Paying off vendor overdue rates

Hi, I'm new here and hoping to buy my first house. The original agreed price agreement collapsed when the bank valuation came in at $10k under. The vendor and I both pulled out. She has since come back with a reduced offer, and we are now renegotiating. We're basically down to haggling over $1,500 (which I realise seems like a really prissy amount - but not to either of us). Anyway, she's asked if I'd be willing to take on that portion of her overdue council rates, which I can pay off under a payment plan set up by the council in question. I want to know if anyone has done this? My parents were horrified at the idea. As a first home buyer I really don't have a clue.

 

I don't like the idea of it either, and think the council should be paid in full with the settlement funds. I don't think there's any guarantee of a payment plan for you (once ownership has changed).

What does your solicitor say?

 

It's only just come up, so I haven't had a chance to ask her yet. It feels dodgy to me, but I wondered if it is actually done often when people quibble over minor (or what might appear to be minor amounts to some) amounts in the final negotiations.

 

If she’s behind on her rates, she’s probably keen to sell. Hold firm on your price.

 

I know that she really needs to sell, I just don't want to feel like I'm sticking the boot into her when she's desperate. I've offered $1500 above the bank valuation, she wants an additional $1500 any way I can agree to it. I offered the extra because it really is a great house in a great spot for my daughter and I, but I'm also very conscious of the fact that I'm paying over value; and this has to come out of our savings, which I'm very protective of in case we have an emergency.

 

Business is business and if you feel like your price is right, then stick to it. Never overpay on a property because you feel sorry for the other person. You can be flexible, amicable and friendly, but do not pay their share of anything because you feel sorry for them. Rates will be apportioned at settlement and if the current owner wants to offset rates, let the sales agent take it out of commission. They will be keen to get it off their books and avoid a another contract collapse.

I'd probably wait a little while then offer a lower price with more flexible conditions.

- Andrew

 

You are taking on the vendor's personal debt, this is usually an adjustment upon settlement however sad they are in arrears, this will be deducted from the amount to be paid to the vendor and a separate cheque to pay council.

If the settlement funds do not cover the outstanding mortgage, the bank may not settle.

 

I hadnt really thought about that side of it - as I have to give notice on the house I'm currently renting, that could make things awkward.

 

Unpaid rates is the vendor’s problem; don’t make it yours.

If I was in your shoes, I would submit an offer at whatever price you are happy with, include a contract condition stating that your offer expires in 24 or 48 hours and instruct the REA to get the deal over the line, otherwise you are walking.

No REA worth their salt would let a deal fall over for $1,500 .

 

?, There shouldn't be any overdue rates after settlement. so tell her you will pay any debt for rates. Just remind your solicitor, to make sure he does his job properly and make the adjustment for rates which is the whole point of the settlement process.

 

And that the outstanding rates will come out of the settlement funds (otherwise you are making them think you will pay the debt).

 

This!

 

What happen ?
Did the real estate agent take a cut in commission ?

 

No, the vendor eventually caved. I basically just said, I don't have to buy any house, I already have a roof over my head, good luck in the future. Sale went through at the bank valuation price and we move into the house in just over a week!

 

Great work !
They should have taken the $1,500 over the valuation you initially offered instead of pushing for more .

 

Would have saved the vendor some money in rates that continue to accrue until we settle at the end of this month.

 

Exactly, would she do the same for you, if the situations are reversed?

Maybe or maybe not

 

Never, ever take on someone else's rates or any other tax debts under a payment plan. When it comes down to who get's paid in a forced sale, the order of who gets paid is something like:
* ATO
* Council debts
* Bank
* Any other creditors, including the REA.

If you take on someone's council debt, you could be opening yourself up to a lot of pain. A better plan would be to offer to release the deposit early and they can pay it from that.

Usually outstanding rates get paid from the vendors funds at settlement.

 

How much are the rates are we talking?

wouldnt it be common sense to take the outstanding rates value off the selling price?