What to do now? (post B&P)

[J_aco]

Dear all,

New to prop investing so would appreciate any opinions on this situation.

*B&P done and several issues identifed:
- roof needs reseal and repoint (est. $4k req?)
- house has no termite chem barrier (est. $3k required?)
- pergola rotten posing a safety hazard requiring demolition and replacement (est. $2k?)
- several other things here and there but above are major big $ issues

* What are my options now?
- get the vendor to fix them?
- ask for settlement discount?
- did any of the estimate costs above seem correct or too low?

* Anyone got contacts in Brisbane North for:
- roof reseal and repoint?
- termite chem barrier?
- new pergola/patio info?

Thanks all!

 

[The Y-man]

Did you do the B&P prior to making any offer or after?

We usually do the B&P prior to making any offers, so we can adjust our offer accordingly.

The Y-man

 

[J_aco]

Hi Y-man,

It's after. (Did I do it wrong... )

 

[Ace in the Hole]

You can try and ask for a discount but they seem like pretty standard maintenance issues, not something which would have been missed by a quick inspection.
Any old house is going to have maintenance issues to bring it up to top condition.

If there is interest for the property, unless your offer was high, I'd say the vendors would disregard any proposed negotiation to reduce the price.
You can only try.

 

[J_aco]

Thanks for that reply Ace in the hole.

I guess worst come to worst I just have to bear all these costs isn't it?

 

[Brady]

Was your offer subject to finance?

Valuer might value the property lower then purchase price if aware of required repairs.

 

[wylie]

If you go ahead with the purchase (regardless of whether you try to get a price reduction - which I've never done because I've always known we were buying houses with problems anyway) then I highly recommend Wayne or his sons at Rifle Pest Management. Here is a link to the yellow pages entry.

We've known Wayne and his boss before him for well over 30 years. I'd rate him way higher than the usual pest treatment companies. He is thorough and will not overcharge or make up scary stuff to entice you to pay more ...

http://www.truelocal.com.au/business/rifle-pest-management/sunnybank-hills

 

[wylie]

Dear all,

New to prop investing so would appreciate any opinions on this situation.

*B&P done and several issues identifed:
- roof needs reseal and repoint (est. $4k req?)
- house has no termite chem barrier (est. $3k required?)
- pergola rotten posing a safety hazard requiring demolition and replacement (est. $2k?)
- several other things here and there but above are major big $ issues

* What are my options now?
- get the vendor to fix them?
- ask for settlement discount?
- did any of the estimate costs above seem correct or too low?

* Anyone got contacts in Brisbane North for:
- roof reseal and repoint?
- termite chem barrier?
- new pergola/patio info?

Thanks all!

Just thought I'd also comment on the problems. The roof condition should easily be seen from the ground. The termite barrier may not be necessary, depending on if it is on a slab or on stumps. An annual termite check is what we do for the IPs we manage. Most are on stumps and there is no barrier needed.

Rotten pergola should have been noted at the inspection.

If the house is still worth buying even with these problems, then go ahead, but as a vendor, I would be really annoyed to have a purchaser come back and want money off for things that are not really hidden.

It has happened to us several times, and is really annoying. I guess you can give it a go, but be prepared they say no, and if it is good value anyway, it could sell to someone else.

 

[J_aco]

Hi Brady,

Yes, subject to B&P by 19th, finance by 26th.

"Valuer might value the property lower then purchase price if aware of required repairs."
What's the implication of this? (sorry I'm new to all this...)

---

Thanks Wylie! I've seen a prev post of yours recommending Rifle Pest - I've looked them up and will contact them shortly.

Since you're in Bris - any contacts about roofer pls?

 

[wylie]

Hi Brady,

Yes, subject to B&P by 19th, finance by 26th.

"Valuer might value the property lower then purchase price if aware of required repairs."
What's the implication of this? (sorry I'm new to all this...)

---

Thanks Wylie! I've seen a prev post of yours recommending Rifle Pest - I've looked them up and will contact them shortly.

Since you're in Bris - any contacts about roofer pls?

I will look up the roofer who was recommended by a builder friend and post up his details. We had a mould issue in one house (in the family for probably 25 years with no previous issues). We had one roofer tell us the mould was caused by the tile roof delaminating, blah, blah, blah and wanted $25K for a new one. We got our builder's roofer to look at two tiled roof houses we had and he said both were fine and the other bloke was "trying one on".

I'll pass on his details.

 

[vaughan]

Either:

1) price your offer accordingly; or
2) walk.

I don't understand the "get vendor to fix" thing. They are selling the house as-is. If they wanted to fix it they would have already, and be charging more for it.

