Bonds for 8HA and above
As a property professional with three years experience and on going training I feel the need to bring the following discussion to the attention of the general public and to the potential buyer. Unfortunately the banks are working in a weird manner, if you get my meaning. Experience has shown time and again that in order to get the client off their backs they will send him to see the agents and tell him to get an OTP. This means that the agent runs around with the buyer – gets the viewings set up and gets the offers made – this then goes to the attorneys who start the process – rates clearance – etc… they draw up the documents and then we wait [everyone is working completely unpaid] – the banks will even send out an valuer… then they come back with… "oh! It’s over 8 HA – we don’t do financing for properties over 8 HA" – This even after the whole property description is in front of them from day one…
I have seen at least 15 such cases in my first year. Slightly less in the second year because I noticed the norm.
We now use a private bond originator who has a proven track record, but even she is not able to sway the banks most of the time.
If you have an income [ that is you are not self-employed, being self-employed is another kettle of fish] it makes it a bit easier… but the banks are saying, and perhaps rightly so, that the guy with a job and a steady income – will buy a farm and immediately leave his job… to farm. If that goes belly up then the banks sit with the unpaid bonds. This is their reason for not providing more than 50% of the bond – just in case they need to resell… at least they can make their money back.
Once you have a guaranteed letter from your bank concerning financing then we can move forward. Remember that the bank will still do their own evaluation and might still only provide 50% of their evaluation. Here comes the crunch with the sellers, the sellers need to realize that the property has a certain value and not a desired value but that will be for a future discussion.
Money is tight and the property market is tighter.