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Buying a "subject to sale" property

Discussion in 'The Buying & Selling Process' started by Kangabanga, 18th Jul, 2016.

  1. Kangabanga

    Kangabanga Well-Known Member

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    Was going to post this on the other thread, please read it for some context.
    Selling "subject to sale"

    but thought I'd make a new one since my situation is on the opposite end.

    Just inspected a house offers over 1.4m which is under contract @ 1.3m . Agent says its subject to sale of buyers property which he will be listing for sale soon. If I could match this offer with better terms and it got accepted, he could then notify the Buyer to make their contract unconditional within 72 hours or else the sale would become under contract to me (not sure how that would work? probably some clause will be put into my contract saying it will be effective upon failure of the other contract?)

    Initially I raised my ethical concerns about gazumping the other buyer and was puzzled why REA would still market the house to me and not put under contract on the listing, etc etc. Also wondered why the vendor be willing to sell such a high priced property "subject to sale" and with a discount too.

    But reading that thread it kinda made sense. Since its been a really slow market before the elections over here, the REA must have helped the Buyer negotiate the purchase price down whilst locking in his commission before his exclusive contract runs out in a months time.


    Does this mean that this was highest offer the vendor managed to get?

    Would it be ok to ask to see the current subject to sale contract before putting in my offer?(what proof do I have that REA is telling the truth?)
     
  2. andrew_de_a

    andrew_de_a Active Member

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    Why do you need to see the contract? If you would like to buy it make an u conditional offer.

    Maybe they haven't exchanged on the other offer that is subject to the sale of their house.
     
  3. Marg4000

    Marg4000 Well-Known Member

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    No, you probably can't see the other contract. At least, I hope it is considered unethical.

    I would be outraged if a RE agent showed a contract I had signed to another buyer.
    Marg
     
  4. Big Will

    Big Will Well-Known Member

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    You will not see the other person's contract, privacy act will not allow you to.

    You either beat their offer and then the purchasers have to make a decision to either go unconditional or terminate the contract and you win.

    The agent should keep trying to sell the property because if the sale falls through (or they are able to find a better offer). To me even if you offered 1.3M unco your offer is better than the current one and it would make the current purchasers have to go unco now. However if you raise the bar (say 1.4M) maybe they cannot afford to pay that so you will get it for 1.4M. Fun game of trying to beat an offer without the other purchasers being able to complete the sale (if you want it).

    Does it mean that was the highest the vendor got? Most likely as subject to selling is a rather weak clause but if it was acceptable why not accept it subject to the sale of and if someone else sees it and likes it the vendor is in a win/win. Either the current purchasers match your offer OR they walk away and the vendor now has a better offer than before.
     
  5. Scott No Mates

    Scott No Mates Well-Known Member

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    Unless the vendor is desperate why would they accept a contract on the purchaser's terms subject to a sale which may or may not occur in an undefined period?

    If the contract is still up for negotiation, go for it if it stacks up.
     
  6. Big Will

    Big Will Well-Known Member

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    I highly doubt there is an undefined period, remember we don't have all the information here.
     
  7. Kangabanga

    Kangabanga Well-Known Member

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    @Big Will : i would think that having accepted the subject to sale at a price point at or above asking might be beneficial for the seller with regard to further offers that come in. But if its a discounted subject to sale accepted like in this case then it might come off as seller being too "motivated"?

    @scott no mates : yeah that's what i was thinking too after reading the subject to sale thread. Vendor is probably pretty eager to sell.

    Now I know why, just got some paperwork from the agent, apparently one side of the house(20m) had ground subsidence of up to 32mm and needed a $14000 Uretek underpinning couple years back. there was no geotech report and warranty for 10 years on the uretek work would probably be not transferable.. looks like gotta do more due diligence before buying.
     
  8. Big Will

    Big Will Well-Known Member

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    You have given us no information besides an intro price (which means nothing). What if it had been on the market for 1 year and they got an offer of 1.3M subject to sell. Are the vendors motivated and desperate to sell, well it was the best offer. Is the purchaser a friend and there is going to be another 150k sitting on the table when it goes unco? Who knows.

    Like I said try at 1.3M unco and force the buyers hand or try at 1.4M and make the purchasers stretch. You can even try at 1.25m if you like unco if you like. Just remember you will likely have one shot at this as the purchaser just has to go unco and you are out so offering 1.3M unco and the purchaser goes unco you lose.