thank you all for your comments. I have since pulled out of the purchase.
It turned out that the conveyancers have not been reflecting the Vendors' attitudes and desires correctly in their correspondence with me (Purchaser). Their conveyancers were almost taking a "take it or leave it" mentality. My own conveyancers were asking about termination every 3rd or 4th email enquiry.
Is this how conveyancers operate?
Buy a different house. 30k over asking?
Why did you offer so much in poor economic times? Do you really want to deal with all this council hassle etc on your first house purchase?
the offer was made in late march, right before the lockdown. there's a due diligence clause in place that i can still invoke and have my deposit refunded.
i would like the owner to deal with the council and achieve full certification prior to settlement.
@AirbusA389: Sounds like a pain in the you know what. Seems like a perfect excuse to get out of the contract. Have a look around, I'm sure you will find something else you like without the headache.
@AirbusA389: lockdown started around the third week of March.
even a week before that I could see that the possibility property downturn.
I'm sure you can find something else cheaper now.
@Bargain80: Very broad statement especially not knowing the area they are in, there are very few areas that have seen a definite reduction in prices from Feb/March. Sale/listing volumes have dropped with no clear sign of volatility. If you're willing to play a guessing game that the market will drop with an abundance of listings available go for it OP, but this is not the case so far..
Personally I would not have raised the issue with council, you've opened a can of worms unnecessarily, you still would of been able to get home insurance without disclaiming this.
All those commenting on the 'price drops' can you please tell me which areas and provide some pre & post covid comparable sales?
@Ciderfizz44: You're right. There's no real significant drop in price for now. Especially desirable areas, given listings are reduced. 6 months later when the government propping (w/ tax payers money) are gone, I think there'll be more listings then the prices will fall.
For less desirable suburbs like ones without train station or is far away from train stations, near housing commissions, etc. Vendors are much more willing to consider an offer slightly below ask price.
I've been following the Sydney South market listings every day as I'm upgrading right now.
@berry580: you won't see the significant effect now.
It will be more apparent in the coming months, especially if the lockdown is continuing.
@Ciderfizz44: "would of been able to get home insurance without disclaiming this.
Probably all right, unless you actually need to call the insurance at any stage and they are having a close look…
Advertised asking price means nothing…. 30k above the asking price is still pretty good…
I have never paid above asking for anything in my entire life.
Strange that you are being negged (multiple times at that!)
Even stranger when virtually the same comment is made below and upvoted
https://www.ozbargain.com.au/node/533886#comment-8634151
I thought this was ozbargain not ozRRP.
@parsimonious one: Neggers gonna neg. Probably upset that they paid way too much for a flammable 20sqm apartment in docklands.
The "asking price" can be a fixed figure, a "from" figure or a range. The real estate agent can decide to use a lower price bracket merely to gain more interest and then negotiate upwards with the potential buyers.
i wouldn't buy it, not worth the hassle
Sounds like a good excuse to negotiate the price down.
Who the (fropanity) pays anything over asking price, let alone $30k… that’s like going to a car dealer, asking the price of a new car and saying, “yes, I like that one, and I know you said it was $29,995 drive away, but would you take $35,000 for it.”
If I saw an asking price on a house, I would start at $30k under asking price, not over… or did the REA see you coming?
In January to March the property market was HOT (Melbourne), on all 4-5 properties I was helping a friend with, with one exception ,all were sold pre-auction at OVER the asking price, which were actually still on the higher end of recent sales. The one that went to auction went for way more than it was worth and two times the agents told me to be weary at the moment as the prices are too high and not representing good value at all.
I'm relieved my friend didn't buy now, as the market has not yet been hit hard because of government intervention, but in July the pain will be back on, and may take a few months later to fully hit.
We don't know the property, but take a look at the whole situation and decide if you want to proceed. The sellers will hate you, but your family and your future might be better off. Don't be pressured by anyone. Make the decision best for you.
