Standard contract dates

[Rod]

Gday,
can somebody offer some sound advice on the following.

I have found our first IP's on Fri (two seperate units in two seperate complexes - QLD), made a verbal offers for which I said I would submit a formal letter of offer to the REA as soon as I returned home that arvo via fax. The agent was keen to send out the contracts electronically as one offer had been verbally accepted by one vendor and the other was TBA but was confident in sending its contract out bar the disclosure statement which was coming. The agent detailed the contract finance date as being 21 days (not business days) from contract date (Fri just gone), and also a deposit around 2.5 % payable next wed and a settlement date 30 days from contract date also. I have been trying to do some research on this since then, under the assumption that it is within fairly tight time frame. I would like to suggest a min 35 "working days" finance date and would like your thoughts on reasonable timeframe for settlement, finance date approx timeframes and any thoughts on the deposit date and amount- I only want to offer $500. Finance has been prior approved, just have to go through the motions of loan contracts going off the lenders last exp; took some time. From my little experience, making the deposit will not secure the deal only signing of contracts. I feel the agent is trying to move quickly and my homework tells me these are good properties and would like to move quickly, but at a reasonable pace to match my experience and allow for incidentals I have never experienced. Also, what is the typical/suggestive manner to change the contract; I was only going to phone the agent and request the ammendments?
Your thought and suggestions are appreciated, thanks.

 

[Kevin Hockey]

Hello Rod,

I have a number of questions from your post. You said you made verbal offer on Friday, yet contract date is Friday??

Without a disclosure statement the contracts would be invalid if contested.

If the contract is dated as you suggested than that means it is complete, to late to make the changes you are suggesting.

My gut feeling is you are misinterpreting the process and no actual binding contract is yet signed. Unless you and the seller have all signed and agreed to its terms on a formal contract then no contract is in place, even if any verbal agreements have been made.

Regarding your question - what you are asking is for the owner to take the property off the market for almost 2 months, with a holding deposit of just $500 and a settlement time frame you haven't determined yet. Almost all owners I would take that offer to would get angry about it.

You have finance pre approved, why would you need 7 weeks to get final approval. 21 days should be ample. Making the deposit doesn't seal the deal but most owners will be looking for more than $500. $5000 is the common minimum figure I am finding sellers want to accept.

Doesn't mean you can't try your terms, but you might also just shoot yourself in the foot by doing it.

Kev
www.gogecko.com.au

 

[Rod]

Hi Kevin, thanks for your reply.
There are 2 x IP's which I made verbals on Fri arvo, the REA emailed 2 x contracts back to me, one with a disclosure and one without, I felt as if already I've lost 2 days to the weekend. Thanks for the advice on the validation of a contract without the disclosure. I take onboard your point about the deposit, it was a suggested figure by an investor who uses this as a blanket rule but always open to advice. Finance was pre approaved some time ago, but I have experienced signifigant delays with the simplest of things with banks and was trying to limit my exposure. As this a first time for me, yet to experience the process for myself instead of out of a book, I could not calculate what a reasonable time frame is to that of one which may be a little short. Perhaps your right and maybe I am just misinterperating the situation.
Thanks again,
Rod

 

[Kevin Hockey]

My comment regarding misenterpretation was regarding whether contracts were in place not about deposits etc. You will notice a warning statement on the first page of the contract advising you have to read the disclosure statement prior to signing the contract. By signing the contract first, without being provided the disclosure information will render the contract invalid - if contested. In other words, you can reneg on the contract at any stage prior to settlement.

No problem to you, the agent might get sued by the owner however for negligence....

Kev
www.gogecko.com.au