Some advice - valuation

Hi

Posted here a little while ago about an OTP townhouse that went very wrong. I bought feb 2017, it’s likely to be finished end of 2019 after developer going broke

It’s a 4bd , 3 bathroom townhouse in a small complex. 243sqm all up (I think it’s about 80 outside with a garden shed/storage) , 1 garage 1 carapace 13kms from syd cbd

I paid just under 1.1

I have a 2bd/2bath unit 9kms from cbd which I owe just under 300k core logic says 750 but I think it’s probably worth closer to 650

I’m at a loss at what to do. What happens if all the buyers of the OTP property can’t settle? Do I sell my unit now and move in with family ? Redraw the equity early while the value is still relatively high?

any advice would be great

Thanks

 

You still have a year to plan, but consider some of these strategies now to give yourself plenty of time to think.

10 Strategies to help you buy a property when you cannot service 10 Strategies to help you buy a property when you cannot service

 

They forfeit their 10% deposit and stand to be sued by the vendor for the difference in price between what the original buyer agreed to purchase for and what they ended up selling for to another buyer (if there is a loss). If there is a profit the original buyer won't get any of it unless they choose to onsell at a profit themselves, if the contract allows.

 

Thanks , that’s really helpful. Guess
I have to wait and see a bit, but going by the media , I’ll be lucky to give my unit away in a years time ..

Do these things go to court often? Do they ever renegotiate ? 7 of 9 townhouses sold all around when I purchased so we could all be in the same situation

 

What would you want to renegotiate? They are not going to renegotiate the sales price as that affects the entire valuation of each townhouse (ie there is a comparable sale in the complex).

The way most people settle is to tip in extra of their own cash. This can come from savings, borrowing from family members, selling other assets etc.

Back in the early days of the Docklands in Melbourne people were selling the family home to get cash to settle and then moved into the unit that was going to be their IP.

 

Generally if you can't settle they will take the 10%, but litigation does happen. I know of a vendor suing a purhcaser who didn't complete as the property was resold about $300k less than the 1st contracted price.

 

@fobo may be worried the value of the other property is going to drop over the next year.

 

Yeah exactly , I’m just looking at options from now. Equity wise I might be able to redraw 200k+ right now , is it worth paying the interest and keeping the money aside.

Basically just don’t want to get to 3 months out and need to come up up with the rest of the deposit plus another 200k

 

I’m thinking more desperately - taking out the equity of my current place in case that drops over the next year

 

You wouldn't necessarily have to pay interest as you could store that cash in an offset account attached to the loan.

 

It could be a good risk mitigation strategy. I’d get specific advice from a broker. @Rolf Latham is always talking about buying umbrellas while the suns shining.

 

thanks , my mortgage broker is going to see what she can do. At least that way, i've redrawn at a bit of a peak so it balances out a little

 

@Propertunity summed up some of the potential solutions quite well.

One other option to explore is a family guarantee. About 2 years ago I had a similar challenge with a client buying OTP. Her Mum was able to offer a guarantee using Mum's house as collateral. Not the ideal solution, but it was the best available given the circumstances.

The good news in that story is her unit has now been valued higher, so there are some options available to remove the guarantee.