Trying to close a deal for ppor site - opinions?

Discussion in 'The Buying & Selling Process' started by Gavin Ng, 26th Jun, 2017.

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  1. Gavin Ng

    Gavin Ng Well-Known Member

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    Hey guys,

    Quick details of the property:

    - Sydney north shore north shore
    - price guide for auction 1.4-1.5
    - auction date 8 July
    - been on the market for 10 days
    - deceased estate
    - house in poor condition, needs big renno or knock down rebuild
    - site encumbered by easement for water supply on one side and a sewer on the other, I assume any conveyancer that sees this will tell their client to stay away.

    Because of the dirty block (two trees need to be removed, easement, sewer, and a bit of cut or fill required) I'm assuming a lot of punters will be put off it.

    The property went on about 10 days ago I went to see it the day after at it's first open, I didn't see anyone there. I asked if if it will be going for auction or will they take offers prior. He said at this stage it will be going to auction.

    The following monday I get a call from the agent, I said it's not exactly what I'm looking for as the it's going to cost me worst case scenario 100k worth of site prep before the slab is even down. He kind of suggested I could make an offer. I said let me have a think about it and i'll get back to him.

    The next day I speak with my surveyor, engineer, architect, and builder, I do a rough design on the site based of the limitations and I price up the additional design and construction costs. I also get my conveyancer to browse over the contract. Everything ok.

    Anyway the next day, I call him and tell him what is wrong with the place, easement and sewer severely limiting design and building envelope options, encroachment of 750mm on one boundary, big site prep costs etc, but I'm still willing to make an offer because I like the outlook (facing a nature reserve).

    I put in writing 1.1m, well below price guide and I ask him to get back to me on Friday.

    On Friday agent says he's given owners plenty of time to consider and they would like to wait another week before making a decision. I say no worries, I'll see you at the open to check a few things out.

    On saturday I rock up to check a few other things, the fence encroachment, walk around the area with my wife, the sewer man hole, the threes etc. This time a few more parties attend the open, about 5 parties, but they do not seem too interested, just walk through get a brochure and leave.

    I chat to the agent, ask him if he's gotten any feedback from other buyers, he said theres a developer who's keen to build on there. I say he knows where I'm at so keep me updated. I also ask him what price the owners want, he said it's too early to say. Anyway we had another auction to go to that arvo so we had to leave (I also let him know that). When I was checking the sewer, he asked my wife what she thought and she said she doesn't like the area and wants to stay in the inner west lol.

    One thing I noticed today is after two Saturday opens advertised, there are no more scheduled inspections and it's by appointment only. Is this because there is no interest?

    Do you guys think I should call the agent or should I just wait for him to call me?

    I'm pretty sure I'm the only one who has expressed interest and made an offer in writing. Do you think I should try close the deal before going to auction? If so, how would you go about it? Wait for him to come back?

    Any tips on how I can close this deal? Any help would be greatly appreciated.

    Thanks guys.
     
  2. Colin Rice

    Colin Rice Mortgage Broker Business Member

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    What you do and how effective it is will depend on how many other parties are also wanting to purchase the property. I would have a frank discussion with the REA as he or she well knows what will be the accepted offer.
     
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  3. Bayview

    Bayview Well-Known Member

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    You've made a written offer, so it's up to them to say yes or no to that.

    You could always up your offer and see what they say to that one....it will also show the Vendor you are serious about buying.

    My feeling - from what you have described - is they are probably not going to get the sort of interest/price they expect, and the Auction will be a fizzer.

    This means that you may be lucky enough to be the winning bid when it gets passed in, and can then negotiate privately.
     
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  4. Gavin Ng

    Gavin Ng Well-Known Member

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    Thanks guys, I think I might be patient and wait for him to get back to me. Last Friday he did say the owners want to wait an extra week before making a decision.

    I would find it hard that there is no interest, it is sydney after all, but then again, tides have turned.
     
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  5. Gavin Ng

    Gavin Ng Well-Known Member

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    Just an update, agent called yesterday, said the vendors are not from Sydney and don't know the market well so they want to go to auction to see how it goes.

    He said at this point in time it's only me and another party, I asked if the vendors had a price in mind they would let it go at and he said they don't and just want to take it to auction.

    I guess we'll have to go to auction and roll the dice.
     
