loan to plug the gap.
 
Hi Aaron,

The loan pre-approval is with a non conforming lender and 80% is it.
I have tried another non confoming lender and the LVR was the same for my situation.

I dont have a credit card and dont see how i would get a personal loan considering the loan is already at a higher rate plus a personal loan would probably double it in interest.

Im really concerned. Not sure if the builder will do anything to assist me.
 
Purchasing OTP is high risk at the best of times - even more so in a flat / declining market as shown here for others to learn from.

If there is no get out clause/s to exercise in the contract you have signed you are not left with too many options other than coming up with more funds (either borrowed or savings) to put in to complete settlement.

You could possibly approach the developer and see if any negotiating can be done there also.
 
It is extremely likely that your valuation will come in low. Quickly see what you can do about finding extra money just in case.

Or maybe try to terminate the contract - are they running behind schedule? Maybe gone over the sunset clause?
 
Hi Rixter,

I will most definitely be speaking to the builder and see if i can negotiate something but coming up with the required funds of $42k in 8 weeks will be very difficult. This is based on their current clearance sale price.
Not likely im going to get anywhere near it.
 
It is extremely likely that your valuation will come in low. Quickly see what you can do about finding extra money just in case.

Or maybe try to terminate the contract - are they running behind schedule? Maybe gone over the sunset clause?
Terry,

The only clause is the 18 months completion date. But with an expected 8 weeks to complete this does not look good in my favour.
 
If approaching the builder/developer maybe you could suggest they leave some of their own money in the deal at settlement. You could then make loan payments to them or it will give you more time to sort out gaining funds elsewhere to pay them out.
 
If approaching the builder/developer maybe you could suggest they leave some of their own money in the deal at settlement. You could then make loan payments to them or it will give you more time to sort out gaining funds elsewhere to pay them out.
I will be throwing all/any ideas at them to see if they can assist.
Your suggestion is surely worthwhile giving a go. It may just work.

Thank you, it is what i need.
 
If you paid $320,000
and they are coming in at $42,000 less
= $278000
80% of this expected valuation is $222,000. This may be the max loan amount.

You need to come up with $320,000 - $32,000 = $288,000

If the max loan size is $222,000 then you need another $66,000.

Plus there will be other fees with the non conforming lender and solicitors etc. What about stamp duty?

And also consider that often valuations come in less than for what the units are selling for so you could be up for even more.

Don't mean to alarm you, but just point out some things to help you prepare more.
 
If you paid $320,000
and they are coming in at $42,000 less
= $278000
80% of this expected valuation is $222,000. This may be the max loan amount.

You need to come up with $320,000 - $32,000 = $288,000

If the max loan size is $222,000 then you need another $66,000.

Plus there will be other fees with the non conforming lender and solicitors etc. What about stamp duty?

And also consider that often valuations come in less than for what the units are selling for so you could be up for even more.

Don't mean to alarm you, but just point out some things to help you prepare more.
Terry.

Using your example.

If i payed $320,000
and the valuation comes in $42,000 less
= $278,000
80% LVR on this would be $222,400 and this is my maximum, they will not lend me more than 80%

$320,000 - $32,000 = $288,000
$288,000 - $222,400 = $65,600

I have a further $35,000 = $30,600 is my shortfall

I cannot come up with this money in 8 weeks.

This is my dilemma and Im looking for suggestions/advice on what can be done or tried.

Thanks.
 
speak to the builder about doing vendor finance for the shortfall in valuation, could be i win for u both in that situation
Hey Tone,

I will certainly be bringing that up. I just hope that "if" they do accept their interest rate is not so much higher than what i already have to.

Thanks
 
how about family, 10k, new credit card with 10k limit, personal loan 5k, and 5k from a friend?

Or

Sell your car?
Edmond,

Have thought of all of those.

Family struggle day by day so no.
Credit card, not going to happen with credit defaults to my name.
Personal Loan, I guess same as above.
Not comfortable borrowing from friends as 5k loan may take a while to repay considering my loan repayments will be high

Sell my car, has definitely crossed my mind, including my girlfriends. But will still be short by about $18k i think.

Thanks
 
Do you have much in the way of assets?

It may be cheaper for you to lose the deposit and walk away from it. This will save you money because you will be losing $32,000 instead of $42,000 because of the drop in value.

You should take legal advice. The vendor may not sue you for more if you have little in the way of assets. (watch out for that cash in the bank!)
 
Do you have much in the way of assets?

It may be cheaper for you to lose the deposit and walk away from it. This will save you money because you will be losing $32,000 instead of $42,000 because of the drop in value.

You should take legal advice. The vendor may not sue you for more if you have little in the way of assets. (watch out for that cash in the bank!)
I wish i had other assets.

I prefer losing $42,000 as i feel i can recover this quicker and with less sweat.

So im liable to be sued after all of this?

Its unfortunate that the builder has built most of the suburb and thus control pricing. But i guess at the end of the day its what people are prepared to pay that determines it all.

Thanks
 
I wish i had other assets.

I prefer losing $42,000 as i feel i can recover this quicker and with less sweat.

So im liable to be sued after all of this?

Its unfortunate that the builder has built most of the suburb and thus control pricing. But i guess at the end of the day its what people are prepared to pay that determines it all.

Thanks

If you cannot complete and the builder has to resell at a loss you could be sued for any short fall as well as losing your deposit. But it hopefully won't come to this.

If you cannot settle you may be able to get them to agree to just keep your deposit and call it quits. If they do want to take it further you can just point out that you have no assets and it would be pointless for them to spend money going to court when they won't get anything out of you.

If you settle then you will be faced with high repayments and it may be years before you are able to sell and break even.
 
If you cannot complete and the builder has to resell at a loss you could be sued for any short fall as well as losing your deposit. But it hopefully won't come to this.

If you cannot settle you may be able to get them to agree to just keep your deposit and call it quits. If they do want to take it further you can just point out that you have no assets and it would be pointless for them to spend money going to court when they won't get anything out of you.

If you settle then you will be faced with high repayments and it may be years before you are able to sell and break even.
I would be able to refinance in 12 months and get a much better deal.
Again hoping things dont get really bad.
 
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