NSW Offer for a commercial property in Parramatta

Discussion in 'Property Analysis' started by htopg, 20th Dec, 2019.

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  1. htopg

    htopg Well-Known Member

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    My friend has a commercial property in Parramatta.
    She got an offer from an agent's buyer and the offer is as follows

    Sale price: $5,000,000
    Deposit: 5% released to the vendor
    Settlement: 24 months from the date of exchange
    Agent fee: 2.5% plus gst of the sale price - 50% payable upon exchange and 50% payable upon settlement of the matter.

    Is there anything that is unusual?



    Thanks in advance.
     
    Last edited by a moderator: 20th Dec, 2019
  2. Stoffo

    Stoffo Well-Known Member

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    A two year settlement ?
    So she still gets all the income and pays all the outgoings (land tax and other holding costs) in the interim.
    Is it worth $5M today ?
    What will it be worth in two years time ?
     
  3. Shady

    Shady Well-Known Member

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    Yes,
    Why is she paying the buyers agent a selling fee? If they haven't appointed a selling agent then tell them to get their fee from the buyer.
    What is the property worth now? If it's currently worth $4mil then happy days. If the property is currently worth $5mil then it doesn't seem to be a good deal.
     
  4. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Is that $5m incl of GST or not ? The difference in the two impact profit by $454,000 which isnt a small sum. Is the sale going-concern ? ....Many issues.

    If you are interested then seeking independent legal advice would be normal - Dont rely on the agent, the BA or the buyer or their legal people.
     
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  5. htopg

    htopg Well-Known Member

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    The long two year settlement worries me.
    I am not sure if it is worth $5M today.
     
    Last edited: 20th Dec, 2019
  6. htopg

    htopg Well-Known Member

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    Maybe double dipping from the agent?
    I am not sure what the property is worth now.
    This is commercial and the zoning seems to suggest that 50+ units can be constructed.
    There was an offer of $3.6m last year.
    My friend turned it down and now the offer is $5m.
     
  7. htopg

    htopg Well-Known Member

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    Good question!
    I will ask my friend to check if that includes GST or not.
    By legal advise, do you mean a solicitor who can go through the contracts?
     
  8. Beano

    Beano Well-Known Member

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    Contract should show $5m plus GST if any
     
  9. MWI

    MWI Well-Known Member

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    There's a huge difference between suggesting or knowing, having a DA approval! Many things can impact the outcome or feasibility.
     
  10. Scott No Mates

    Scott No Mates Well-Known Member

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    $100k/unit as if. It'd be worth at least double that IF the site can yield 50 units. Some detailed site planning may be required to ascertain how you can achieve the density ie setbacks, dimensions of the site, existing services, ground conditions, height restrictions, FSR etc.

    The zoning won't mean much other than guiding what the permissible usage is.
     
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  11. Shady

    Shady Well-Known Member

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    Most probably...If an agent has approached your friend with a buyer tell them they're not paying a selling fee, get their buyer to pay it.

    I am not sure what the property is worth now.
    This is commercial and the zoning seems to suggest that 50+ units can be constructed.
    [/QUOTE]
    It really doesn't matter what its currently zoned for, It's about what the 'experts' believe they can get approved by council or state government.

    Oh...make doubly sure that you use a solicitor (not conveyancer) and one that's very proficient in commercial property.
     
  12. Jmillar

    Jmillar Well-Known Member

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    2.5% + GST is expensive for a sale that size.

    PM me if you want an agent that specialises in that area to give some advice on what it's actually worth.
     
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