"it's just a building certificate" is troublesome. If it was they would get it and sure up your deal…
even till now, i think the house itself presents good value; my bid price would be lower without the pergola. i dont need the pergola anyways.
the vendors notified the council about the pergola + asked me to verify notification with the council. He omitted the positions of the pergola + pipelines in his notification to council, after I told him + his conveyancer about the positions of the pipelines.
the local market is softening quite fast, especially the smaller 3-bedrm houses. that's part of my reasons to invoke the due diligence and get out.
why do you think the pain will only hit in July?
"why do you think the pain will only hit in July?"
https://www.abc.net.au/news/2018-06-19/fears-as-interest-onl…
…This is one reason as mid year was about the time this was going to impact. So when the market was getting heated in January it was surprising. Now add the job issue situation and this is becoming a bigger problem. Housing won't just drop suddenly though because if people get in trouble they can apply for loan hardship assistance and pause repayments for 3 months on top of extra concessions now, so have more breathing room. But if the economy doesn't pick up, they don't get jobs after this lockdown and start re-paying their debts, it could be bad news.
I am a pretty pessimistic person though, and I don't think housing is doomed, it's just means you can be picky. Now is the time for you to low-ball or be harder in negotiations. Don't be embarrassed to look out for yourself.
@Heaps for Cheaps: This interest only rolling to principal won't happen anymore.
People are rolling to the 6m mortgage deferrals. The pain will come in about 6-9m time.
Customers will have to get through the mortgage deferral period first, hope they find a job or future out how to live within their centerlink payments. If not they will either sell or default on their loan. ie. Bank will sell.
The question is how will the banks deal with selling so many houses without destroying the property market that their mortgage book is so dependent on or do they keep in on their books and spread the sales out.
Either way there should be some downward pressure on price with extra supply of houses coming on to the market from distressed sales/mortgage in posession in 6-9m
Yep, start with 30k lower, meanwhile the other 10 people who were also thinking of placing offers on the house all placed an over at or over the asking price, 10 years later your still looking for that bargain…
Sure in some areas you can certainly get away with offering under, my experience it is way more common to pay considerably over the asking price, again depends on the area.
You do realise that there is more than one house for sale at any one time, yeah?
If you believe the shit a REA tells you that "there are 16 other very interested parties who have all made significant offers already" then you are a sucker. There is only one creature lower on the slime scale than a used car salesman… and that's a real estate agent.
I have bought a few houses in my life and have NEVER paid over the asking price. People like you and OP are the ones keeping this housing bubble afloat, so, in some way, I guess I should thank you for when I come to sell my house.
Did it ever occur to you the reason you could buy all your houses below asking price was because there was absolutely no one else interested in buying the place and that was the way things used to work, before boomers, (to a lesser extent) Gen X'ers, the federal govt & overseas investors destroyed the concept of reasonable housing prices?
Nope, probably other things wrong that the owner has hidden
You mean 30k under? Same as above, this would of been an excellent reason to reduce the offer.
Now that council is aware. I would steer clear.
my bid was 30k above asking price, before the lockdown in march 2020.
Why? Was your first offer below asking price but then alot of interest came from other parties?
FOMO
what are the implications of the council aware of that illegal works?
none of my friends have gotten in such drama in their property purchases.
They will tell you to remove the structure. They've already said that you will be paying for any damages to the pipe.
Neighbours can be another issue. If you have problems with them and they know about the issue, they will report it to council.
Now council knows they will require, engineering plans, permits, inspections etc. My father just had a pergola rectified to meet council requirements, all up nearly $3000. This included digging beside the footings to prove the depth met requirements. Your biggest issue is the easement, it it highly unlikely it will be approved at all.
Much easier and cheaper to demolish.
