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?
Had similar experience in past with house I was looking to buy and where council enforced a compliance order on property due to unapproved pergola.
I know from neighbor of property that pergola was removed at owners expense and thus I’m happy I never bought it.
If you really really really want to live in the place get your own builder quotes to identify cost of remediation to meet councils expectations. Then ask vendor for new contract that matches quotes plus x for your time and risk in cost blowout.
Alternatively, probably saver to walk away and buy something better later
This.
All people above going on about price likely have no idea how property prices work. Don't worry about them.
It all comes down to how much you want this house and how much risk you want to take.
Council will most likey (now that they know) tell you to remove it. So factor in all the cost and offer a lower price (I would also lower it further now that the market is soft). If they refuse, walk away unless you are prepared to pay potentially tens of thousands to deal with council headache.
listen to this guy ^
Normally people build over easements without worry and normally get a permit to do so when building the house, but a pain to do afterwards. Highly unlikely there is the need to access the stormwater or sewer pipes. You do this knowing that you may need to remove the pergola if someone needs access.
Only issue is if someone alerts the council, which you have, now it is an issue.
What could possibly go wrong with a pergola on top of the sewage and stormwater? The depth of cover is 500mm and safe.
We were in a similar position about 15+ years ago - negotiated with the seller to have the council inspect (at his cost) and either he paid for the de-construction and replacement for the pergola (after the inspection, and quoted by a reputable dealer ~$3k) or we removed that from the offer. He reluctantly agreed, but it was a different market back then, and he'd had the house on the market for 6 months without a buyer. Fortunately for him the guy from the council inspected, said it looked fine, and that was the end of it. Personally I'd use it as a bargaining point to lower the price, or to back away from the sale - depending on how much you like the property.
seller might offer to rectify or compensate you to rectify by lowering purchase price. if they don't, walk away.
if seller agrees to lower price by 100k, would it be worthwhile to spend 35k cash to fix up the issues?
i'm sitting on 90% LVR. 100k house price = 10k reduction in downpayment.
no need to get greedy. the seller's agent might advise them that its worth it to fix up as they are losing money each day they dont sell the house. avoid feeling pressured into buying the house. i walked away from a house that had an untenable first floor (illegal ceiling height) and found a nicer place soon afterwards. i think its a buyers market right now.
Did I just read 90% LVR!!
Dude, you’re likely in negative equity already in this market. You might have pre-approval, but that’s meaningless when it comes to settlement with a bank. So there’s a chance you might not be able to get a loan.
And I Hope from your username you’re not involved in the aviation industry….
Use this to pull out
i'm a pilot with Qantas.
@AirbusA389: My advice would be not to buy this house. It has the potential of becoming a money pit and you could lose everything. Wait until your future is less uncertain before committing to a $700k+ mortgage.
Edit: Just saw you've edited the OP. Something else will come along. Best of luck with your career and your future house-hunting.
Take this as an unqualified opinion. I've read that the value of some real estate is estimated to drop up to 20% during this covid19 crisis.
With that in mind, your current potential issue with the property, it may be time to talk with the vendor and negotiate. If you're not a comfortable negotiator, pay someone to negotiate for you.
I haven't heard your financial circumstances and your desire to purchase this property. It'd be worth cancelling the contract and start looking for a property once the market turns to a buyers market. There is the possibility that property prices might actually not drop but that seems unlikely.
the vendor has stated 3 options: the first 2 are unacceptable to me, 3rd option is price reduction.
i'm not trying to squeeze the vendor dry. Using the 100k price reduction as suggested in this thread:
if seller agrees to lower price by 100k, this means i save 10k in cash downpayment + reduced stamp duty + reduced LMI (not quantified at this moment)
would it be worthwhile to spend 35k cash to fix up the issues? the 35k is based on the quotations that i have received.
Depends what exactly that money is for and what the council is likely to enforce. You'd have to be prepared that you may need to spend that money straight away to keep the council off your back. So if anything, that will reduce the amount you can put down as the cash deposit.
If the rectification work is $35k and you've paid $30k over the asking price, I'd be thinking you want at least $65k off the price to account for risk in those quotes going higher, risk of damage to the pipes (you'd want to speak to a plumber that does concrete encasement to get an idea on the cost you would be up for though) and the effort it is going to take on your behalf.
on a separate issue, how would valuation stack up? Given you said you have paid above market by $30k and mention 90% LVR and the market where it is and the banks being extremely tight with valuation, have you thought through this scenario?
To the hypothetical scenario of the seller agreeing to a price reduction of a $100k (which sounds unlikely). Say if this did happen, there is no need to go and spend money on any rectification straight away. I would sit on it till prompted by the council.
One question you need to consider, what's the imdemnification for the council potentially worth? Just in case they find a way to enforce it.
i'm not trying to squeeze the vendor dry. Using the 100k price reduction as suggested in this thread
It's not a matter of squeezing the vendor dry, it's about what's the right decision here and now. You have to think of it like this. You have new information (Covid pendemic and impending economic downturn) and the vendor has inadvertantly given you an out.
For some context on the $100k, if the market dives 20%, that 100k will only compensate you if the purchase price is $500k. If you're pushing 1kk or 2kk, it's a fraction of what you're likely to lose in the short term and might not be worth the 5-10% adjustment unless you're making an emotional purchase and have plenty of spare cash to burn.
would it be worthwhile to spend 35k cash to fix up the issues? the 35k is based on the quotations that i have received.
