Hi guys,
I just want to know what people normally do in regard to this. Do we do the building inspection first and make sure that everything is ok before we sign the contract, or do we sign the contract and secure the deal first and have our due diligence done during the cooling-off period?
I just missed out on a deal. The story goes like that. Our offer was accepted on Tuesday morning and I straight away organised the building and pest inspection. The inspection reports were ready by Wednesday late afternoon. On Thursday morning I discussed with the agent and arranged with him our final house inspection for Saturday (as Friday was Good Friday) as there were something mentioned in the reports that concerned me and I thought I could knock off a few thousands dollars off our original offer price to cover the expenses for the repair. Everything seemed fine up till lunch time, Thursday, the agent emailed me and told me that "the other buyer", which he never mentioned to us, was ready to exchange contracts that afternoon and asked if I could do so in order to secure the property as our offer price was higher than the other buyer. We didn't go ahead and the property was sold to the other buyer.
So, is this a common scenario in real estate? Any advice or comments on this would be welcome.
try a contract subject to a an acceptable inspection, we have done this and it seems to work OK. You can still get bumped by someone with a better price or less conditions….but that normal business. At least this way you have something to offer the vendor.
Hi Yarpos,
When you say "try a contract subject ….." do you mean you have to pay the 10% deposit as well? In that case the contract would be binding?
aliyee wrote:Hi Yarpos,When you say "try a contract subject ….." do you mean you have to pay the 10% deposit as well? In that case the contract would be binding?
Normally at the contract stage you pay a deposit, it doesnt have to be 10% , thats just what the agent likes as their commission if then banked (roughly speaking). If the contract is signed by both sides its binding after the cooling off period…..please note "binding" can be a relative term. How much time, energy, $ would you spend really trying to enforce it? Generally its not an issues but I dont count any deal done until settlement is completed.
Ali,
When you sign a contract, you would only offer a few hundred dollars to "secure" the property and should the vendors sign as well then you have say 14/ 21 days to carry out a building/pest inspection or what other conditions and if happy to proceed pay the deposit by the date set out in contract 14/21 days. Most ok with 5%.
Be careful of the standard Real Estate agents special conditions, ie: building / pest inspection as it is designed to LIMIT your opportunity to end the contract – as it only allows you to pull out only if it has major structural defects, you are better putting in your own condition that states if the report is not to your satisfaction then you can walk away and all monies refunded.
Regards
MattHi Matt,
I'm a bit confused here. I just need to clarify a few things:
1) So you mean we can actually sign the contract and pay a nominal deposit, like a holding deposit, without having the vendor sign as well? Is this contract binding in any way then?
2) I thought once you sign, it means you are ready to exchange contracts?
3) And if the vendor sign as well, do we just get 5 days (cooling off), instead of 14/21 days, to have our building and pest inspection done?
4) If we had signed the contract and have our buidling and pest inspections done during the cooling off period, and if the reports come back with some defects, do we still have room to re-negotiate the price?Thank you guys for all the comments.
Basically if you decide you would like to purchase the property you tell the agent you want to put a contract on it.
you give your details and include your clauses which are building and pest which can be any amount of time you like as long as the vendor agrees to it an average time is 7, 10 or 14 days you also put your finance clause in which is average 14,21,30 days
you then state what settlement date you want generally 30,45,60,90 days you also put in what deposit you would like to pay again you choose the amout keep it small like $500 or what ever you are comfy with remember it's your choice there are not set amounts. you also state the price you would like to pay they then take the written contract that you have signed to the vendor they either counter sign with a higher amount or they sign it off and accept your offer. You then orgainse you building and pest ect and go from there. there is another thread on here in regards to "the other buyer"aliyee wrote:Hi Matt,
I'm a bit confused here. I just need to clarify a few things:
1) So you mean we can actually sign the contract and pay a nominal deposit, like a holding deposit, without having the vendor sign as well? Is this contract binding in any way then?
2) I thought once you sign, it means you are ready to exchange contracts?
3) And if the vendor sign as well, do we just get 5 days (cooling off), instead of 14/21 days, to have our building and pest inspection done?
4) If we had signed the contract and have our buidling and pest inspections done during the cooling off period, and if the reports come back with some defects, do we still have room to re-negotiate the price?Thank you guys for all the comments.
1) the contract means nothing until its signed by both parties. at the stage when only you have signed it , its just an offer2) when you sign it you are making an offer and showing willingness to proceed to settlement (subject to any conditions)
3) you get your statutory cooling of period depending what state you are in…..as already stated, you can make the inspection a condition of the contract thereby giving you more time
4) if the defects are enough to wihdraw the offer then you are at square one again and can make a new offer
If this is confusing perhaps you could clarify all this with a solicitor, and ask questions face to face. Probably $100 or so well spent
Hi Ali,
1) So you mean we can actually sign the contract and pay a nominal deposit, like a holding deposit, without having the vendor sign as well? Is this contract binding in any way then? YES! it is binding and agents use the contract to present an offer as it makes it harder for you to pull out.
2) I thought once you sign, it means you are ready to exchange contracts?
This is what I thought – I think it depends on the agent or where you live. As i had only signed when we were ready to exchange and vendors agreed to all terms, but recently buying in Melbourne every agent wanted to present an "Offer" to the vendor by signing a contract, which can be dangerous if you arent prepared or believe the agent that it is just an offer. A good website for info on the offer/contract process is http://www.lawyersconveyancing.com.au I have used them.
3) And if the vendor sign as well, do we just get 5 days (cooling off), instead of 14/21 days, to have our building and pest inspection done? Still get your 14/21 days as well as cooling (3day in Victoria) NOTE: I believe coolin off period is from when the purchaser signs not when the vendor signs, so if they counter sign and you have passed 3 days – then you arent protected! Dont rely on cooling of period to get out..Just suggestions…seek legal advice – Try website above: good resource and helps you in being protected even if your not in Victoria.
Regards, Matt
Hi Ali
When you get to the contract stage include a clause in your contract that says something like
"subject to finance of x$ at X% and satisfactory building and pest inspections"
Talk to a solicitor if you need more clarification on the exact wording.
That way if any of these things do not line up you can cancel the contract.
Also in terms of deposit, you should not be expected to come up with the 10% deposit until contacts are exchanged and even this can sometimes be changed if you include the appropriate clauses in the initial documentation you sign along with settlement periods as Matt has suggested.
I really recommend you spend say $100 buks and half an hour with a solicitor in the area you poroposed to invest in getting all this sorted so you are really clear on your obligations and options
Warm Regards
SueMIT | Owen Real Estate
Email MeHi Ali
When you get to the contract stage include a clause in your contract that says something like
"subject to finance of x$ at X% and satisfactory building and pest inspections"
Talk to a solicitor if you need more clarification on the exact wording.
That way if any of these things do not line up you can cancel the contract.
Also in terms of deposit, you should not be expected to come up with the 10% deposit until contacts are exchanged and even this can sometimes be changed if you include the appropriate clauses in the initial documentation you sign along with settlement periods as Matt has suggested.
I really recommend you spend say $100 bucks and half an hour with a solicitor in the area you propose to invest in getting all this sorted so you are really clear on your obligations and options
Warm Regards
SueMIT | Owen Real Estate
Email Me
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