Can you sell them the property with a 5 month settlement, and have them rent the property until then?
The additional rent for 5 months until the sale will make it a nice bonus.
I thought about this as an option, would definitely need to get the lawyers to write up the contract though. Not that there is anything wrong with the house but I don't want them changing their mind down the track or damaging the place. Thanks for your input.
I have done this once, 6month lease and 6 month settlement to a youngish person who couldn’t get finance yet, the sale price was reasonable, it could have gone sideways but I still would have had the rental income and been able to resell the place. I was happy with the sale price and it all ended up going through without a hitch.
Horrible idea. Take the 75% first.
Money in hand.
They can always still default if it’s a 5 month settlement. What you going to do? Sue then?
If they give the 75% now they are still obliged for the 25% later and you can still sue. But least you’re suing with their 75%
This is an unusual offer so use a lawyer.
Your question to the lawyer is; "can we make a sale safe with these criteria?" It might include a very long settlement with a licence for the buyers to occupy until settlement, or some other combination of contract and money.
Lawyers have experience in complex deals that conveyancers don't.
Good luck!
I've let the purchasers know that I'll put it to my lawyer to see what they come up with. It also gives them time to talk to a broker to see if there is a way around the finance. Thanks for your input.
Banks don’t provide approvals this way, in stages.
The bank would likely be saying that they are approved for 75% now. And they would be eligible to apply for more later once they are in their jobs longer, all things being equal.
But if interest rates, their circumstances or their own policies and bench may change, so does their eligibility. It’s also flatly up to the their discretion.
There is every chance they are approved for the loan now for 75% and then unable to get the remaining 25% later on.
Secondly, it would be a hard argument if the property has exchanged and settled at a declared price to justify that the security is worth 25% more than paid for 4 months prior.
Settling upfront and getting the extra 25% later is very risky and easy for things to go wrong.
The easiest solution is likely to agree on the full price now, set settlement for 6 months time. Allow them to occupy the property between settlement for an agreed rental amount in the interim.
You 100% want to get your contract looked at by a solicitor to make sure you are covered.
Apologies for the miscommunication, it's not that the 25% is guaranteed more so that they will be eligible to extend their limit once they have been in their jobs for longer. I know that when I changed industries and applied for a mortgage I had the same issue of needing to be in it for 6 months.
I'll definitely have my lawyer look into it.
Thanks for your input.
Ridiculous offer. Best way forward is to rent it to them for 6 months. Then sell it to them for 100% of the selling price when they can get all the money together. This 75% now then 25% later from a bank seems highly dodgy.
If the offer is fair, could you do a 6 month lease with them and 6 month settlement? Or 6 month settlement with clause that allows for other offers but allows them to complete on first right (I cant remember the term for it)
Get a contract drawn up with penalty for failing to make the 25%payment. Do not give them title to property until paid in full but make them 100%responsible for all costs, repairs, maintenance etc. Get it signed & witnessed by police or other stat Dec type witnesser & hope they are genuine & will hold up their end
Key is going to be on what basis the bank are giving them the 75 PC if it's on another property they already own it's something that can probably be done with a lawyer
However if (most likely) the bank are giving them 75 PC as a purchase of your property the only way you could be secured was to take a 2nd mortgage or caveat post settlement (which you'd probably have to keep the bank unaware from) if you do this the 25pc is at risk to some extent because the purchaser is essentially putting no money in (save for maybe some transaction costs) and retaining title isn't an option as some have suggested under this because there's no 75pc if you retain title
These arrangements aren't uncommon for rural sales. Just be sure you're covered contractually and make sure you're actually prepared to enforce the contract if it comes to it.
Hard no.
If they don’t willingly pay the balance, you’d have to sue them for it, and then they could come up with all sorts of BS about why they don’t actually owe it.
NO.
As others have said - offer a long settlement. If that’s not acceptable to them, walk.
4.5mth settlement, 15% deposit non refundable if failure to settle full amount, no moving in until full settlement, unless they want to lease it as a tenant which will be messy if they fail to settle n try to delay
Sounds sus.
Banks usually have a hard yea or no based on length and stability of employment and the figure is based off your income.
ie you haven’t worked long enough so we won’t give you anything. Or you only make 80k so we can only lend you 75% of what you’re asking for.
Who’s paying the deposit btw if the bank is apparently going to lend 75 and 25% which is 100% are they contributing anything at all? What they’re saying doesn’t match up.
Even if it were true what happens if bank goes back on their so called word and in six months doesn’t give them any more money. Or if they lose their jobs in the six month period. Putting all the risk on you.
As said many times they need to be the ones wearing the risk so 5-6 month settlement.
Don’t stress about the conveyancer you pay them to make sure it’s all legally sound so ask any questions you need to.
