Join Australia's most dynamic and respected property investment community

Negotiating after B&P results

Discussion in 'The Buying & Selling Process' started by Taku Ekanayake, 11th Nov, 2015.

  1. Taku Ekanayake

    Taku Ekanayake Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    765
    Location:
    Sydney, Australia
    Hi guys,

    Would love any advice and feedback I can get.
    I have an offer on a property, and the B&P results just came back yesterday. There is more fixing that needs to be done than expected. Roughly $15-$20K reno. I had factored in $10K reno when I put in the offer which I got for $238K.
    Now I want to ask for $12K reduction off initial offer which is over 5% off the offer price.

    The first REA had it listed in July for $280K, and then reduced to $255K in October. Two contracts have crashed on it during that time.
    It then got re-listed a week ago with a new REA (which is the one I'm dealing with). They still have it up for auction on the 28th of November as a backup if I was to crash on it.

    I spoke to REA last night to set expectations that I will be asking for a reduction in offer price. REA said you can try but I doubt the vendor's bank will release the property if you ask for lower price because apparently the vendor's mortgage on the property is larger than what I offered (I think he is just pulling my leg here).

    I will be preparing a document outlining all the work that needs to be done, and send to REA, with a request for $12K off.
    What else do you suggest I would do to get the best outcome?


    Thanks so much,

    Taku
     
  2. WattleIdo

    WattleIdo renovating Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    1,822
    Location:
    Central West NSW
    Tell the REA what price you are now willing to pay and why. REA will probably come back from vendor with a half way price. If you believe you have time on your hands, do nothing. Wait. If you're ready to go ahead,, accept the mid-point between first offer and second offer.
     
    Taku Ekanayake likes this.
  3. RetireRich101

    RetireRich101 Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,312
    Location:
    Sydney
    Is the bank valuation done already? Did it come back as purchased/offer price? What is the risk rating on the improvement?

    has your bank accepted the security considering a 15-20k reno is required?

    Further discount after a B&P is very dependable on vendor expectation
     
    Jake Milne and Taku Ekanayake like this.
  4. larrylarry

    larrylarry Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    3,508
    Location:
    Sydney
    You can only try I guess. There was thread on this before. Your 3rd property? You moved really fast in Queensland.
     
    Taku Ekanayake likes this.
  5. Taku Ekanayake

    Taku Ekanayake Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    765
    Location:
    Sydney, Australia
    It's subject to 14 day B&P and Finance. Last day is 20th Nov, which at this time it goes unconditional.
    So you think meet half way between their counter offer? If they come back with $6K, I meet at $9k?
     
  6. larrylarry

    larrylarry Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    3,508
    Location:
    Sydney
    instead of getting $226K, meet at $232K.
     
    Taku Ekanayake likes this.
  7. Taku Ekanayake

    Taku Ekanayake Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    765
    Location:
    Sydney, Australia
    Bank val is done.
    What does the risk rating mean (I've attached the risk rating)?
     

    Attached Files:

  8. Taku Ekanayake

    Taku Ekanayake Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    765
    Location:
    Sydney, Australia
    Ok cool, will try find the thread.
    Yep, just settled on 2nd last week and had a little wiggle room for a cheap 3rd one so I thought why not?
     
  9. larrylarry

    larrylarry Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    3,508
    Location:
    Sydney
    Well done!
     
    Taku Ekanayake likes this.
  10. WattleIdo

    WattleIdo renovating Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    1,822
    Location:
    Central West NSW
    You'll say 12K;); They'll say 6K o_O; you accept the 6K :cool:.
    Yeah.
    Whatever you think it'll cost, go for that.
     
  11. Taku Ekanayake

    Taku Ekanayake Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    765
    Location:
    Sydney, Australia
    Wasn't aware of this issue.. And the bank doesn't know that a $15-20K reno is required
     
  12. Azazel

    Azazel Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    8,113
    Location:
    Brisbane
    Get quotes, and itemise EVERYTHING that is required.
    You probably won't get all that you ask, but hopefully get a reasonable outcome.
     
    Leo2413 likes this.
  13. Taku Ekanayake

    Taku Ekanayake Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    765
    Location:
    Sydney, Australia
    Thanks man!
     
  14. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,161
    Location:
    Canberra and Sydney
    I've seen this go two ways.

    Some clients manage to negotiate a discount - and the purchase proceeds.

    I've had other clients mention the word "discount" and it's onto the next buyer. This typically happens in hot/rising markets where the vendor has control.

    It all comes down to the demand for the property.

    Cheers

    Jamie
     
    legallyblonde and Taku Ekanayake like this.
  15. larrylarry

    larrylarry Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    3,508
    Location:
    Sydney
    Taku Ekanayake likes this.
  16. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    4,954
    Location:
    Sydney
    Agree with Jamie.
     
  17. Biz

    Biz Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,482
    Location:
    Sydney
    I love b&p time. I always carry on like a smacked tit regardless of how minor the issues.

    First thing Taku. Stop talking to the agent, their job with you is pretty much done at this stage. Go through you solicitor and ask for the full discount, i would ask for 20k off and expect them to meet you in the middle.
     
  18. larrylarry

    larrylarry Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    3,508
    Location:
    Sydney
    + 1. In this time of the year, it depends if Vendor wants it quickly done or wait for better offers in the new year (often slow...)
     
  19. D.T.

    D.T. Adelaide Property Manager Business Member

    Joined:
    13th Jun, 2015
    Posts:
    5,600
    Location:
    Adelaide, SA
    In SA we can do this using the cooling off period.

    Eg, I had a property I offered on in Semaphore. The vendor signed and returned it. During the cooling off period, I arranged the B&P inspection which came back with lots of asbestos which greatly increased my costs of renovating. I wrote back to the sales agent to exercise my cooling off rights and they offered to hear alternative sale price to keep me in the deal.
     
    Taku Ekanayake likes this.
  20. larrylarry

    larrylarry Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    3,508
    Location:
    Sydney
    +1 can try too but it's your property that you wish to buy...so ultimately, more or less reduction depends on you. Will you find other similar properties in this bracket?