I believe you must engage a Buyers Agent with every property purchase, Using a Buyers Agents/Buyers Advocate and Property Advisor is key to more property investment success. These are extracts from my latest book “The Australia Property Investment Handbook 2018-2019″. In all good book stores now. Also Read Property Finance Made Simple and Property Investing Made Simple. Property investment, using buyers agents/ buyers advocates, is so important, and if looking in Melbourne for example, you should look for Melbourne Buyers Agents or Melbourne Property Advisors. We also service NSW and QLD, so look for Sydney Buyers agents and Brisbane Buyers agents, and QPIA advisors
Investment strategists, property investment, buyers agents, Melbourne buyers advocates, Melbourne Buyers Agents, Melbourne Property Advisors,
Sydney Buyers agents , Brisbane Buyers agents, QPIA advisors, Property Investing Made Simple,Property Finance Made Simple, Investment strategists, property investment, buyers agents, Melbourne buyers advocates, Melbourne Buyers Agents, Melbourne Property Advisors, The Australia Property Investment Handbook 2018-2019,
Now you have found a property, or your buyer’s agent has found a property or short list of properties for you that suit your plan and property strategy. They have been well researched, finance is pre-approved, you have decided on a conveyancer to use and you have a property inspector in mind. You have spoken to your accountant to advise you if you should purchase the property in your own name or in the name of another entity, such as a company or a trust. Upon deciding which property you want to purchase, you either attend the auction if there is one, or you start negotiating.
So, what can you do to try and reduce some of the risk?
You can pay for a property inspection to be done prior to auction, understanding of course, that you risk having wasted $380, if you are unsuccessful at auction. A further $200-$300 could be wasted if a pest inspection was also done. What a great insurance policy in a way, it at least would provide comfort in bidding at auction; it is a small price to pay to help avoid making perhaps a several hundred-thousand-dollar mistake
Ensure you have a pre-approval in place before auction, this does not do anything to eliminate the risk of a low valuation or you paying too much, but at least the risk of not even getting finance is reduced.
You just cannot change the fact though that you can’t have a ‘subject to finance clause’ in the contract.
You could also try buying the property before auction. Some vendors will accept an offer, some want the offer to be a crazy offer, and others may simply accept a reasonable offer to avoid the risk of the property not selling at auction. If the vendor does accept an offer from you, you could negotiate to have the clauses inserted in the contract.
RULE: You cannot have a ‘subject to finance’ clause or ‘subject to property and pest inspection’ clause in the contract under auction conditions, you are not protected.
With a private treaty, i.e. when a property is not going to auction, you can insert the clauses in the contract, subject to negotiations. Be wary of dodgy real-estate agents. One example is a property in Frankston, Victoria. The agent was willing to accept a finance clause but not a property inspection clause in the contract. This has problems written all over it and it would more than likely suggest that the agent knows there is a problem and lacks the integrity to tell you. In this case we walked away and later discovered there were in fact serious issues with the property. If you think you can always trust the sales agent, think again.
When there is a private treaty, different agents have different ways of handling the process.
In March 1999, the office of fair-trading released a video of the president of the REIQ stating, ‘We have a legal, moral and fiduciary duty to promote and protect the interests of the vendor and have no interest in the purchaser.’
There are several approaches the can agents take, and you need to ascertain which approach is the one you must follow.
- You submit a tender, putting your best foot forward and the agent presents all offers to the vendor. No second chance, this does not provide you the ability to negotiate, and you risk offering more than you may have needed to, or too little.
- You can negotiate with some back and forth until either you walk away because the vendor still wants more, or you agree on a price. This process can be via email if in NSW, leading to an offer being submitted on a signed contract and presented to the vendor. If the agent asks you if you’re willing to fill in a contract it suggests you are close, but not in Victoria. In Victoria, many agents will not want to waste their time with you until you submit any offer on a signed contract. In my soon to be published book, (‘The 100k Property Plan; how to earn $100,000 per year from property’) I will go into depth on differences between different states of Australia. Each state is different.
- Once you sign the contract in a private treaty situation it is normal to have seven days for property and pest inspection to be carried out, and 21 days for finance to be fully approved (in Victoria). In NSW for example you may only have seven days for property and pest, and 14 days for finance in general. In Victoria, you may have 30, 60 or 90 days agreed settlement period, sometimes 120 days. You could even negotiate 12 months, with access to the property prior, for your personal enjoyment. In NSW, it is 42 days. Again, other states will be covered in my next book.