Making an Offer on Property before Viewing Strata/Building Reports

Sex on 11/05/2016 - 10:51

Hi, my girlfriend and I are currently looking into purchasing a property.

We are talking to the agent about making an offer before the auction, and they have stated that our offer cannot be a conditional one. As such, we are considering making a formal offer.

However, we are aware that our offer could be knocked back, and because of the uncertainty, we're not sure whether we should spend the $265 on the strata report and the contract read by a conveyancer.

In this case, what would you suggest we do? Should we make a formal bid now and purchase the strata report if it's accepted? Or bear the costs now even though we may not have our offer accepted?

Thanks!

Home & Garden

Comments

  • ykwon10 on 11/05/2016 - 11:08
    +10

    OP please think of it this way..

    What is $265 on the scheme of things when compared to buying a property? It is of insignificance compared to the potential issues that you might find out. There are certain things that we can be frugal on and there are also certain things that you NEED to spend on.

    Side note: some conveyancer provide free proofread services for the first few contracts (if you have appointed them).

    Please do NOT make the mistake of trying to save a couple hundred and end up losing even more in the future.

    • Sex on 11/05/2016 - 11:22

      Thank you, appreciate the comment and you are right. I guess I was just hesitant because this is not a sale but an auction. So there is no guarantee than any offer would indeed be accepted.

      We will definitely get the contract read by a conveyancer. But is the strata report really needed at this point in time?

      • ykwon10 on 11/05/2016 - 11:31
        +3

        Definitely! Considering you are making an unconditional offer, please ensure everything is sound. Trust me.. you DO NOT want to buy a lemon. Cost of fixing a house (ie: structural issues, pest issues, etc) is way more than what you are paying now for the report to be done.

  • dasher86 on 11/05/2016 - 11:10
    +1

    Make an offer and make it conditional.
    But definitely get a conveyancer. They had help with other things post strata.

  • SnoozeAndLose on 11/05/2016 - 11:12
    +3

    Contract read is a must before making offer as this may be a turning point for you.

    Then put in an offer, if accepted then deposit, during 5 business days cooling off period you could do the necessary strata/building report.

    • Sex on 11/05/2016 - 11:24

      Thanks, we shall definitely get the contract read. I'm wondering why it's okay to do the strata/building reports after the offer and not before though. Thanks!

      • SnoozeAndLose on 11/05/2016 - 11:29
        +1

        as there are cooling off period and you have want to act quick(strata report may take few days or week), therefore after the contract read with no alert you could paid the 0.25% deposit and it should not be too much.

        If you could wait ofcourse you do the report first, now the property is slowing down and it back to buyer favor, depends on the interest, you may be able to take your time do all the reports before putting in offer.

        Remember agent try to squeeze the most from the buyer for the vendor/himself, if you feel the agent make you feel uncomfortable and it is not a must for this property then you should stay off.

    • Sheila Dealer on 11/05/2016 - 11:24

      If the property is going to auction it is unlikely there is a cooling off period, even if sold prior.

      • SnoozeAndLose on 11/05/2016 - 11:26

        it really depends, it is forthcoming auction or 100% on auction? It really depends on the vendor/agent, never say never. If the interest is not enough to go for auction then they will have to accept whatever acceptable. If you are the only few interest and making offer, if you are offering the highest price with cooling of period they may still take it.

      • ykwon10 on 11/05/2016 - 11:28

        The agent & owner will not accept a conditioner offer (cooling off period, subject to finance, etc) if the property is set to auction. Basically OP is offering to buy the property "as is" as per auction rules. Please get building reports done prior to offer….

        • SnoozeAndLose on 11/05/2016 - 11:32

          if no one interest, will they take conditional offer?

          If you are the vendor you would rather have conditional offer or none, going to auction is not guarantee it can not sold.

          By saying that the contract signed between vendor and agent does not have a rule/term mention if there is an offer it needed to be unconditional.

        • ykwon10 on 11/05/2016 - 11:34

          @LoveBargain15: Agree. If NO interest, of course they will take conditional offer. BUT you are talking about post auction which means highest bidder of the auction will get to negotiate with vendor.

        • SnoozeAndLose on 11/05/2016 - 11:37

          @ykwon10:

          No I am talking about both pre and post.

          Because if the interest is not strong even prior the auction, agent may not push for it or even cancel it.

          There is not a must/never when selling a property, everything possible.

        • ykwon10 on 11/05/2016 - 11:49

          @LoveBargain15: Of course everything is possible. What we are talking about here is with the assumption "IF".
          IF no interest at all, I will be happy to sell whenever a reasonable offer comes in. Sure!
          On the other hand, IF I have plenty of interests why would I?

        • SnoozeAndLose on 11/05/2016 - 11:55
          +1

          @ykwon10:

          The agent & owner will not accept a conditioner offer (cooling off period, subject to finance, etc) if the property is set to auction. Basically OP is offering to buy the property "as is" as per auction rules. Please get building reports done prior to offer….

          You are also making assumption the agent will not accept conditioner offer if the property is set to auction.

          My suggestion is to try to put an offer with condition and see.

        • ykwon10 on 11/05/2016 - 11:59

          @LoveBargain15: Please read original post "We are talking to the agent about making an offer before the auction, and they have stated that our offer cannot be a conditional one".