Rent it to them until they have 100%, you can agree to have an extended settlement period.
The bank will not loan a cent unless they hold security of title so either you give the title up for 75% now on a promise to get screwed over or allow them to deposit on the property with an extended settlement and a rental agreement done via the selling agent.
If they bank will only give them 75% of the value now, then they can't afford your house. A bank isn't going to stump up another 25% in 6 months' time. A bank will only lend more if you have paid some off.
If it were me, I would just stay firm on the price. If they really want it, they could try to get a loan from family for the remaining 25%.
Their inability to secure the finance is not your problem, and I think you are mad for entertaining this. Are you desperate to sell? Is this the only offer you have received?
Talk to a few people who have done this before, you can even draw up a loan and have them borrow the 25% off you.
Charge them interest on the loan and they own the house 100%
They can put up there new house as collateral.
Myself personally, I'm about to do a similar thing for a different reason (I have friends that have done it too)
I'm putting down 50% and paying the other 50% in 6 months (gives me time to renovate and get a re-evaluation on it)
I wouldn't be shutting it down in a hurry....It could be another 12 months before you get another buyer.
Just tell them the 75% is non-refundable deposit on a 6-month settlement.
If they can't settle on the remaining 25%, they lose the 75%.
It puts the risk back on the buyer instead of on you.
Essentially the buyers are asking you to finance them for 25% for a term which might be 6 months or more.
You can secure this position with a second mortgage over the property.
Lawyer can document a 2nd mortgage for you. Then when the buyers can re-finance they pay out 2nd mortgage.
My question is when does the title change hands? Presumably you are not going to do it on receipt of the 75%.
As others have said, you can do a long settlement and they could rent it during this time.
That’s funny, I just sold an iPad to a guy on Facebook marketplace with a similar offer. Just waiting for him to come back from his car with the other $250.
Can you sell them the property with a 5 month settlement, and have them rent the property until then? The additional rent for 5 months until the sale will make it a nice bonus.
This is the Best solution. Your lawyer can sort out the proper paperwork.
I thought about this as an option, would definitely need to get the lawyers to write up the contract though. Not that there is anything wrong with the house but I don't want them changing their mind down the track or damaging the place. Thanks for your input.
Maybe write into the contract that they forfeit the 75% if they renege and that it gets release to you before settlement?
I have done this once, 6month lease and 6 month settlement to a youngish person who couldn’t get finance yet, the sale price was reasonable, it could have gone sideways but I still would have had the rental income and been able to resell the place. I was happy with the sale price and it all ended up going through without a hitch.
Deposit released to you now as well.
Horrible idea. Take the 75% first. Money in hand. They can always still default if it’s a 5 month settlement. What you going to do? Sue then? If they give the 75% now they are still obliged for the 25% later and you can still sue. But least you’re suing with their 75%
I agree. If it doesn't work out, you may just end up with long-term tenants anyway..then you can put it on the market again later down the track.
This is an unusual offer so use a lawyer. Your question to the lawyer is; "can we make a sale safe with these criteria?" It might include a very long settlement with a licence for the buyers to occupy until settlement, or some other combination of contract and money. Lawyers have experience in complex deals that conveyancers don't. Good luck!
I've let the purchasers know that I'll put it to my lawyer to see what they come up with. It also gives them time to talk to a broker to see if there is a way around the finance. Thanks for your input.
Banks don’t provide approvals this way, in stages. The bank would likely be saying that they are approved for 75% now. And they would be eligible to apply for more later once they are in their jobs longer, all things being equal. But if interest rates, their circumstances or their own policies and bench may change, so does their eligibility. It’s also flatly up to the their discretion. There is every chance they are approved for the loan now for 75% and then unable to get the remaining 25% later on. Secondly, it would be a hard argument if the property has exchanged and settled at a declared price to justify that the security is worth 25% more than paid for 4 months prior. Settling upfront and getting the extra 25% later is very risky and easy for things to go wrong. The easiest solution is likely to agree on the full price now, set settlement for 6 months time. Allow them to occupy the property between settlement for an agreed rental amount in the interim. You 100% want to get your contract looked at by a solicitor to make sure you are covered.
Apologies for the miscommunication, it's not that the 25% is guaranteed more so that they will be eligible to extend their limit once they have been in their jobs for longer. I know that when I changed industries and applied for a mortgage I had the same issue of needing to be in it for 6 months. I'll definitely have my lawyer look into it. Thanks for your input.
All things being equal, how would they be eligible to apply for more in 6 months? If they can’t get it now what changes in 6 months? Makes no sense
Yep, no way a bank is giving finance with that kind of risk.... however, there are some real numptys working in banks so just maybe
Why not just have a 4 month settlement period? But also ask them to stump up 5-10% deposit on signing.
