Real Estate Agent Being Forceful

[beachside]

This thread reminds me of an article I read in one of the magazines recently about exchanging "subject to...." rather than risk getting gazumped by getting P&B etc first. Obviously would not be in the running in a hot market if multiple offers were being made on the property with less on no conditions, but in a cooler market is this a good tactic to reduce the chance of being gazumped (NSW etc). The subject to clauses would have to include "no penalty" for withdrawing if not satisfied with P&B etc.

Have many people gone this way? For the vendor there is still the chance of the sale falling through but at least they have advanced to the stage of exchanging rather than just putting $5 or $500 down as a holding deposit while they think about it. This would then work like a Qld contract wouldn't it?

 

[Big Will]

Usually you have 1 or 2 weeks to do you DD but during this time the REA will still keep advertising the property. So there is no real loss.

If it was subject to the sale of another property a vendor would not likely agree unless it has been a really quiet market and/or it was a fantastic offer. However if I was the vendor and needed some form of certainty I would make sure there is some wording that if a better written offer comes in whilst you are selling I either get you to agree to their offer (or better it) or I can sell to the other party.

 

[Jacque]

The subject to clauses would have to include "no penalty" for withdrawing if not satisfied with P&B etc.

Have many people gone this way? For the vendor there is still the chance of the sale falling through but at least they have advanced to the stage of exchanging rather than just putting $5 or $500 down as a holding deposit while they think about it. This would then work like a Qld contract wouldn't it?

Very rare that vendors will accept a no penalty clause should you rescind during the cool off period here in NSW. Each state's laws vary so you need to be up on what is required and is acceptable/non-acceptable. In a hot market, the risk you run for exchanging a property conditionally (under a cool off) is that you forfeit the 0.25% should you change your mind (for any reason P&B, finance etc) however most times (in our experience) it's preferable to get the property under contrat than being gazumped or beaten by a faster buyer. There's been very few times we've had a no penalty clause accepted however we have been able to call on a couple of "latent defects" in the contract that weren't disclosed or the good nature of a vendor in getting our 0.25% back for certain clients.

It's important to keep in mind, however, that the 0.25% is considered a penalty payment to the vendor for having the property taken off the market with no-one else being able to buy it during the cool-off or the vendor being able to rescind- if NSW buyers were able to consistently obtain properties under contract with no penalties, we may as well call ourselves QLDers
Yes, it sucks, and I agree that NSW has some of the harsher vendor-favoured contract of sale conditions in Australia but you just have to deal with it and play smarter.

 

[beachside]

I think I have become more open to thinking outside of "this is just the way you do it" in recent years. Isn't an agreement to sell a property an agreement between two people rather than on terms that others dictate? It makes sense to have a default system for those who want a simple cooky cutter process, but it seems that 98% people are scared to think outside the square to fit a desired scenario. Do state laws actually dictate the terms on which a property can be sold other than what documents have to be obtained/completed etc. Even the standard NSW 2005 edition is subject to changes by vendor solicitor to suit themselves before a property is offered for sale!

If a vendor does not want to agree to a contract subject to xyz, so be it as it takes two to form an agreement, but why not try. I am not thinking of finance clauses or subject to selling another property, just perhaps subject to P&B. Isn't a contract subject to searches anyway which occur after exchange?? As for forfeiting 0.25% or cooling off periods, these are just a standard condition which would not remain in such an agreement I was suggesting (yes I realise a waiver of cooling off period is required to be signed). I guess it would operate like a QLD contract - and it is accepted by a big chunk of Australia.

I agree that many vendors may not want to exchange subject to and with no penalty, especially in a hot market, just floating the suggestion I read in the magazine to avoid being gazumped and wondering how many do it.

P.S. I looked up the article and it was actually written by Rob Balanda (pg 80 July API). It was actually referring to searches but I think he meant to include P&B at least because he suggested exchanging as soon as offer accepted ....and you would generally not waste money on a P&B before an offer was accepted (unless extent of problems had to be determined to form the basis of an offer). It seems this is common, but not in the mum and dad real estate world!

 

[Beau Lyon]

Better luck next time.
When the market is hot, all the first home buyers get put off by having to sign a contract right away, so miss out the first few times.
After they have missed out on a few properties, they realise the agent is not just faling "there is another buyer/s, you need to offer now", and they either get a building inspector in early, or they sign right away and cancel within the 5 day cooling off period if there is a major issue. In NSW you generally risk 0.25% if you buy with cooling off period, which for a $600,000 property is just $1,500- considering that most properties are ok, so you usually won't have to cancel, it is a small risk to secure the deal.

Getting pre-approval is one of the first things you should do before you start searching for your home, so you don't have to worry about finance.

When the market is soft and there are less buyers, you don't need to rush things as much, but at the moment it's quite hot.

 

[beachside]

Hi Beau

I think you have completely misunderstood my posts. I was not talking about any situation of mine, merely an article I read in a magazine and wondering how many people may have done this. I realize agents may not be able to switch off sometimes and all ink blots look like a For Sale sign. Thanks anyway.