When was the pergola built? If it was built 15 years ago or something like that I don't think you're going to have any issues with the pipes going into the future. Again if the bedroom and bathroom were swapped in the 1980s and you or building inspector can't see any obvious issues, I can't see the problem.
sometimes you just don't see it because it's underground/internal walls, it's an issue when you start noticing anything weird…especially if structure starts moving
And to a point, I agree with you. But there could potentially be structural issues like that with any house you buy, even ones with permits and building inspections. It's just the risk you need to take.
yup, but if its going strong at 15 years mostly like no issues unless there was a roof leakage (mould) weakening the timber structure. Anything external is pretty hard to cover up
Walk away. The most significant issue you now have is council being aware of the issue. They will ride you like a beaten favourite on this, and God only knows whatever issues they might find when their inspectors come out.
This has got money pit written all over it.
if the Vendor agrees to rectify the pergola issue and deal with the council's inspection:
would it still be worthwhile to buy this house after the rectification and inspection by council?
Maybe, but (1) I don't think that's going to happen, and (2) is likely to take a long time even if they agree to it. My bet is the vendor will back out and try to get a sale elsewhere.
Of course, you can go with this as a negotiating tactic and see where it gets you, but make sure you do this via your lawyer as you want to retain the right to get out.
Also remember that you've said the pergola that is making the entire deal so contentious. That issue is not going away. The indemnity the council is looking for will basically travel with the property. If you get through the other matters, this will remain "forever". Basically, the council are saying that the works may have damaged the pipework and if that pipework has a problem down the road you'll be on the hook to fix it. That can't be "certified away".
The big thing here is don't get emotional about the property. It's ultimately just a pile of bricks. There will be others that don't present these sorts of hassles.
Councils are not easy to deal with, let the vendor rectify the issue.
Also, make sure you will not pass any time frame where you will lose your deposit if you have already signed the contract. Involve a solicitor/conveyancer.
I did something like this in WA, unapproved sunroom came up in the building inspection. Based on that we said our offer was subject to the room being approved. The vendor was able to get it approved retrospectively by the council (though it was declared a non-habitable room) due to the ceiling being too low.
If they don't agree to something like that, you need to adjust the price to what you'd be willing to pay if the council decrees it needs to be demolished.
knocking down the pergola is half the issues. the structural integrity of the sewage and stormwater lines are the major considerations too.
@AirbusA389: You can usually apply to build over a sewer line however, council will make you get approval from Sydney Water as they own the asset. Sydney Water will make you encase the sewer line in concrete if you want to build over it. Encase means to cover in concrete to make it essentially indestructible.
I just did this in my back yard so we could put a pool over it - it cost circa $900-1K per metre. The pool is 4m wide plus we had to allow an additional 1m either side… total 6m of encasing. All up including approval fees it was about $6.5K
There are specialist teams that do the job… they bring in a excavator, dig up the old sewer line, replace it with a PVC line and then cover it in 600mm of concrete all over, it is then inspected by the certifier and then approval is granted.
Therefore, I would expect that in order to get the pergola structure approved you would need to go through this process and it will likely require the pergola to be demolished and rebuilt after the encasement. THere are strict rules about how close you can pier near the encasement so that needs to be considered.
In summary, this will be a very expensive process. I would suggest asking the owner to reduce the price by $30K
Just for a little clarity, when you refer to your sewer line, are you referring to the easement sewer line? You can build over the houses sewer line, just not over the easement line as council may need access for repairs etc.. A stormwater line is likely different as you want this water away from the structure.
Yes, it's the easement sewer line that runs through the backyard of 10+ properties along that street. there's a sewage maintenance / access point on our property. The stormwater line is 0.5 metres away from the sewage line and parallel to the sewage line.
So I only know about NSW, but it may be similar in other places.
If the above is all true, I would be calculating the value of the house without the addition, and minus the cost of rectification. If the difference between that and your offer is more than the deposit, then I would think about abandoning the deposit and pulling out.
A costly mistake for sure, but not as costly as going through with the purchase and rectification.
