Negotiating price after loan approval

Discussion in 'The Buying & Selling Process' started by Nate7invest, 27th Dec, 2019.

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  1. Nate7invest

    Nate7invest Member

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    Hi was just seeing of anyone has gone through the same situation as I'm in at the moment. Made some last minute negotiations on price after building and pest but my loan has been approved for the pre-negotiation price not the newly negotiated price (negotiated on xmas eve, convayencer left the office before could speak to them with updated price and isn't back till after new years). My finance due date is on the 31st of Dec but my conveyancer won't be back in office till the 2nd of Jan with settlement due on the 9th of Jan. Was wondering if it would be too late to adjust the approved loan amount and how leanient the process could be over xmas/new years break with pushing settlement back as I have no way of going forward until after the new years break.

    Cheers
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    How much you talking? If small loan left as is and adjusted at settlement
     
  3. Nate7invest

    Nate7invest Member

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    Hi Terry

    Only a reduction of 2.5k, when you say adjusted at settlement do you mean the vendor would just directly pay me the 2.5k difference?
     
  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Yes
     
  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    But check with your broker
     
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  6. Angel

    Angel Well-Known Member

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    The bank will want the revised contract, but your solicitor will sort out the money at settlement. Keep the loan the same unless it impacts the LVR. You dont want the bank taking any longer to finalise their processes. That $2.5k will cover your solicitor's fees, council rates or other disbursements.
     
  7. Nate7invest

    Nate7invest Member

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    Thanks for the reply Angel, sounds like keeping the loan as is and adjusting at settlement is the way to go
     
  8. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Not really the way I'd do it because a change in purchase price will affect the LVR, possibly LMI and the loan would need to be re-approved and re-documented. That's unlikely to be a big deal, but it takes time to sort out. The risk is minimal, but there is still risk in this.

    The way I've seen this frequently sorted is it's more a cash-back or similar from the vendor to cover your costs of fixing any problems. That way the purchase price, loan and LVR remains the same. It's usually fairly straight forward for your conveyancer to sort this out as a settlement adjustment.
     
  9. Angel

    Angel Well-Known Member

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    O yeah. What Peter said. So do you mean it's more of a "gentlemen's agreement" about the $2.5K?
     
  10. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    a binding contract.
     
  11. Nate7invest

    Nate7invest Member

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    Negotiated the 2.5k reduction after building and pest. Took longer than expected to get a final negotiated price (vendor was going through personal issues and over xmas period) hence the loan was approved for the original amount before I could submit the new price
     
  12. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    This isn't really a gentlemen's agreement but you're also not changing the purchase price. You're simply both agreeing that the vendor will compensate the purchaser $2.5k to cover the cost of repairs that should have been done prior to settlement.

    The purchase price and the value of the property aren't changing as a result of this, so there's no need to change the loan, stamp duty or any of these figures.

    The vendor never hands over $2.5k, this is simply a settlement adjustment. Effectively the purchaser hands over $2.5k less at settlement and the vendor receives $2.5k less from the transaction.

    I can't say exactly how it happens from a contractual perspective, I'm not even sure it's applied the same in all states. This is part of the conveyancing process (I manage the finance process, I'm not a conveyancer). I've seen this done many times in Victoria.
     
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  13. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    It is essentially a variation of the contract.
     
  14. ChrisP73

    ChrisP73 Well-Known Member

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    So how is it not a change to the price? Just curious.
     
  15. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    It is
     
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  16. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Pete's on the money.

    You really don't want to mess around with getting reapproval at this time of the year.

    Cheers

    Jamie
     
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