Vendor Terms

buyerWhats Vendor Finance to me?

More appropriately called Vendor Terms… Ok then, whats Vendor Terms?

A vendor is simply the person selling an item, a vendor does not necessarily own the item but they are the one in control of selling it.. With real estate it is generally accepted that the Vendor also holds the title although i do not accept it as the legal definitions around the net do not specify it as such.

So Vendor Terms is where a seller offers a property up for sale to a purchaser on a payment plan.

In the case of a property owner deciding to sell their property, they then become a Vendor for that property. They will either choose to sell it themselves or they will choose to sell through an sales agent – commonly referred to as a Real Estate Agent.

Selling with an Agent

A Real Estate Agent has no financial interest in the property what-so ever. They are simply a commission based salesman. Their job is to advertise your property and find buyers acceptable to your requirements as a Vendor.

The payment plan with an agent is usually pretty simple.

The choices are:

  • How much deposit up front
  • How many days for settlement

Pretty simple right.

They then call everything else special conditions.  That’s things like a finance clause giving the potential buyer a period of time for their lender to do a valuation and approve the bank loan.  The finance clause is the most common but there are many more.

As Australia is the land of Over Regulation, the Commissioned Agent you use must be a registered Real Estate Agent or a Real Estate Agents Representative.

Can you Sell your Property Yourself ?

Can you sell your property without using a real estate agent on similar vendor terms to the agent?

Yes you can.

Is it worth it?

That depends…

If you simply want to sell it on a Contract that collects a deposit and a balance in a short time frame ( 30 to 120 days) to a person you know, and you have worked out all the details with them, then all you need to do is  get a solicitor to do the paperwork and sign it up with the buyer, then the solicitor will look after the rest till settlement.

If you don’t have a buyer lined up you can still sell it yourself  but getting the word out there about your house can be a bit hard. However, you can advertise it and find buyer if you like and just have them sign the contracts when you have negotiated the details with you. It may take you a bit longer as you don’t have access to resources like www.realestate.com.au available to you as agents do, but you will save the commission.

What alternatives are there for selling my house?

Using an agent or not, you can sell your house on very different sets of Vendors Terms….

The type of Vendor Terms we talk about require:

  • You have a property to sell.
  • The property is in reasonably good condition.
  • You don’t need all the cash in the short term.
  • You have a higher than average tolerance to risk.

This type of sale is over a long term. It allows the buyer to pay a very small amount up front and the balance in installments. This can be achieved in a few different way but the out come is the same. If both parties live up to their end of the agreement, then both parties get what they were after.

  • The owner sells the property and gets the price they agreed on plus any extra for the offering of terms.
  • If the buyer makes their payments on time over the specified period they will get the property.

Wrap Up

Vendor terms is a great way for a seller to sell the property and maximize their profit. You get the purchase price your looking for ( and it must be a reasonable price), plus you get a bit more for the offering of the terms.

Vendor terms is a great way to buy a property if your low on savings, have low credit score or you are over 45 years old…

*Update:

16/9/2018

This week the Andrews government in Victoria have introduced legislation to the Victorian Parliament to  pretty much take away take your choice to use a Terms Contract to sell your home.

So no sellers, the consumer again misses out due to over bearing government.