..Why a minimum of a 120 days’ settlement is important if you haven’t sold…

We had the pleasure of helping a very special family find their new home in Frankston South; the gateway to the Mornington Peninsula bound by the beautiful bay, the hustle and bustle of busy downtown Frankston, and the leafy treetops of sleepy Mount Eliza.

This was no ordinary assignment… it had complexity.

In this moving market our clients were keen to secure their future home first, and then face selling their much-loved smaller family home after they’d secured their purchase. This can be a great idea given that they are securing their new home in today’s dollars, and selling their home in tomorrow’s dollars… provided the market trajectory continues upwards, and taking into account stock supply and demand.

We endorsed their decision, particularly given that our Melbourne winter months are generally very kind to vendors. Low supply is typical during June to early September, yet buyer numbers are still in force. In today’s low interest rate environment the buyer interest which we are experiencing is hitting record levels in some areas; so we are optimistic that our lovely clients will benefit from their timing and their decision to secure first and sell second.

The first house which they seriously canvased was priced “over $650,000”. Our initial inquiries gave only a glimmer of hope, and our move to offer below this quoted figure was met with a decline. We had anticipated this, but it was disappointing nevertheless.

The second home was the heart-breaker… Our offer was enough to secure the property, but our terms were our issue. The agent’s competing buyers could offer a 30 day settlement, and while the competing offer was a conditional offer (as opposed to our unconditional offer), I had to explain to my buyers why it was so critical that we adhered to our 120 day offer.

Many buyers make this grave mistake.

When a buyer is facing an imminent sale as a result of their purchase, they need to factor in the following timing:

Weeks 1 – 2: interviewing and selection of an agent. For some, they already have a favourite agent selected. For others, they may interview a few and then ponder the decision, negotiate the commission and sign up the agent. Allowing 2 weeks is sensible if the sellers don’t have someone in mind.

Weeks 3-4: depending on the state of the property, some sellers might decide to do a ‘clean up’, repaint, re-configure, cull of ‘stuff’, or even just engage a stylist to move out clutter and bring in hire furniture.

End of week 4: once the home is ready for the photographer, the agents actually move things along very quickly. From photos to internet advertising to board to printed media, it can surprise just how fast these essential elements are coordinated. Allowing a full week is enough.

Week 5: the commencement of the sales campaign. If the listing agent has determined that an auction is the best way to go, the seller needs to allow for a minimum of a four week campaign.

Week 9: auction day. IF THE SETTLEMENT for the previously purchased property is ANY SHORTER than 120 days, the SELLER cannot accept a 60 day offer from a prospective buyer, let alone a 90 day offer.

Sellers who put themselves in a position where their required terms are less than 90 days show vulnerability to the buyers. Sellers who put themselves in a position where their required terms are less than 60 days leave themselves exposed and limit their buyer pool.

Unless the purchase deal is amazing, or unless bridging finance is approved – I never endorse a buyer to back themselves into a corner with a shorter settlement offer than 120 days. 150 days is ideal. Sellers shouldn’t assume that bridging finance is cheap or easy. It’s neither, and for many it’s not even a possibility.

I know that as a buyers agent who fields many off-market opportunities, the majority of my off-markets purchased are due to vendors not thinking through their own vulnerability when they sign a contract to purchase on a limited settlement period.

Vendors in this selling environment should give themselves the best opportunity to sell well and to sell with maximum buyer competition.

Our gorgeous family got a welcomed call from us just days after their disappointing rejection of their offer on Property #2.

Property #1’s vendors had decided they’d like to reconsider our initial offer.

Within two days we’d secured this beautiful four bedroom home for $650,000 and we couldn’t be prouder.

Photos sourced from REA