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#1 Unatheowl

Posted 16 December 2012 - 06:06 AM

Dh and I want to build but that is in 5-10 years.  We thought we would stay where we are until then unless something comes up which would be a suitable interim house, so we're kind of looking out all the time and seeing whats out there.  

Yesterday I saw something suitable.  Obviously our house , although it has been valued, it not on the market.  What would our options be to secure this new place when our own place which may or may not sell for a while, especially as it is coming up to Christmas.  Surely we aren't the only people who happen upon this situation?  What do other people do ?

#2 Froger

Posted 16 December 2012 - 06:40 AM

Maybe ask whoever is doing your side of the conveyancing about putting a clause in the contract that makes the purchase of the house subject to the sale of your house. As far as I know a time limit is normally put on it, say for example that if your house doesn't sell within three months then the contract to buy that particular house is void/cancelled.

I'm in Qld, and this seems to be a fairly common sort of thing to have inserted in a contract when one is purchasing a house.

#3 Unatheowl

Posted 16 December 2012 - 06:42 AM

ahh, ok thanks for that.  Ive never been in a situation where i'm selling one house to buy another.  I can imagine there would be so many timing issues bu I just have no experience with it.  Its probably the normal situation thought right?  Is there some kind of finance that the bank can offer in the meantime and what would it involve?


#4 Froger

Posted 16 December 2012 - 06:53 AM

A bridging loan perhaps? But if you were purchasing the home subject to the sale of your house, you would only need to put a small deposit (I've seen deposits as smallas $50, or even none at all). There would be no need for a bridging loan, as you haven't actually purchased the other home, and won't be until and unless you sell your house. Hope this makes sense.

You would only need a bridging loan if you purchased the other house without it being subject to the sale of your house (unless there was a large gap in the settlement time on your house and the other house I would suppose).

However I'm not a conveyancer or anything, this is only what I know from personal experience. I know it can be done however, but obviously you need to talk to a legal professional of somesort. Although I guess the estate agent could give you some preliminary information about sale contracts, so you have something more to think about how you want to go about this.

#5 SplashingRainbows

Posted 16 December 2012 - 06:54 AM

Una you can ask your bank about bridging finance.

Happens quite a bit.... I think you're self employed? They will almost certainly want financials (bank that is) make sure you get a copy from your accountant before they close for Christmas.

#6 Unatheowl

Posted 16 December 2012 - 06:56 AM

wow, such a small deposit?  That would be ideal.  Yes, I do need to do more research so I thought EB would be a great place to start original.gif lol

Yes, we are self employed (both of us  blink.gif ) but have been for about 6 years now.

#7 Shadowess

Posted 16 December 2012 - 06:56 AM

You need to speak to your solicitor and your mortgage broker/bank, to see what can be done.



#8 SplashingRainbows

Posted 16 December 2012 - 06:58 AM

Another option is to buy now with delayed settlement - say 3 to 6 months. In that time you can rent it from them if you want to move in an advertise your existing place.



#9 Froger

Posted 16 December 2012 - 07:05 AM

QUOTE (Unatheowl @ 16/12/2012, 06:56 AM) <{POST_SNAPBACK}>
wow, such a small deposit?  That would be ideal.  Yes, I do need to do more research so I thought EB would be a great place to start original.gif lol

Yes, we are self employed (both of us  blink.gif ) but have been for about 6 years now.


I'm in Qld, so you better check out the deposit requirements where you are. But here in Qld the deposit can be negotiated, and can be very little, as long as both seller and buyer agree (at least it was when I last bought a house). However some sellers are reluctant to accept a small deposit (incase the buyer pulls out I guess??)

And yes, as per PP, delayed settlement would be another option, but if your house didn't sell within the settlement period you'd have to be aware that you would then have two houses and possibly two mortagages to support until you sold your other house. Generally speaking, I would suppose (and I'm in no way an expert at all!!! - just another house buyer like you) this is where a bridging loan would come into play??

#10 Guest_AllegraM_*

Posted 16 December 2012 - 07:08 AM

Unless you can afford to buy the new place and keep your current place as a rental, you have two options.

1. Buy but make contract subject to selling your house within a specified period.

Advantage is that you can transfer your mortgage smoothly, as long as both properties settle on the same day. Disadvantage is that you will have to move out of your house and move into the new house on e same day. Nightmare! Major disadvantage is that the sellers of the house you are buying may not agree to enter a contract on that basis. Sellers hate prior sale clauses as it gives them no certainty for what is often a long contract that has the potential to fall over if you can't sell your current place.

2. Bridging finance

Advantage is that you can quickly proceed to buy the new place without waiting to sell your current place. You can move from one property to another at your leisure. Disadvantage is that yiu will be essentially paying for two mortgages until you sell. Bridging finance is expensive and should be a short-term option only. Major disadvantage is that you would be in a big pickle if you could not sell your current place easily, or could not sell it for the price you need.

#11 Unatheowl

Posted 16 December 2012 - 07:14 AM

ok thanks for all that.  OUr current house is in a very good location and is renovated and has no major issues so I imagine the house would sell in the normal time frame.  It si pretty "typical" for the area if not a little above average.  Obviously the REA thinks it would sell quickly but I'm not going to rely too much on that one lol.