          My comments are based on what OP said, not assumptions.

        • SnoozeAndLose on 11/05/2016 - 12:08

          @ykwon10:

          So I want to point out that nothing is not possible to OP.

          If Op still make an conditional one it may being turned down , but also have chance that the agent will discuss further

  • StewBalls on 11/05/2016 - 12:03
    +4

    We are talking to the agent about making an offer before the auction, and they have stated that our offer cannot be a conditional one.

    The agent doesn't get to make that call, they are legally obliged to present all legitimate offers to the vendor, end of story.

    • Sex on 11/05/2016 - 16:46

      Interesting! What constitutes a legitimate offer? My email to them was structured as follows:

      Hi X,

      Thank you for sending the contract of sale to us. We would like to submit an offer of $X for the vendor’s consideration on X.

      This offer is subject to legal review of the contract and strata report and any other requirements as necessary, and is not binding unless and until a formal agreement is entered into.

      As we are in a position to move quickly, we are also happy to discuss earlier settlement timelines with the vendor.

  • airzone on 11/05/2016 - 12:14

    Another thing to consider, an offer is not binding. Only when you pay the 0.25% and sign the contract does it become binding.

    They may want you to forfeit the cooling off period, but if the auction is still some time away, you could argue your way through it.

    I looked at buying a unit once. The strata report showed that a structural engineer had been called in to inspect cracking foundations due to construction next door. You could not have seen it by looking at the building other than a few cracks (and all buildings have cracks of some form). Knowing that there were foundation problems, we ran away.

  • Mumbles on 11/05/2016 - 12:19
    +1

    OP, the advice you receive from the OzBargain community is varied as we are all in different situations to you. $265 is nothing to a property investor as they can write it off as an expense.

    If you are a first time home buyer within a falling market the advice for you is going to be very different. If you are a first home buyer I would highly recommend you buy a normal listing. This will allow you to slowly and carefully get accustomed with legal contracts, conveyancing, due diligence, inspections, property valuations, the terminology (legislation/realestate/strata), …, etc.

    Auctions are disappointing for everybody except the auctioneer. Traditionally speaking, more than half of auctions fail to achieve any buyers (ie. the reserve was never met). For failed auctions this gives buyers heaps of time to negotiate and arrange inspections.

  • one man clan on 11/05/2016 - 12:24
    +3

    It's vital to get a strata report - even more so than a pest and building inspection for a house IMO. What if there's defect works outside of the sinking fund or insurance period? You could be hit with a 20k bill the first year after you buy the place.

    Personally I think it's the greatest scam of the property industry - it should be compulsory that the vendor provide the strata/building report rather than making a bunch of different prospective purchasers pay $300 each for a piece of paper.

    • Sweetnsour on 13/05/2016 - 07:30

      If all auctions provided strata/building reports, liability issues, conflict of interests issues and even inspectors would charge more knowing more ppl would be reading their report. Liability insurance would only be covered if the purchasers name is on the report.

      So in theory reports make sense but i do not want to know if i trust a report a vendor/agent ordered. Its like a second hand car dealers report, i wouldnt necessary think its worth the paper

      • one man clan on 13/05/2016 - 08:37

        Possibly for building reports but not for strata - you can go through the information on liabilities yourself. They can't really hide it. Sure they could spin the summary but not the actual information, you just have to figure out how to read it.

        If it becomes an issue regulate it - the State Inspectors Board or something and it's contracted through an agency.

        I must have spent over $1000 on reports for houses that it turned out I had no chance of getting in auction, before I was finally successful.

  • crentist on 11/05/2016 - 13:23
    +1

    it seems like every place I've lived, friends lived, and places we've looked at buying have some sort of strata issues. so knowing what those issues are going to be is critical. minor repairs will always be present, and a well funded sinking fund is a good sign

    even brand new buildings aren't safe. I've seen brand new buildings that were revealed to have flooding in the elevators, suggesting poor water sealant and potential major repairs down the line

    but I've also seen similar issues in an older building, with a huge repair bill already determined in the area of 100k for each owner. skipping due diligence here would have been very traumatic. instead the buyer negotiated even more than that off the purchase price, knowing everyone else would run away (and then got lucky because that figure had been inflated and later came down significantly)

  • pjetson on 11/05/2016 - 15:45
    +3

    If you do make an offer, make sure that you specify that the offer is valid only for a specific amount of time (say 48 or 72 hours or whatever). The idea is to apply a little pressure for them to sign, and not have them string you along until they get a better offer.

    • Sex on 11/05/2016 - 16:47

      Thanks for the tip!

  • CheapskateQueen on 11/05/2016 - 21:26

    This is a dilemma that all home buyers face. It's unfortunate because it does feel like you're throwing money away.

    I would suggest making the offer conditional on a satisfactory review of the building/strata report not showing any defects,structural damage etc etc if they won't accept that offer then there may be an issue they're concerned with..i mean if it were me, and there was nothing wrong,id accept that offer.

    Or bite the bullet and spend the money.
    I think it's too risky to not check the reports. I've had a lot of issues with my building which you'd never know just by looking at it.

  • [Deactivated] on 21/05/2016 - 18:29

    Just jump straight in but use a fake name, if everything goes well and is accepted by the seller then simply assign the contract to your real name :-)

Login or Join to leave a comment
Login Join