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Risky ride on the vendor-go-round
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Risky ride on the vendor-go-round
Chris Vedelago
January 22, 2012Read later
Success: Gavin and Verity Carson sold their home in Abbotsford with a subject-to-sale deal. Photo: Craig Sillitoe
Selling a home is stressful at the best of times. Failing to sell at auction in the midst of a property downturn can be its own kind of nightmare.
But imagine if it turned out that the only way to sell your home depended on the buyer having to sell theirs first.
It is a scenario Gavin and Verity Carson never considered when their Abbotsford terrace house went to auction and was passed in.
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After later negotiations with a bidder broke down, they were left at a loss about what to do next. Looming was the threat of a lengthy wait in the private sale market, already flooded with thousands of unsold homes.
''All the people that had been interested were no longer interested - we had to really start the campaign from scratch,'' Mr Carson said, adding that they already faced a $10,000 advertising bill for the auction.
The Carsons were thrown a lifeline when one young couple offered to buy the house - but only on the condition they sold theirs first. Known as a ''subject-to-sale'' transaction, the method is used in the outer suburbs and regional areas but has rarely been seen in the inner city since the 1980s, when auctions became popular. But industry operators say the system is drawing new interest as home owners scramble to make sales in difficult market conditions.
As part of the deal with the Carsons, the buyers were given a 30-day deadline to put their property up for auction.
If it sold above a certain value, they would buy the Carsons' home. But if there was no sale or the sale price was too low, the deal was off.
Meanwhile, the Carsons could hedge their bets by continuing to run open-for-inspections - but they were prohibited from accepting any other purchase offers. ''It's just one of those times in the market,'' Mr Carson said.
''You go back a year ago and properties were clearing at auction but now you have to resort to looking at different ideas that are outside the box.
''It was little bit stressful but there's nothing we could do.''
Fortunately, the deal worked out after the buyers accepted a pre-auction offer on their home that met the price threshold.
But critics caution that the Carsons' experience is unusual, deeming the ''subject-to-sale'' system excessively complicated and prone to failure.
Transactions often collapse because buyers hold unrealistic views about what their own properties will sell for, leaving the other owners in the lurch. ''The vendor is taking all the risk and the purchaser is taking no risk, other than the investment of some funds to advertise their property,'' said Barry Plant, of Barry Plant Real Estate.
''But I think it may start to come back because of the conditions we're seeing.''
Many agents contacted by The Sunday Age said home owners should demand a price premium to compensate for the hassle and risk.
Others said this was unlikely to happen, as subject-to-sale deals were a sign of a vendor's weakness.
''It's better to have a buyer than not, but these things can really only be organised on a case-by-case basis,'' said Julie Taylor of Biggin & Scott Richmond, who represented the Carsons. ''We looked very closely at what the buyers were hoping to get for their property, which is what the entire deal hinged on. It was also important to set a closing date, so they weren't left waiting.''
The Carsons were happy with the result, with some qualifications. ''Ideally, we would have sold at auction,'' Mr Carson said. ''We did end up taking a lower value than we were expecting but that's really just indicative of the market at the moment. We're glad that it's over - put it that way.''
In Britain, subject-to-sale transactions can often evolve into ''chain'' sales involving multiple properties that must all settle on the same day.
[ 本帖最后由 tina50 于 2012-1-24 18:15 编辑 ] |
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