The business of selling a residential property is pretty straight forward – but there is always someone who wants to re-invent the wheel.
Here’s how it should play out…
A home/property owner wants to, needs to, or has to sell and move on.
Owner hires an agent or explores a private house sale option.
The home or property owner, or their agent, promotes the property to attract buyers.
Buyers respond – enquiry – inspect – make offer – come to an agreement with the owner – make it legal – owns it.
As I have discussed, at length, in past offerings, as long as the buyer has got the M.A.N. – a straight forward deal should be executed and the property ‘changes hands’.
A quick reminder:
Without all three, a genuine buyer does not exist and exploring the possibilities of achieving any deal are almost non-existent.
However, there is always someone out there who will try to re-invent the wheel (innovate) and profess that the most important ingredient of the ‘qualified buyer’ scenario, MONEY, is not that important – and there are ways around it to enable smart (see struggling) buyers to purchase residential property.
I have come into contact with quite a few ‘smarties’ armed with ‘knowledge’ from out-of-the-box spruikers who make a nice earn from their gullibility.
The ‘smarties’ are usually eager potential investors and buyers who want in on yet another get-rich-quick property system.
Recently one of these spruikers, Rick Otton, was fined $18m – yes – Eighteen Million Dollars by the Federal Court for engaging in ‘deceptive and misleading conduct’ through his ‘We Buy Houses’ platform and a book he published; ‘How to Buy a House for $1’
Instead of seeking reputable sources of finance, ‘clients’ were taught methods such as: Rent to Buy, Vendor Finance, Sandwich Lease Option and other ‘gems’.
Otton came to my notice not long after the sh*t hit the property fan with the GFC.
Some owners fell on hard times and couldn’t sell (because of a lack of financed buyers) and many buyers could not secure finance because of the tightening of credit from credible sources (banks etc).
It was a tough time for the property market.
My first exposure to Otton (indirectly) was when I showed a couple a property I was selling for the owner, and buyers, in general, were not thick on the ground.
This couple was confident, and my initial qualification indicated they might have the BIG ‘M’.
We started talking offers and price, and whilst they were some way off offering a price that would get the owner interested, I explored what conditions/terms they would require to get a deal done.
The one thing I will pay them credit for is that they were prepared!
They presented me with a list of conditions that basically heaped all the risk on the seller, gave them the key and the seller would get their money when the buyer on-sold the property in 12 or 18 months – oh and with a deposit that would barely secure a new lawn mower.
My inner voice was yelling, “You have got to be f*cking kidding me?!”
My outer voice said, “Right, where did you learn this purchase method?”
“Oh, we follow a guy called Rick Otton.”
“That’s great, I don’t know Mr. Otton, but you may want to let him know that that is NOT the way I will do business for any of my clients. If you can’t raise sufficient funds to buy this home outright – you will have to look elsewhere.”
“Oh, we know someone will want to run with this deal.”
“Good luck finding them.”
When I told the seller of this attempted deal, he was so grateful that I had cut them off at the pass.
Over the next year or two I struck a couple more of these ‘disciples’ and they got the same short shrift.
More recently a client called to say she had been approached by a potential buyer who was offering a ‘rent to buy’ scenario to purchase her property.
My first reaction was – “Hold everything!”
I then explained that this was fraught with danger, and even if she was going to consider it, she must seek trusted legal advice before even entertaining the offer any further.
Happy to say that she rejected this offer and the buyer miraculously came up with the MONEY to complete a conventional purchase.
Buying a home or property is no different to any other transaction.
If you, as a buyer, don’t have the ability or capability to present the full, agreed amount to transfer ownership, take a walk.
If you can’t cough up, then shut up and find someone who is willing to sell based on a promise and a warm handshake.