URGENT PLZ: Need advice as most likely to be ready for purchasing property?

[gobear]

Just to cut it short.

I have a property that I am interested to buy and is through an agent. Saw the property a few times. Wasn't in a hurry. The asking price was $980K. At first, I offered $780K but was telling me a few times that it was too low and the vendor declined it. I was about to gvie up since it's not worth what I thought it was paying for

Finally, a few days ago, the agent rang me again for follow up (since there had not been contact for 1 1/2 weeks or so) and ask whether I am still interested so I decided to finally give a final offer for $800K and I said take it or leave it. He then asked me "so are you sure that if 800K is ok, you will sign the contract straight away?" and I said "yes, for that price" and he said that he will have a talk with the vendor

Then yesterday, he rang me again. I dunno if this is actually 1/2 done. He said he needs me to sign a temporaily contract for a 0.25% deposit (i.e. $2000) which is fully refundable for 5 days cooling off period. He said that he needs ot double check with the vendor or something (forgot the exact reason) and as well to secure the property. Basically, if the vendor is happy with the price, the contract will go for $800K as it is but if the vendor decided to withdraw or has a better deal, I can get the money back.

I am pretty sure that this is some kind of delaying technqie but I am not sure why this is necessary when I stated that "I will take it for $800K if the vendor is confirmed" and I am even happy to pay the 10% deposit? Or is it that the vendor wants to delay (since they have another inspection on Sat) to see whether there might be a higher offer during the 5 days cooling off period?

I said I will call back later. I mean should I insist and reply by saying "well, I said I will take it for 800K, so I don't see there is a need for the temporaily contract for 0.25% of the cooling off period, so take my 10% deposit or go away" etc? Or what the agent suggest is actually the safest method to do so for the benefits of both parties?

Your answer will be appreciated

 

[silversands]

I would offer to sign a contract including a sunset clause. i.e. this offer is valid til 5pm tomorrow, accept by then or offer is over.

But I don't know how bad you want this property!

 

[Jazza]

I would offer to sign a contract including a sunset clause. i.e. this offer is valid til 5pm tomorrow, accept by then or offer is over.

But I don't know how bad you want this property!

Spot on. 800k expires in 24 hours.

If they come back *after* 24 hours is up drop your offer by 10-15k and go for another 24 hour expiry.

Expiring your offer is read between the lines as "pull your finger out and make a decision".

 

[Propertunity]

He said he needs me to sign a temporaily contract for a 0.25% deposit (i.e. $2000) which is fully refundable for 5 days cooling off period.

Not exactly how it works in NSW. If you sign a contract and pay 0.25% and then the REA goes to the vendor and the vendor agrees to the price you've offered and also signs.......the property is yours subject to a 5 day cooling off period AND the deposit becomes non-refundable.

What is happening here is this. The vendor wants more than $800K obviously. The REA will take your deposit chq for $2K and a signed contract around to the vendor's place and will attempt to "crunch" them. He'll be saying "its a genuine offer - here's the money to prove it. Sign here and it is a done deal in 5 days".

The only way you get your deposit back is if the vendor refuses to sign.

 

[gobear]

What is happening here is this. The vendor wants more than $800K obviously. The REA will take your deposit chq for $2K and a signed contract around to the vendor's place and will attempt to "crunch" them. He'll be saying "its a genuine offer - here's the money to prove it. Sign here and it is a done deal in 5 days".

The only way you get your deposit back is if the vendor refuses to sign.

Sorry, not quite sure what you mean

Do you mean that the reason for me signing the 0.25% contract so that the vendor will be able to show other interested buyers like a bait.....like "There's an interested buyer who already paid $2K, here's the proof....look at it....it's signed BUT however, I have not signed it yet........if you can offer more than $800K, then I will not sign it and it will be yours..". Is that what the vendor is trying to do and at the same time, using this to pressure other buyers to make up their mind ASAP to make higher offer?

If so, should I listen the other member, to add an extra clause by make an offer for expiry date? i.e. The offer is valid for 2 days? 1 day? to pressure the vendor in reverse so that I can secure the property??

 

[Propertunity]

Sorry, not quite sure what you mean

What I should have said was this:
What is happening here is this. The vendor wants more than $800K obviously. The REA will take your deposit chq for $2K and a signed contract around to the vendor's place and will attempt to "crunch" them. The REA will be saying "its a genuine offer - here's the money to prove it. Sign here and it is a done deal in 5 days".

If so, should I listen the other member, to add an extra clause by make an offer for expiry date? i.e. The offer is valid for 2 days? 1 day? to pressure the vendor in reverse so that I can secure the property??

You cannot really add an extra clause to the contract (well you can but - normally solicitors want to do that themselves). If you want to make an offer to sign the contract - then that is fine. The offer is a separate piece of paper and you can put whatever you like on that BUT do not sign the actual contract until the offer has been accepted.

 

[Jazza]

What I should have said was this:
What is happening here is this. The vendor wants more than $800K obviously. The REA will take your deposit chq for $2K and a signed contract around to the vendor's place and will attempt to "crunch" them. The REA will be saying "its a genuine offer - here's the money to prove it. Sign here and it is a done deal in 5 days"..

In my eye's that's not exactly working 'in the best interests of the principal'.

 

[Collector]

No such thing as a temporary contract.

You sign the contract and pay 0.25% - the agent then gets the also sign a duplicate contract if the vendor agrees to your terms then the agent delivers the contract you signed to the vendors solicitor and the contract the vendor signed goes to your solicitor - the contracts are EXCHANGED.

The 0.25% deposit is the penalty fee that is payable if the purchaser rescinds after the contracts are exchanged and prior to the 5 working day cooling off period expires.


As Propertunity stated agents sometimes get the purchaser to sign a contract and pay a deposit so they can present to the vendor - the vendor may have received numerous low offers and if the agent can demonstrate that this offer is genuine then that may induce them to sell.


In NSW there are 2 methods to exchange a contract - the agent to exchange (get both parties to sign) - this allows for a cooling of period and enables the purchaser time for DD, or for the solicitors to conduct the exchange - this is normally done after DD is completed the solicitor signs the 66w which is part of the contract this waives the right to cooling off.


For those who have said to add a sunset clause giving a deadline: the agent must exchange the contract within 48 hours (2 WORKING days) or the contract is void and a new contract needs to be entered into - ensure that you date the contract the day you sign or place date near signature.

BTW: there is nothing stopping the agent from getting the vendor to sign the contract first and then you second - maybe you can request this.


In recent times due the FHB our agency have left all exchanges up to the solicitor's - with the delays with financial approval the we found that the cooling off periods were being extended for up to 3 weeks - so property stays on market until it is unconditionally exchanged.

 

[Propertunity]

In my eye's that's not exactly working 'in the best interests of the principal'.

Oh I totally agree. I just explained what is going to happen - seen it all too many times before.

You seem to think that REAs always work in the best interests of the principal I know they are supposed to...............we need to catch up over a coffee one day and I'll tell you some stories

 

[gobear]

Thanks for the answers and advice guys. I really appreciated it as it helps me alot