I would also consider talking to a different lawyer to see if you might have a remedy against your conveyancer/current solicitor
Show me a house that doesnt have something. Ive bought 2 houses with stuff like this, the bad thing is the council knows now ;). Buy it and enjoy, if there's too much of a stink, knock down the pergola.
are you able to share your experience on how you deal with your property purchases?
what's the consequences of the council knowing the pergola issue? i was thinking of getting the vendor to demolish the pergola prior to settlement.
If the council needs access to the sewer line and your illegal pergola is blocking it, they will get the plumber with the bobcat to demolish it.
Might even bill you for it.
I don't see what the point is of getting it demolished in advance, it might never be an issue
We have looked at properties in a similar situation in the pass. I am always reticent of buying properties with easements unless, the easements are conveniently located. What I mean by that, is away from the structure of the house and that there is (and you will be able to maintain) clear an easy access to the easement. Remember if there is a required maintenance to any of those pipes, the service providers have the legal right to come and do it.
Regarding your pergola, that may or may not be a big issue, depending on how it was built. If the pergola has paver flooring and is easily demountable, I see no issue, as it wont be difficult to access the pipes. If you have concrete floor and bricks, I would walk away.
The internal changes should not be a problem, specially if the total number of bathrooms is the same, and there is no increase in surface area of the house.
Would you be able to clarify what council is the property on, as different states have different regulations.
I agree that your biggest issue is that Council is now aware, and I am sure that the current owner is really happy about that…
Good luck
I bought a place with a non-compliant deck. They'd built it right up to the boundary fence. It was flagged by the real estate agent so noone was trying to hide it. It's only an issue if the council knows….which they do in your case. They can request it be "made good", i.e demolished
I've just had recollection on this too - the deck would not have been compliant also because it's built over a stormwater line (that was NOT picked up by building inspection). Really, it's only an issue if there's a problem with that line. And it's not the kind of thing that would generally require the entire line to be ripped out. But you have to be aware that's a possibility. I've made my peace with it.
the pergola is half my problems. The pergola is a prefab steel structure, with an approx 20m2 concrete foundation. I dont know the locations of the foundations and the proximity to the 2 pipelines.
the rear boundary of the pergola is only 0.5metres away from the rear boundary fence.
20m2 concrete foundation?
Bail out. This sounds like in a few years there will be some work on that sewer line and you'll be paying for council workers to jack hammer up your back yard to get at it.
Tell the owner you're out because of it. Gives you the option of either getting deposit back and go on with your life, or they come back with a better offer (discount or rectification). Assume that pergola isn't there and you have to pay to completely remove it + fix the pipeline. Take that money out of the amount you're willing to pay.
The problem doesn't go away by knocking down the pergola, you will still be on the hook for potentially very expensive pipe repairs/replacement should any damage be found down the road. You absolutely DO NOT want to be in a position where you are indemnifying the council for damages.
Just invoke your clause and get your money back. Guaranteed the buyer will be in contact within a week or two to negotiate.
Do not proceed with purchase. If its possible, invoke the due diligence clause & get out.
It sounds like a future nightmare.
If possible get an estimate of costs involved in rectifying the issue, revise offer down by cost plus time & effort. If Vendor doesn't agree, invoke get out clause.
If it was just the pergola being built too close to the stormwater pipe I would have said just buy it and try to negotiate a price decrease and fix the pipe if it worries you that much or just leave it as it doesn't sound like a big issue to me but since you have got the council involved I'd say find somewhere else as you don't want the headache of dealing with them.
the pergola is built on top of the sewage and stormwater pipe….
Sounds like a very drawn out nightmare.
Even if you are willing to go ahead, I'd use this as a reason to drop the price by a LOT.
You hold so many of the cards now
1. Bad market.
2. Problems with proper permits.
3. The seller may be obligated to sell.
I would be revising the offer for 5% under market, remove the value of the pergola, cost of removal of the pergola and cost of any council permits.