#12 Guest_AllegraM_*

Posted 16 December 2012 - 07:23 AM

Just make sure to sell your current property for the amount required by your bank to release it as security without changing their loan to value ratio. I had many a client get burnt with bridging finance because they accepted a lower price for a quick sale on their old property just to get it out of their hair and had to end up contributing many thousands of dollars at settlement for the bank to release their security. Banks rarely allow their security ratio to be worsened.

#13 casime

Posted 16 December 2012 - 07:26 AM

Except in rare circumstances, a subject to sale clause is only around 14-21 days.  Sellers aren't going to wait around for months waiting for you to sell.  A buyer that came to me with no decent deposit and wanting a 3 month subject to sale clause would get laughed out of my house.

If you *must* have this house, then look in to bridging finance.  If you can't get that, then put yours on the market and keep your fingers crossed that the other doesn't sell before yours does.  If you have enough for a decent deposit, you could approach them with a subject to sale contract, but unless it has been on the market for a while, many sellers may be reluctant to accept.  You can only try though, you never know your luck.

#14 whatnamenow

Posted 16 December 2012 - 07:39 AM

The other thing to look at with a subject to sale clause in the contract is to put in a sunset clause.  Most sellers will look more favourably on contracts with these than a straight subject to sale.  Essentially subject to sale with sunset clause is indefinate until you sell your house but....  They can keep advertising the house for sale.  If another contract comes up on the house then you both have a specified time to put in your best and final offer.

#15 zingy

Posted 16 December 2012 - 08:02 AM

OK, I have done what you are thinking of doing and I'm sorry to say that it's just way too stressful  ffear.gif It is much more relaxing looking for a new property when you know that you have a buyer for your house. Once you have SOLD you become a cashed up buyer who can negotiate the best deal on your new property.

Once you have a buyer for your house it gives you way more freedom and you know exactly how much you have to work with $ wise.

When you buy before you sell, often you will pay more for the new house (because you're scared of losing it) and end up having to sell your house for less than you wanted (because you have already committed to something else and you start to feel desperate). It can be a very negative combination.

We bought a house with an extended settlement to give us 4 months to sell and it came right down to the wire...it's one of the most stressful things I have ever done...we had to take $25K less for our house because there was a time limit.

Put your house on the market straight away and maybe start the negotiation on the one you love (dangle a carrot so they keep you in the loop) but don't sign anything...I know this sounds like the boring sensible option but no house is worth that kind of stress.

I also worked in real estate for many years before children and I've seen quite a few people get into very hot water when buying before selling.

Bridging finance is an option but seriously think, what if your house didn't sell for 12 months, could you afford to pay 2 loans for that long...I know this sounds extreme but it can happen.

Also, what if you don't get the price you are expecting for your house?

If you sell first, you will be in a much better position financially and emotionally.

Put your house on the market and see what happens...if it's meant to be, the timing will just work.

Sorry if I sound like a killjoy but I am pretty passionate about this subject.

#16 Gumbette

Posted 16 December 2012 - 08:31 AM

Slightly off topic and correct me if I'm wrong, but from the sounds of your post you're planning on doing a knock down rebuild in 10 years time on your new block? We're going through the same thing, and looking back I wished we had researched a bit better before buying the house.  Due to a change in council regulations since the original house was built, we've had to pay $22k just to drop the driveway gradient, (complete and utter waste of money), can only build on 40% of the block (we have to build a 2 storey which i really didnt want) and because the block is super wide (which a lot of older blocks are, we only had the option of 1 project builder as all the other designs are for newer narrow blocks).  If I had my time over I would of had a rough plan of what I wanted and worked out the type of block I would need to find.

I'd never take out a bridging loan, I'd buckle under the stress and end up giving our place away!

#17 *LucyE*

Posted 16 December 2012 - 08:47 AM

QUOTE
Except in rare circumstances, a subject to sale clause is only around 14-21 days. Sellers aren't going to wait around for months waiting for you to sell. A buyer that came to me with no decent deposit and wanting a 3 month subject to sale clause would get laughed out of my house.

I'm in QLD too and subject to sale clauses for a couple of months are very common around here.  

It's how we managed to nab our last two homes for such good prices.  For our current house, the vendor originally accepted the high price offer that were conditional but spent over 6 months waiting and then have it fall through - twice!  When we came along, the price had dropped over 100k because we could offer an unconditional contract.

Our previous house was sold via a tender.  There were other offers greater than ours, but ours was accepted because we could offer the unconditional contract.

I personally wouldn't accept a subject to sale clause unless a substantial deposit was offered and the purchase price reflected the inconvenience.  I'd also want to be able to continue advertising the property even if it was listed as 'under contract'.

#18 Unatheowl

Posted 17 December 2012 - 06:32 PM

Thank you all for your replies.  You have given me lots to think about and a great starting point for my research.  We saw the property today and another the rea wanted to show us.  He thought it won't be an issue to get a delayed settlemt and ours should sell fast.  Looking at potential building sites I realize how important it will be to get preapprovals from council etc.  Visiting with the architect next and taking him to the site.




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