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Government housing purchase

Discussion in 'The Buying & Selling Process' started by R.B., 10th Dec, 2015.

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  1. R.B.

    R.B. Well-Known Member

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    Hi Guys,
    I found a government house for sale, it is in a good location, updated / cleaned,...etc. it is for sale with a listed price. spoke to the agent, and she said that the contract is not subject to build and pest. it goes to a selection process (kind of a tender) where everyone submits an offer, and they pick the best offer. this is the normal process. They require 5% deposit.

    From your experience with such purchases. Can you please let me know if there are anything I should be aware of?. negotiation tips?.

    I am going to drive around the house, arrange build and pest during the cooling off period. and see how the streets around looks like, it will be with a 7% yield, and I am planning to buy and hold. no work to be done to the house.it will be around 10% less than the average price in the surrounding streets.

    Thanks
    Ramez
     
  2. Waldo

    Waldo Well-Known Member

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    What makes you think it will sell for a 10% discount?

    Yes it might have a listed price, but if its for tender or dutch auction I would imagine there will be offers above that price. Especially if it sounds like theres no work to be done?
     
  3. Wall Street

    Wall Street Well-Known Member

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    In Melb these often seem to attract a premium, as they are on decent size blocks - and everyone and his dog turns up to snag a bargain!
     
  4. Scott No Mates

    Scott No Mates Well-Known Member

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    If the contract isn't subject to p&b why wait until the cooling off period to find out what issues exist?

    There's no wriggle room if you find that all the drains are blocked, electrical wiring is non-compliant and all the copper plumbing has been removed.
     
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  5. Veech

    Veech Active Member

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    pardon my ignorance scott but the usual build and pest does not check for plumbing and electrical. Does usual people get these done as well?

    mental note to myself

    if any large trees, will go for plumbing check but what to look for to go for electrical inspe tion
     
  6. Scott No Mates

    Scott No Mates Well-Known Member

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    @Veech Oops, I have to admit that I have never paid for a p&b so haven't analysed what has been included /excluded. I would not recommend this approach to anyone who doesn't have building qualifications and a good grasp of services.

    I have updated my requirements for new buildings to include a sewer video
     
  7. willair

    willair Well-Known Member Premium Member

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    That does not mean much,maybe it's the block size zoning,just try and look into the block size for each property on both sides and the street that gives you a more understanding of value,plus the way this is set-up in contract terms in reality you have very little power with this ,unless you know someone..
     
  8. wobbycarly

    wobbycarly Well-Known Member

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    Last B&P I got done, he at least confirmed that the wiring was insulated in the ceiling, and the plumbing available to view under the house was free from leaks. Didn't check for blockages, though. And any plumbing that was hidden from view (in walls, etc) wasn't checked; if it was on a slab, the plumbing would have been hard to look at as well!
     
  9. Magnet

    Magnet Well-Known Member

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    Hi Ramez,
    We bought an ex-housing commission place in Deception Bay, QLD. The tender process is tricky. Just make sure you do your DD on price so you don't overpay. You can do building and pest prior to offer, most ex-housing are 20+ years so it's a good idea. There is usually a 2-3 week period to submit your offer from the time of advertising. Just check the deadline with the agent.
     
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  10. R.B.

    R.B. Well-Known Member

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    Hi Scott,
    This was the advise I got from the REA. as the contract is subject to finance, so there is a runaway clause in case the building and pest reports came with show stoppers. the reason for not doing those now, is basically not to pay for the reports, and they sign contract with someone else. It is not the best way, but this is the advise the REA gave to me.
     
  11. Scott No Mates

    Scott No Mates Well-Known Member

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    @R.B. - so ignorance is bliss?

    You're being blindsided by the agent. Your p&b is due diligence so you can determine how much you want to pay. So if you find out after you've signed the contract that there are serious flaws you then are committed to the purchase as well as having to do unanticipated work to bring it up to standard.
     
  12. Magnet

    Magnet Well-Known Member

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    With Government housing you buy as is, where is. I guess the agent is offering a 'way around the red tape' but I agree that the buyer then has all the risk in the deal. It's not the greatest position to be in. We managed to get an extra clause in to agree to building and pest but apparently this is a rare agreement. Always worth a try!
     
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  13. R.B.

    R.B. Well-Known Member

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    @Magnet. I think what you mentioned is the best option. I will add the build and pest clause to the contract and see how it goes.
     
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  14. legallyblonde

    legallyblonde Well-Known Member

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    In Tassie (for Housing properties) it is business as usual. The only interesting thing is... They get a valuer in and cannot sell for below the valuation.