(That is, if you really want the property. Otherwise, move on.)
Do you really want all the hassle when this is your first property? Seems to me you'll have enough new things to navigate without adding on pergola council hell. I say walk away.
It seems to me that there are no problems so they should not ask you to knock it down. But if the pipe gets damaged and needs to be fixed or Sydney water decide they need to replace the pipes for some reason it would be your cost to knock down pergola and provide access to Sydney water from my understanding.
Lots of people in this thread must only buy brand new apartments.
The internal changes you can just say were done decades ago, if they are up to code it’s not a council issue. I don’t really know why you would think they would have floor plans for internal renovations, and no permits are needed for changes to approved plumbing.
The pergola can’t be approved, but so what?
If you like it, keep it and use it. If the sewer pipes ever need to be dug up they will tear the pergola apart too, and you won’t have any redress, but that is pretty unlikely. If the pergola was actually a four story block of flats that could somehow damage the pipes that could be an issue, but a bit of decking/paving and a roof isn’t a big deal.
What do you think bad could happen?
Given the market is tumbling, I would ask for a discount to compensate you for these hassles. The cost of building a new pergola would be a starting point.
i see your point in keeping the pergola. It's a rare event for the sewerage and stormwater lines to be dug up. The pergola would then be "conveniently" demolished and hence meeting the council's requirements.
in any case, does the council have enough teeth to force me to demolish the pergola after settlement?
Technically, sure. They could issue you a compliance order and pursue you through the land and environment court to make you comply.
Why they would want to is the real question. If neighbours aren’t complaining they have no reason to spend the effort going after you. And it is likely they aren’t even the affected party, as it will be the water company who has the benefit of the easement.
But ask for a discount and you can bank the demolition cost in case it ever comes up.
Can second that. Am also aware of a compliance order enforced by council on pergola removal for property that I was considering buying.
Costs can easily skyrocket and once you bought it you are liable for all fines as well.
Get your own quotes to remediate or walk away. You don’t want to get a caveat on property title from council thus restricting you from selling in future.
@mskeggs: Just read further that the OP is trying to ask for a $100k discount!!
Seems that he's either a dreamer, or he has cold feet over the purchase…
@mskeggs: It's apparently a 20m^2 concrete slab. I would be asking a lot more than $400 to do that much work!
@abb: exactly, the cost will definitely be in the thousands and that is assuming no remediation on the pipes which with jackhammering the slab you could be up for another X thousands for them to come in and repair/replace the pipes.
@abb: Who pours a concrete slab over an easement? Nuts.
Given you could make a nice pergola that was semi-permanent, why go out of your way to make life hard for the future…
Ripping up concrete isn't the end of the world either, but it does seem there are a lot of issues.
Don't think a $100k discount will fly though…
@mskeggs: $100k sounds a lot, but I would definitely be pushing 35k+ just for the pergola, remember this pergola probably played a part in the purchase price so you have lost the value of the pergola, plus you have demolition costs, plus an open cheque book for the council should they find damage or decide to play hardball (given a concrete slab has been put on top and demo will involve jackhammers it is not unreasonable to expect costs there).
I think mskeggs has hit the nail on the head here. Use it as a bargaining chip. If you're able to get even a few grand off the purchase price then you're ahead. Demolish the thing if it concerns you (maybe $1k in labour and haulage), otherwise use it and enjoy it. If council someday magically issue you an order to rectify then you just demolish it.
If it were the actual house built over it then I'd walk away, but its just a bloody pergola..
Pergola with 20m2 concrete foundation is gonna cost a lot more than just few grand
@lgacb08: Its probably a wafer thin slab, maybe doesn't even have reo bars in it.. The cost to remove it will be the labour for someone to jack hammer it up, then haul the debris into a skip. Plus the cost of the skip. Probably a day's work tops. I don't see it being very expensive to remove.
If the slab is structurally tied to the house slab somehow then thats a different story..