 

[pully]

yes I think that is correct. some properties are auctioned in as is condition. sometimes the agent advises the vendor to spend money prior to sale, to get a better price.

its always buyer beware of course. some buyers/agents will point out problems to get the vendor to accept a lower price. did you get it for a good price?

 

[techie]

How long has it been on the market for? If it has been on the market for a long time, the vendor could be more open to a price negotiation or they might fix it for you if you request.

 

[Perp]

My view is that once you've signed a contract with a price on it, you've struck an agreement, and you shouldn't try to renegotiate on the basis of issues that are one or more of:

a) obvious upon inspection,
b) to be expected for a property of that age, and/or
c) not strictly essential but merely desirable/optional.

Every one of the issues you mention falls into one or more of these categories, and you should have consider all three of these categories and factored them into the price you offered.

The purpose of the B&P - to an ethical purchaser, IMHO - should be to protect you from a disaster, e.g. you discover that the floor or roof structure is riddled with termites and about to collapse costing you multiple $10s of K.

If you're unlucky enough to get such a disastrous B&P, you can elect to cancel. The vendor may or may not be willing to offer to re-enter a contract at a reduced price, or do repairs, and you can then consider whether you want to re-enter into a new contract.

Anything short of such a disaster, I think you should have considered as factored into your offer, and requesting a price reduction is just rude and "trying it on".

 

[Hypnotic Cat]

This is my take:
Depends whether you still see value in the overall deal with the $10k of unexpected expenses. If you do, then sign the contract.

If you don't, tell them you've reconsidered and are going to exercise your cooling off rights (if you have cooling off period). Leave it to them to come back to you. If they do, submit a revised offer.

All depends how much you like the place.

Plenty of houses out there...

 

[wylie]

Roofer recommended to us last year by a builder is Nigel 0413 838 081.

He gave us a second opinion after the "rip off" roofer told us we needed two new roofs. Second opinion was no need for new roofs at all.

 

[Perp]

Depends whether you still see value in the overall deal with the $10k of unexpected expenses.

In what sense does the purchaser *have* to spend $10K immediately, and in what sense are they unexpected?

All established homes have a rolling schedule of maintenance jobs that need doing. At any point past the first few years of a home's life post-construction, some routine maintenance will be overdue or near-due, and you can guarantee any such jobs that are noticed will be mentioned in a building and pest inspection.

That neither means that such jobs should be a "surprise" to a prospective purchaser, nor that they have to be completed immediately.

Building and pest inspections highlight everything that would have to be done to bring the property back to "as new" condition. It is not reasonable, after making an offer on a property that's clearly not new, to subsequently argue that your offer was subject to the property being in "as new" condition.

 

[Hypnotic Cat]

In what sense does the purchaser *have* to spend $10K immediately, and in what sense are they unexpected?

I did not say the purchaser *must* spend the $10k. The OP listed the estimated expenses which amount to $10k, the implication being this is money they will have to spend to get the property up to scratch. Clearly, the expenses for this particular investor (who state they are new to property investing) were unforseen, hence their request for opinions from the forum.

It is not reasonable, after making an offer on a property that's clearly not new, to subsequently argue that your offer was subject to the property being in "as new" condition.

I did not suggest in any way that the OP argue that their offer was subject to the property being in "as new" condition.

I'll say it again. My suggestion was simply for the OP to exercise their cooling off rights (5 days in Qld) if they no longer want to proceed with the deal. As far as I'm aware they are not legally obliged to give a reason to the vendor when exercising those rights.

The OP is on the forum asking for opinions and asked, "What are my options now? I didn't say I had all the answers, just my take on this situation.

 

[J_aco]

Thank you everyone!

Thanks to everyone who responded, truly appreciate it.

A newbie was just overwhelmed with a 41-page B&P report and wasn't sure what to do. Also hard when you try to manage all these interstate, having to call for quotes while still working FT. I have no intention to be disrespectful to the vendor. I simply, didn't know what to do...

Learnt heaps already so once again, thank you for all the responses!

 

[Perp]

My suggestion was simply for the OP to exercise their cooling off rights (5 days in Qld) if they no longer want to proceed with the deal. As far as I'm aware they are not legally obliged to give a reason to the vendor when exercising those rights.

The OP is on the forum asking for opinions and asked, "What are my options now? I didn't say I had all the answers, just my take on this situation.

I get it, wasn't attacking you, just wanted to make it clear to the OP that it's not how it works.

The OP says he has the benefit of a B&P condition, anyway, so no need to cool off, he can exercise his right not to proceed without penalty (whereas cooling off does attract a modest penalty).

I agree with you, Hypnotic Cat, that declining to proceed is more ethical than asking for a price reduction.