Header Ad Module

Collapse

Announcement

Collapse
No announcement yet.

About to make my first offer: what conditions do you normally attach?

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • About to make my first offer: what conditions do you normally attach?

    Hi
    I'm about to make my first offer on a property. What conditions should I attach (or what conditions -can- be attached) to cover myself? I have my loan approved and the bank has approved the property as acceptable security for the loan.

    But what other conditions should I attach? I can only think of the following:
    -Title search
    -LIM report
    -Builder's report
    All of these must be satisfactory to me.

    As for a valuation report, the bank didn't need one and I know what most houses in the suburb have recently sold for. I also do not need to wait for another house to sell.

    I know sometimes the offer is conditional on finance; because I have this approved, does this mean any offer I make is considered a cash offer? Are there any other conditions I should attach?

    Also I am seeing the agent tomorrow night to fill out the sale and purchase form. I'm expecting he will then take it to the vendor. That means I will not have a chance to get my lawyer to check my offer and attached conditions before the offer is presented. Should I tell the agent to wait till I can get it checked by my lawyer?

    Thanks
    Last edited by utopian201; 19-08-2009, 10:08 PM.

  • #2
    You want to make your offer as clean as possible so just use one standard due diligence clause. The more clauses the less likely you are to get it signed. Some DD clauses HERE

    Comment


    • #3
      Strictly a cash offer is a done deal - no conditions. Signed = sold. However don't worry about this. The conditions you suggest are good and not unreasonable. However they should be phrased "suitable and acceptable to the purchaser entirely at his sole judgement and discretion".

      I'd also suggest "subject to purchasers solicitors approval as to form and content within 5 working days".

      Comment


      • #4
        Originally posted by Dean Letfus View Post
        You want to make your offer as clean as possible so just use one standard due diligence clause. The more clauses the less likely you are to get it signed. Some DD clauses HERE
        Good advice - agreed. Still, an offer with no finance clause and a few mundane conditions is going to be attractive to a vendor in the current market - assuming the offer isn't too insulting.

        If you are making a cheeky offer, forget about conditions and do the homework first.

        Comment


        • #5
          I'd also suggest "subject to purchasers solicitors approval as to form and content within 5 working days".
          Can't use solicitors clauses anymore, they aren't kosher.

          Comment


          • #6
            I've seen this clause used.

            The deposit shall be held in the agents trust account until authorized by both parties to be released upon settlement date. In the event of non settlement by the vendor and subsequent cancellation of this contract by the purchaser, the deposit shall be returned to the Purchaser without deduction. This shall not affect any claim the agent may have against the principal under terms of agency contract.

            Keeps your money safer.

            Here's a sneeky one.

            This Agreement is conditional upon the purchaser being satisfied in all respects within 10 working days of receiving a registered valuation and rental appraisal to be obtained by the purchaser at the purchasers expense. This clause is inserted for the benefit of the purchaser.

            Anybody see the fish hook?
            www.3888444.co.nz
            Facebook Page

            Comment


            • #7
              Originally posted by Keys View Post
              This Agreement is conditional upon the purchaser being satisfied in all respects within 10 working days of receiving a registered valuation and rental appraisal to be obtained by the purchaser at the purchasers expense. This clause is inserted for the benefit of the purchaser.

              Anybody see the fish hook?
              That's brilliant!

              Comment


              • #8
                I agree but disagree with using a DD clause - even though it is 'just one clause' some agents do hate them, as do vendors who have had a bad experience with them before or who just don't understand them. I tend to use a DD clause now but 'spell out a bit more' what DD I intend to do. Something along the lines of (as an example only)...


                Purchaser’s Clause
                This agreement is entirely conditional upon the purchaser’s approval (in the purchasers’ sole and unfettered discretion) of any matters that the purchaser considers relevant to the property and their investment decision which may include:
                A registered valuation
                A rental appraisal
                A building inspection
                Council records pertaining to the property
                within 15 complete working days after the date of this agreement by both parties. If notice is not received in writing by the Vendors’ Solicitor or agent by 5pm on the 15th complete working day after the date of this agreement of the purchasers’ approval of the property, then the contract will be at an end. This condition is inserted for the sole benefit of the purchaser.