Agree with this totally… either a lot of apartment only buyers, or people who have read a lot and are self-proclaimed experts.
It also depends a lot on where the property is - in my area property prices are still stable/have not dropped, and if it's a nice property you'd have no chance at getting any (major) discount from it - a significant number of the nice properties are selling off-market here in days still, at above asking prices.
Look into title insurance. It insures against this type of thing - so you can claim on insurance any changes the council makes you do due to buildings / renovations without permits.
Mind you if the council are now aware of the situation they'll be likely to pursue it until it's resolved.
wells given that i am well aware of the illegal works, would the title insurance still apply?
I'm not sure mate, probably - but you'd have to look into the specifics to see if it covers your situation.
Almost certainly NOT. known issues at the time of purchase are almost universally not covered.
I'd avoid it. Some insurers will not cover works that never met the building code at the time/were never council approved. Just an issue if something for example, damages the unapproved sunroom and patio (eg storm/hail damage, impact from tree, car etc).
Walk away. By the time you move in , the property will be worth 10% + $30k less than what you've paid for it. Now add on all the other expenses to get it up to code. Not worth it, imho.
$30000 over asking price sounds like OP just went all-in straight off the bat, or got squeezed by the seller’s agent for all he was worth until he maxed out his budget.
If his house is in Vaucluse and its a $3M purchase, then $30k over that is not a lot.
If his house is in Outer-West-Bumville and has a $250k price tag, then his $30k offer over is substantial.
I think we're lacking some context here..
Does the owner know of this defect, if so if it's not written down then ask for a serious reduction in price.
It'll be fine. Most houses have some kind of council violation. No one checks.
What do you reckon the price of the house is right now, given covid19?
Old price - new price = negotiating margin with the vendor
The pipelines were discovered when the Vendor tried to pressure me into settlement asap and tried to pass the certification of the pergola to me, claiming that "it's just a building certificate".
My bid was 30k above offer
I do not want to take over liabilities relating to the pergola, and re-doing the floor plan and retrospective permits costs a few grand. I am waiting for the Vendor to get back to me to see if he wants to do the rectification works and meet council's requirements.
Building inspection was completed, no mention of the pergola built over the pipelines. The pipelinesWhat would you do?
Ask for 100k less, ask for whatever needs to be rectified to be rectified at their cost.
reduce the price by 100k + rectification works at their costs?
i dont think any vendor will tolerate double whammy..
You're in NSW and OP is in Tassie. $100k in NSW is less than 10% while a $100k in Tassie is probably 20+% of the sale price.
If you are happy with the price, buy it. If you plan to keep this house as a long term investment, 30K isn't a deal breaker in the grand scheme of things. You MAY find something cheaper, you may not. There may be more competition from first home buyers in your area, there's no guarantee that you will get the same house for less if you pull out.
From memory, most states don't require approval for a pergola or is an "exempt development" anyway. Council is saying they MAY ask you to pay for damage to cover their arse, but there isn't any existing damage so why worry about it? Plumbing wise, from memory it's "self certified", so you can just get a plumber to certify it for you without getting the council involved.
If it's the right house, in the right location, for the right price for you, then buy it.
Feel like all the people with their panties in a twist about paying 30k over the listing price have never bought a house in an area with a lot of interest before.
Absolutely, I'm not a seasoned house buyer (just the one) however in the 20 or so properties I followed before getting my own, there was very much a trend of sales significantly over the advertised price. Inner suburbs of Melbourne. I imagine mileage varies depending on the city and areas.
It's more the timing of the market, when it's hot you often have to pay above, it might have been warm a month ago, but all indicators point to it cooling.
ask the owner to get plumbing approvals. if the council needs access to the easement at any time in the future knock the pergola down.
if u love it, buy it.
Buy the house and remedy if you want to meet code.
Buy and dont remedy and just live your best life.
Shouldve got a building report.