House sale and purchase - how to proceed?

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Forums › Finance and wealth management › House sale and purchase - how to proceed?

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tweake

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#3244642 5-Jun-2024 10:37

David321:

Hi all,

My wife and I have had a few offers turned down on houses we would like to buy, we believe it’s the subject to sale clause we always use that is putting sellers off.

go check what those houses sold for. make sure its not just a price issue. a lot will be hanging out for the best possible price they can get.

sonyxperiageek

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#3244859 5-Jun-2024 15:50

Can I ask what conveyancer you went with? Am doing almost exactly the same purchasing a property and so am looking for a conveyancer.

Sony

Handle9

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#3244865 5-Jun-2024 16:08

David321:
Eva888:

Most of the time settlement day means just that and the cash is in the bank on time. However there can be odd occasions when someone decides either to back out of the contract or circumstances change like a death or accident or they go bankrupt like in the case of a developer buying a property and many other scenarios that are rare but can happen.

Although it’s meant to be a sure thing to have a cash offer in hand with a settlement date there are those rare times when it won’t go ahead, so I completely understand your anxiety. There are legal remedies for non settlement and the Courts are tough on those that don't but that takes time and money and a lot depends as you mentioned, on if they have assets to remedy.

The market has slowed down for selling now so buyers are scarcer and you don’t want to become part of a chain of people buying on condition of selling their own homes.

A lot also depends on your personal circumstances so things to consider are, do you have relatives guaranteed and willing to be a back stop if things turn sour. Would your bank consider bridging finance and can you afford to pay this while waiting. Would your lawyer be willing to cover you with trust funds if anything unforeseen happens to a sale.

In the meantime only make offers that are subject to a settlement completed on your own house and get advice on the exact wording to ensure that it’s clear you will not go unconditional unless cash from the sale of your property is in the bank. If you are very nervous or risk averse the best decision is to wait till settlement on your house happens and then shop with cash in hand which also means that you could get a much better deal and can bargain.

If you wait until your house settles you can rent an Air B and B or go to a cheap motel for two months if you don’t have anyone to stay with. It’s winter and rental prices will be very negotiable for long term.

Brilliant answer thank you, ill ask my conveyencor if a subject to settlement being completed is common and a good idea. I am very risk adverse.

If I was the vendor I would tell you to go whistle. Why would they accept a contract that hamstrings their ability to buy something else? Your contract would still be conditional so they can't go unconditional on their next property.

If you want to have no risk of not being able to settle then you need to sell your property and rent. If you want to move from your current house to a new house you need to accept some form of risk. As mentioned previously it is normal to have back to back settlement and for both contracts to be unconditional. There is a risk of your purchasers not settling but you can somewhat offset that with a 10%+ deposit.

You can't have your cake and eat it too, you either have to accept renting for a bit or some risk.

Handle9

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#3244866 5-Jun-2024 16:10

Also in your circumstances OP it sounds like you need a property lawyer, not a conveyancer. Cheap bad advice is far more costly than expensive advice.

Goosey

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#3244867 5-Jun-2024 16:10

Best to chat with a mortgage broker. I’m sure this an everyday occurrence for a lot of punters.

there will be a way… unless of course you have tried that route but not successful for whatever reason.

alasta

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#3244870 5-Jun-2024 16:20

I recall someone else suggesting in a similar thread that you keep your existing property under the pretext of renting it, with the bank taking account of rental income when they calculate how much they are willing to lend. You can always flick off your existing property down the track if being a landlord isn't your thing.

Of course, this assumes that you have lots of equity in your existing house.

nova

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#3244889 5-Jun-2024 17:43

alasta:

I recall someone else suggesting in a similar thread that you keep your existing property under the pretext of renting it, with the bank taking account of rental income when they calculate how much they are willing to lend. You can always flick off your existing property down the track if being a landlord isn't your thing.

Of course, this assumes that you have lots of equity in your existing house.

This may get harder when debt-to-income ratios are enforced starting from July 1st. But definitely talk to your bank, especially if you have good equity. A lot depends on where you live, but in general I think the introduction of DTIs and high interest rates in general are creating a lot of head wind on house prices. So selling first, with a longish settlement period, and then buying is probably the way to go.

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Goosey

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#3245065 6-Jun-2024 07:04

nova:

alasta:

I recall someone else suggesting in a similar thread that you keep your existing property under the pretext of renting it, with the bank taking account of rental income when they calculate how much they are willing to lend. You can always flick off your existing property down the track if being a landlord isn't your thing.

Of course, this assumes that you have lots of equity in your existing house.

This may get harder when debt-to-income ratios are enforced starting from July 1st. But definitely talk to your bank, especially if you have good equity. A lot depends on where you live, but in general I think the introduction of DTIs and high interest rates in general are creating a lot of head wind on house prices. So selling first, with a longish settlement period, and then buying is probably the way to go.

speaking to a decent mortgage broker would be better than the bank.

the MB’s can submit to multiple lenders for consideration. you need to give them (MBs) sufficient time though..like a couple weeks after satisfying their questions and data collections.

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