Government housing purchase

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

 

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?

 

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!

 

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.

 

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

 

@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

 

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..

 

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!

 

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.

 

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.

 

@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.

 

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!

 

@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.

 

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.