Wednesday, October 22, 2008

Stupid, stupid vendor

Sydney newspapers are reporting that vendors are increasing the prices of their properties in anticipation of an increase in vlaue caused by the recent changes to the First Home Owners Grant Scheme (FHOG). The grant was recently increased from $7,000.00 to $14,000.00 for existing properties, and a whopping $21,000.00 for newly constructed homes. The Sydney Telegraph calls these sellers “Greedy” but I would be more inclined to call them Stupid.

In case you haven’t noticed, the property market is really depressed. Forget all the kybosh that the various real estate bodies are pedaling, nobody’s buying. In other words – it’s a buyer’s market. So it’s a bit of a surprise that some vendors would think to put their prices up. They haven’t been able to sell their properties at their current asking price so they think the best idea is to increase the price? Right - good idea. Not.

I wrote this off as a one off but last week I was helping a client to restructure their loan to assist them with an investment purchase. They had their eye on a renovator near the beach on the Sunshine Coast which had been on the market for a while. After we had finance in order our clients went back to the vendor to make a cash offer (subject to valuation and building inspection) but guess what? The asking price was now $30,000.00 more than it was a week ago. What had happened?

During the process of arranging the pre-approval, the FHOG went up. So somehow, in a severely depressed market where house prices are clearly falling, the seller thinks this house is now 12% more valuable. Our client, and their cash offer, walked away. Stupid, stupid vendor.

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