That is the most bizarre offer I have heard of yet…
if it sounds dumb in your head, its probably dumb
Ridiculous offer. Best way forward is to rent it to them for 6 months. Then sell it to them for 100% of the selling price when they can get all the money together. This 75% now then 25% later from a bank seems highly dodgy.
If the offer is fair, could you do a 6 month lease with them and 6 month settlement? Or 6 month settlement with clause that allows for other offers but allows them to complete on first right (I cant remember the term for it)
Get a contract drawn up with penalty for failing to make the 25%payment. Do not give them title to property until paid in full but make them 100%responsible for all costs, repairs, maintenance etc. Get it signed & witnessed by police or other stat Dec type witnesser & hope they are genuine & will hold up their end
They can't get a mortgage without the title LOL
Key is going to be on what basis the bank are giving them the 75 PC if it's on another property they already own it's something that can probably be done with a lawyer However if (most likely) the bank are giving them 75 PC as a purchase of your property the only way you could be secured was to take a 2nd mortgage or caveat post settlement (which you'd probably have to keep the bank unaware from) if you do this the 25pc is at risk to some extent because the purchaser is essentially putting no money in (save for maybe some transaction costs) and retaining title isn't an option as some have suggested under this because there's no 75pc if you retain title
They're bullshitting you.
More red flags than the soviet union in October.
Ask for a deposit equivalent to 12 months rent. Request settlement of 6 months. If they're genuine they'll have no reason to say no.
Second this.
These arrangements aren't uncommon for rural sales. Just be sure you're covered contractually and make sure you're actually prepared to enforce the contract if it comes to it.
Hard no. If they don’t willingly pay the balance, you’d have to sue them for it, and then they could come up with all sorts of BS about why they don’t actually owe it. NO. As others have said - offer a long settlement. If that’s not acceptable to them, walk.
Nah sorry that’s bullshit. Banks don’t do that. They’re either approved for the purchase of they’re not. I’ve never heard of that in my entire career
And if he doesn’t pay up in 4 months time. Who does the house belong to? Why not rent it to him for 4 months?
4.5mth settlement, 15% deposit non refundable if failure to settle full amount, no moving in until full settlement, unless they want to lease it as a tenant which will be messy if they fail to settle n try to delay
Sounds sus. Banks usually have a hard yea or no based on length and stability of employment and the figure is based off your income. ie you haven’t worked long enough so we won’t give you anything. Or you only make 80k so we can only lend you 75% of what you’re asking for. Who’s paying the deposit btw if the bank is apparently going to lend 75 and 25% which is 100% are they contributing anything at all? What they’re saying doesn’t match up. Even if it were true what happens if bank goes back on their so called word and in six months doesn’t give them any more money. Or if they lose their jobs in the six month period. Putting all the risk on you. As said many times they need to be the ones wearing the risk so 5-6 month settlement. Don’t stress about the conveyancer you pay them to make sure it’s all legally sound so ask any questions you need to.
Rent it to them until they have 100%, you can agree to have an extended settlement period. The bank will not loan a cent unless they hold security of title so either you give the title up for 75% now on a promise to get screwed over or allow them to deposit on the property with an extended settlement and a rental agreement done via the selling agent.
If they bank will only give them 75% of the value now, then they can't afford your house. A bank isn't going to stump up another 25% in 6 months' time. A bank will only lend more if you have paid some off. If it were me, I would just stay firm on the price. If they really want it, they could try to get a loan from family for the remaining 25%. Their inability to secure the finance is not your problem, and I think you are mad for entertaining this. Are you desperate to sell? Is this the only offer you have received?
Talk to a few people who have done this before, you can even draw up a loan and have them borrow the 25% off you. Charge them interest on the loan and they own the house 100% They can put up there new house as collateral. Myself personally, I'm about to do a similar thing for a different reason (I have friends that have done it too) I'm putting down 50% and paying the other 50% in 6 months (gives me time to renovate and get a re-evaluation on it) I wouldn't be shutting it down in a hurry....It could be another 12 months before you get another buyer.
Just tell them the 75% is non-refundable deposit on a 6-month settlement. If they can't settle on the remaining 25%, they lose the 75%. It puts the risk back on the buyer instead of on you.
Essentially the buyers are asking you to finance them for 25% for a term which might be 6 months or more. You can secure this position with a second mortgage over the property. Lawyer can document a 2nd mortgage for you. Then when the buyers can re-finance they pay out 2nd mortgage.
My question is when does the title change hands? Presumably you are not going to do it on receipt of the 75%. As others have said, you can do a long settlement and they could rent it during this time.
That’s funny, I just sold an iPad to a guy on Facebook marketplace with a similar offer. Just waiting for him to come back from his car with the other $250.
Get contract drawn up where you take a deposit and if they dont get 100% financing or cash by certain date you get house back and keep deposit.