Is there any risk in those quotes? Has there been underquoting to get the job? If so, you could end up with a $50k+ bill in the end.
In the end, you need to make a decision on what's this property worth to you. If this is your dream home that you'll die in, it may be worth it. If it's a place to live for the next 5 years before you move on to greener pastures, you need to consider the issues when it comes to resell and/or if council intervention occurs.
Personally, I'd bet it'll become a buyers market in the not too far away future. Rent is cheaper now. I'd walk away from the deal, rent for the immediate term and kick some tyres when the market turns in my favour in 7 or 8 months when owners/investors mortgage stress kicks in.
It’s a sign. Call the deal off. You must cover yourself.
If you really love the house and can see yourself there long term and are comfortable about the price go for it but have the issue genuinely addressed, (properly) unlike the current owners (seller).
In nearly all cases, there's always going to be faults with a house (just like buying a car). Are you you willing to compromise and have them addressed (at your expense?). Factor all that in.
Run forest Run
If you really like the house have the owner rectify the issue within a certain period of time and insert it in the contract that it must be fixed based on a licensed builder/plumbers quoted timeframe maybe some leeway for weather. If they fail to fix it you have the option to extend or walk away. Make sure both parties signs and goes through your conveyancer/lawyer.
Alternatively, if you just like it but not amazingly because you had to compromise a few things, just walk away.
30k above asking is putting shame to the Ozbargain community, we sir, don't even pay the asking price.
If no sale or cashrewards/cashback, thank you..next!
Sounds like a negotiation tactic.
"$50k less or I'm out"
You hold all the power at the moment, the vendor will be panicking about trying to sell it.
don't buy ANYTHING when you know it has something illegal/unapproved/broken/faulty because it becomes your problem.
The old owner could feel bitter about selling and report your unapproved structure to the council after you move in, then it's your expense to fix.
I'm super paranoid (comes with the job) so I would wonder if there's plumbing or wiring that's not approved as well.
Well said!
Is the rear of the property (where the stormwater service lies) an floodway/ overland flowpath? If the pergola is blocking this flowpath (filled above natural ground, dwarf side walls, etc) it is likely to impact neighbouring property, not to mention your own, and may entangle you into a legal stoush over claims of damage.
Not sure in Tassie (where you are looking?) but in NSW, most Councils do not permit structures greater than say a carport/ timber deck over stormwater lines. Dont bank on it getting approved post construction.
You have not mentioned if the drainage service is public or private or whether there is an easement registered on property title. In either case, you would be up against Council but with a private service (ie draining neighbouring properties) you may face legal challenges with a neighbour + solicitor/ lawyer should they wish to develop their property and have to to upgrade the service to do so.
IMO I would walk away given the current economic climate but if you are persisting, you have plenty of leverage to knock down the asking price.
The council wants us to indemnify them of any damages relating to the sewage pipe, and they want the full inspection of the toilet and bathroom on first level
walk away now!
when buying a house that you want to move into, the only things I overlook are cosmetic issues or things i could deal with if I wanted to renovate it anyway. illegal structures that council are now aware of make this a bad deal.
Not sure why council give a sh!t about the upstairs room swap… unless the second storey was never approved in the first place? Internal plumbing has nothing to do with council. a plumbing certificate is really only to cover you against damage claims or for insurance claims. it's great to have an actual plumbing plan lodged somewhere for reference, but typically the only thing council/water authority cares about is the entry point to stormwater/sewerage.
either way, if you have a way out of the contract, use it.
Who would buy during an obvious downturn?
NAB assumptions suggested house prices could drop by up to 32% in 2021
“ NAB ponders grim home price scenarios
It’s not a forecast, but NAB’s ‘severe downside’ property assumption is for a 32pc fall in house prices by 2021.”
House prices may fall in some hyper inflated areas of Sydney in 2021, but not across Australia.
I will definitely get out if you can afford to wait for next better house as Council is a pain to deal with. I know easement is not an issue to some home owners, i have one in my side yard and literally nothing can be built on top of it. It is not like i will anyway, but the feeling of not fully owned it after paying the price for it sucks.
If you are borrowing money to purchase the house, check with the lender first. I've heard of. Lenders backing out of deals because of rooflines being too low.
Here is something to consider: If you sell this house you'll have the same hassles with illegal structures and buyers will ask for steep discounts or just walk away.
I asked my local council if they give retrospective approvals. The answer was: rarely.
Regarding Convenyancing, and in broad, I guess you get what you pay for. Normally large companies will just do the basic and minimum for a normal no issues sales. In some instances they may feel that the negotiation is not going anywhere, and that they are just wasting their time, so they push to stop. Additionally they are not getting anything additional for all the negotiating work.
Or that it is not in your best interest to proceed, but in this case they would make this really clear to you.
If you pay a convenyacer / lawyer by the hour they will be more into it regarding the negotiations.
Move on, last time we have looked over two years before settling on a house.
Good luck
F*** no! The owners should make it up to code before selling. Shame on them! You could make it a condition of the sale, on the contract, that the house has to be up to code.
https://www.firsttitle.com.au/products/title-insurance-for-r…