Third time lucky for vendor as banks turn screws on buyers

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We speak to the team behind the most intriguing recent property sale.

The property: A four-bedroom house at 74 North Quay Circuit, Hope Island, Queensland. Sold by private treaty $1,385,000.

Who was the agent/agency?

Tony Sutton-Yeomans, Ray White Runaway Bay.

How long was this on the market?

[Tony] We put it on the market initially in February.

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The four-bedroom house at 74 North Quay Circuit, on Gold Coast's Hope Island, has its own pontoon and water access.  

Why did this one sell?

Just have a look at the property – it’s magnificent! It presents north to the water, very, very high-end finishes, [done by a] master builder. Everybody that looked at the property was more than impressed with the quality and finish.

Was it overpriced?

The vendor was hoping to achieve over $1.4 million. When the first contract failed we adjusted it to $1.385,000.

What did you think it would go for?

Based on comparable sales in the area, around $1,375,000.

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It was a long road to sale for the property as it coincided with growing nervousness by banks about buyers' ability to meet repayments.  

What was surprising about it?

This was the third contract I’d had for this particular seller. The first contract was from two engineers from Mount Isa, both with good incomes. You’d expect the finance to flow through, and they couldn’t obtain finance!

I got a letter from the bank to say finance had been declined. They cited the valuation for the property wasn’t high enough. They’d signed for $1.36 million and had some furniture included. And the bank’s valued it at $1.3 million.

When the royal commission came in, it put a choke hold on everything. Then it was relaxed, They got their handle on new ways to process things. That steamed along reasonably well.

In the last two to three months, it’s been more prevalent with the serviceability. The banks are very wary of serviceability.

When did you get the second offer?

They signed on July 28 for 45-day settlement. That contract was $1.33 million.

As soon as someone signs a contract, we don’t pull up the shingle. We keep showing the property, as we don’t know if they’ll get their finance.

The buyers thought they had their ships in line when it comes to banks. But they had to go back with more information which wasn’t readily available.

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Despite having signed contracts on the property, the agent and vendor kept marketing it – which was a good move.  

They couldn’t get finance. Finance was due on August 12. They asked for an extension for another week.

The seller doesn’t have to grant that extension. They can say: “I’m going to sell it to somebody else."

In the meantime, we continued to have inquiries. Another buyer emerged and signed a contract for more money with no financing clause. We ended up selling it for more money and better conditions.

That was good for the vendor, right?

They're very happy.

It’s the serviceability that’s become top of mind for the banks. There are buyers out there that have had approval a couple of months ago, but now those buyers are on JobKeeper, so the banks are thinking: "Is it prudent for us to lend?"

I have another client. She’s signed a contract to purchase and we need to sell her property. She’s been given a final approval for funding that runs out on September 23. If she hasn’t got a contract signed … she may need to supply more information to the banks, which she may not be able to do.

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People with approved finance who have since ended up on JobKeeper because of the pandemic are now trying to conclude purchases to avoid having to apply for financing again, the agent says.  

The lady is frantic to piece it together. She’s now turned into [a] JobKeeper [recipient]. There are plenty of buyers in the same situation – they had approval to buy something and their employment has diminished somewhat. That’s why this particular lady is wanting to get the i's dotted and the t's crossed prior to that date.

Do you reckon we’ll see another result like this: a) next week b) next year c) next cycle d) never?

a) Today. I’ve got two contracts signed currently in my hand from two different buyers for her property. One offer is for $1.5 million with 21 days, and one for $1.5 million with a 14-day finance clause. So put yourself in the shoes of the seller – which would you accept? It makes sense to take the 14 days so she knows she’s got a deal.