Bad Experience trying to buy a unit yesterday

Good Afternoon All,

Can someone please shed some light on a bizarre situation that my husband and I experienced yesterday.

A bit of background - we have been looking for a while to invest in property with our SMSF. Over a month ago we went to our Accountant and he set up our SMSF as a company trust with the ability to borrow to purchase a property with a bare trust. As far as we understand we have the correct SMSF structure for property investment. We also have the trust deeds with us to prove we are legit. We went through a broker who got us pre approval with St George SMSF loan so after this we started looking.

We came across a 2 bedroom unit we really liked yesterday, it had been on the market since May and it had a price drop from $475k to $455k that week so we were attending the first open home of the price drop. Nobody but us showed up for the whole duration.

To cut a long story short, we liked the unit, it was tenanted for a good price and tenant wanted to stay and the building itself was in a prime location. My husband put in a low ball offer to test the waters. $432500k, the agent came back to us and said vendor won't start negotiations until we come up. So after a while I call back with 445k. Eventually the vendor counters with 450k and I said to the agent we accept I will come in today to sign. He kept banging on in the conversation that the vendor was very concerned that our finance won't go through because in their experience half of all SMSF finances get knocked back or falls through.

I started to get the ***** with the agent, I was telling him that we have our act together and are not in the business of time wasting. Given there were no other offers I couldn't understand why the hell he was pushing us away like that and full on insulting us like we were true morons. He then said that he would have to convince the vendor to let me come and sign the contract. At that point I lost my **** and said if you need to convince someone to take my money then forget about the whole damn thing and hung up on him.

After speaking with a couple of other agents they seemed utterly bewildered at our experience.

Does anyone know of these type of SMSF situations where things fall through even though the purchasers have done all they can to ensure they are fully compliant and eligible to purchase?

Thanks in advance, I am most disappointed that we didn't get the unit but out of principle he can shove it, he isn't getting a cent from me.

 

Why did you even mention the SMSF? No need to let them know.

SMSF loans generally take longer to approve.

 

So I should not mention it at all? Ok well if I can get away with that then I will next time. Thanks

 

Our broker said to ask for a 15 day cooling off if possible but 10 days should be sufficient, I forgot to add that in my reply. That's why we mention the SMSF also the contract will be in the trust name

 

No need to mention anything about the SMSF to the vendor - none of their business.

I hope you have sought legal advice? The contract should not be in the trust's name but the trustee's name (the custodian trustee)

 

There are several things to say about this :

Firstly, a vendors permission is not required in order for you to submit a signed offer in contract format. It is, however, the vendor's discretion as to whether they wish to accept your offer by also signing the contract.

If you are utilizing bank finance, then the purchaser will not be the Super Fund itself and it will also not be the corporate trustee of the super fund. It will be a separate entity (eg Security Custodian Pty Ltd ATF Smith Street Property Trust). Unless you include words in the Pty Ltd such as "Super" or "SMSF" then the agent will be none-the-wiser that this is a super fund purchase.

 

Just get legal advice about the specifics of the name of the contract, otherwise there could be stamp duty implications to fix it.

My suggestion is not to use a conveyancer but a solicitor.

 

Yes sorry the name is not the trust name but the entity name in this case it's JK XXXX Properties pty ltd for example. The Accountant had advised us previously of which name to have the contract set up in.

 

accountant's should not be giving this advice - check with a lawyer.

 

Thanks, we found it strange that the agent didn't want us to come in and sign the contract. I am happy we walked away, it's not a good omen to be upset in that manner before anything had started.

 

Thanks, is this something that your company offers? You seem quite helpful in the forum, is it something we can speak with your company about?

Thanks

 

I don't practice conveyancing at the moment - but there are plenty of lawyers out there who do.

Before signing a contract you would also want advice on the terms - although some sign and then seek advice and use the cooling off period to amend if need be.

 

Ok great thanks, I appreciate your advice.

We have a property lawyer that we used in past, I will get in touch with his office regarding this matter.

 

Just on 'insulting' - I don't think they teach tact at RE school. As a 22 year old first home buyer I came across a RE agent who abused me for being a time waster for not having enough money. As a new Australian who was scratching together a deposit I remember feeling very hurt and a long way from home.

Three decades later it was very satisfactory to ignore phone calls from same agent. She has no idea. Politeness and helpfulness could have built a client for life.

 

It's ok I now know why we weren't allowed to sign the contract

The vendor listed this property 16 times since 2014 and it didn't sell once.

Now I don't feel so bad.

I asked the agent of other offers were made in past and he said yes but no one signed a contract. I've taken the link to the report out as I don't want to allude to anything and be accused.

 

My advice is to request at least a 21 day settlement period, preferably 28. The two I've done in my SMSF took 17 and 14 days respectively - but I had everything lined up.

Maybe the finance has fallen through previously due to a combination of bank val and LVR?

 

Yikes, 21 or 28 day settlement periods are extremely tight for a SMSF. I'd want 60 days.

 

Ring that agent and tell him 400K is your best offer. Then hang up.

 

If you are going to do that, drop the price back to the original offer. Tell the agent that's what he gets for being a twat.