                Comment


                • #9
                  I wouldn't use a DD clause unless you are in 2 minds about the property and want to get it under contract before spending any money on the property. Fair enough, otherwise it is only going to serve the same purpose as having 5 or more clauses in it.

                  Conditions that are standard as per contract, title, lim, finance are all acceptable clauses and noone baulks at these at all. Builders report is becoming more standard. Again if house is solid the vendor should have no concerns. If that is all you need to put in the contract then a DD clause is only likely to make the vendor think you will pull out at any time for any reason.

                  Whereas the standard clauses are acceptable and easily overcome in the sales pitch.

                  Also you may want to make sure your pre approval is solid. The pre approval is always subject to the property being acceptable to the bank. If the property is not standard then a finance clause of 2 days could be a good idea. Had a client with a pre approval went and bought a house in a rural area and the lender would only lend to 70% and not 90% as first approved.
                  [email protected]

                  Comment


                  • #10
                    Thanks

                    What about getting the lawyer to check my offer before I sign it? If I'm seeing the agent tonight, and he presents the offers tomorrow, I won't have a chance. Is it necessary to get the lawyer to check my offer (with 3 conditions: title, lim and builders report)? Or is it standard enough to be ok?

                    I think because my offer is a bit lower than the listing price, I probably should keep the conditions to a minimum as some have suggested.
                    Last edited by utopian201; 20-08-2009, 12:38 PM.

                    Comment


                    • #11
                      Originally posted by Keys View Post
                      This Agreement is conditional upon the purchaser being satisfied in all respects within 10 working days of receiving a registered valuation and rental appraisal to be obtained by the purchaser at the purchasers expense. This clause is inserted for the benefit of the purchaser.
                      Anybody see the fish hook?
                      The clause doesn't give a date when the reports will be done just says that the purchaser needs to decide 10 days after it is done. Therefore this clause does not start until the registered valuation is done - which has no date.

                      Comment


                      • #12
                        What about that new clause I have been hearing about regarding if the vendors bank won't release the title due to the mortgage being too high. It protects the purchaser when the deal falls over - maybe something about the deposit being in purchasers lawyers account?

                        Anyone got the words for that?


                        Lawyers approval - go tonight and get the agreement all sorted but not signed. Have the agent fax/email it to your lawyer, who you have spoken to today. Once it has the OK (tomorrow morning), the agent can whip around to your place for a quick signature on the way to present it to the vendor.

                        PS I hope your approval from the bank is in writing.

                        Comment


                        • #13
                          Hi
                          Thanks
                          Is it necessary to show them my loan approval document? Its just that it lists the maximum value they will lend me, which may allude to my maximum amount. Or do I black out the loan amount?

                          Comment


                          • #14
                            Originally posted by utopian201 View Post
                            Hi
                            Thanks
                            Is it necessary to show them my loan approval document? Its just that it lists the maximum value they will lend me, which may allude to my maximum amount. Or do I black out the loan amount?
                            Don't show them or tell the agent your max. As long as you have a finance clause in there you will be fine.

                            Comment


                            • #15
                              The reason I mentioned having the bank offer in writing is in case they change their mind. With no finance clause you have no safety net.

                              I'd go with the least possible clauses since you can make it cash.
                              Title is covered under 5.2.
                              LIM is just a YES/NO
                              Builders report - the agent will have the standard clause
                              Keys' clause will protect you as I mentioned before from the vendor not being able to settle.
                              The deposit shall be held in the agents trust account until authorized by both parties to be released upon settlement date. In the event of non settlement by the vendor and subsequent cancellation of this contract by the purchaser, the deposit shall be returned to the Purchaser without deduction. This shall not affect any claim the agent may have against the principal under terms of agency contract.

                              So just 2 clauses needed. You could cross out each line in the conditions box except LIM to really make a statement.

                              Remember to have settlement & possession dates thought through.

                              Look forward to hearing how it goes.

                              Comment

                              Working...
                              X