  6. mikey7

    mikey7 Well-Known Member

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    Good luck.. Hopefully it all goes well for you.
    Hopefully you can secure it for a bid less than your written offer lol
     
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  7. Bwinny

    Bwinny Well-Known Member

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    Best of luck this weekend and fingers crossed for you!! I'm looking forward to the update
     
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  8. Brady

    Brady Well-Known Member

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    Best of luck - in these situations you hope to get the agent on board to get the property sold.
     
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  9. Sackie

    Sackie Well-Known Member

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    Time to go over your notes for Auction Strategy. I'd develop a plan and stick to it. Keep the emotions out of the action.

    Good luck.
     
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  10. Property Twins

    Property Twins Mortgage Brokers & Buyers Agents Business Member

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    @Gavin1985
    All the best for the auction! How long to go now?
     
  11. dabbler

    dabbler Well-Known Member

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    The punters....what, like you ?

    I think the block is not going to put people off if located well & good established suburb.

    I think all your doing is giving them price indicators, as will others, I doubt they will sell prior to auction unless it is above what the agent feels it is worth.

    Prob multiple people involved too.
     
  12. dabbler

    dabbler Well-Known Member

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    lol ... classic, let's see how many are there, they have you hooked at least !

    Good luck if it is only 2 of you, I would believe that when I saw it, anyway, here is your chance to get it, get your plans and ducks in a row !

    Will read with interest.

    Cheers
     
  13. Archaon

    Archaon Well-Known Member

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    Interested to hear how you go at auction!!
     
  14. Gavin Ng

    Gavin Ng Well-Known Member

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    1 bidder kicked it off at 1.3, vendor bid at 1.4, first bidder raised to 1.42, passed in and sold after at 1.45. I didn't bid at all lol. Another auction after similar property in the same suburb same deal, 1 bider against the owner's bid, sold at 1.45. Both sold at lower ranges of the price guide. Will be interesting to see what happens in the next 12 months.
     
    Last edited: 8th Jul, 2017
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  15. thatbum

    thatbum Well-Known Member

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    So was that what you expected? And your 1.1 offer was a cheeky one?

    Or a surprising result?
     
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  16. Bwinny

    Bwinny Well-Known Member

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    All good :)
    "plenty more fish in the sea" and I'm sure something else will come up.

    Out of interest now that it is finalised can you share the property link??
     
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  17. dabbler

    dabbler Well-Known Member

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    You were more than 300k out, agent would have known this, you will need a blood bath before people will dismiss 300k.

    I thought you were going to say you nabbed it !
     
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  18. Gavin Ng

    Gavin Ng Well-Known Member

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    Yeah, definitely not on the money. Both properties are what I would consider secondary. Heavily encumbered or irregular shaped block, over 100k in site prep (excavation, concrete encasement or piering below sewer if within zone of influence, big design challenges, and non-compliant da designs if you wanted to building something with an acceptable level of amenity (solar access, deep soil, orientation and aspect of living areas and open space etc) for me there was a big level of uncertainty with what the finished product could be.

    But you were spot on, the block made minimal difference. Although in the past in this area is a lot of these do get passed in with no bidders

    When there's only 1-2 interested parties involved, anything can happen I guess, who knows what the other bidder knows, doesn't know, or even if they care? You've got to roll the dice and be in it to win it. For me, I was in up until 1.25m, and thats by getting a new build on a clean block in the same area (approx 2.4m conservative value) applying a 15% discount for a secondary block (irregular shape, sewer and watermain easement), 700k site prep and construction costs, and a little bit of icing on top for my borrowing costs and uncertainty troubles.

    It would have been a fun project for me but at that price, I'd rather pay 2.4m and shop around for an established property on a clean, flat, rectangular unencumbered block and move in straight away, or pay 1.5-1.6m for a clean flat unemcumbered knock down. Even though it's a ppor the numbers still need to make sense.
     
    Last edited: 9th Jul, 2017
  19. Gavin Ng

    Gavin Ng Well-Known Member

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    Nah, nothing is surprising in the North Shore :D but sometimes you get lucky with these ones. I would have paid up to 1.25-1.3. Was good fun and at least I know the DCP and LEP back to front now.
     
  20. dabbler

    dabbler Well-Known Member

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    Yeah, that can happen too, if market was cooler it would prob be yours....
     
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