A couple of weeks ago, before making an offer on a property, I bought a Residex report to help me decide on the price I was willing to pay.
It made me realise that the asking price of the property was FAR too much, so I made an offer to what I thought it was worth it. I missed out on that one, the property got snapped up by someone willing to pay the full asking price.Actually a lot of the sale prices on the list were more than the prices on the ‘today’s estimate’ list.
Does that necessarily mean that all these the buyers have actually paid too much (more than the value) of the properties?
There is, for example, one property for sale now, asking price $90,000 that says on my report has a value of $67K, and the real estate agent told me it got sold for $86K.And wouldn’t they have problems getting a loan at 80% of the purchase price if the property is worth less than they paid for it?
I don’t understand.[?]Celivia,
I think the Residex report that you are buying is not up to date with this fast rising market. Therefore, I believe the report won’t help you much in comparing the property price that are listing to the report price.
Just a thought.
Warm Regards
ChanDollars
[Keep going, you’re nearly reach the end of financial freedom]The fact is, there are loads of ‘investors’ out there that will pay too much for property, thinking an $86K house is a good bargain. You’ve done very well in getting a Residex report, most people don’t. I’m hoping when I go to sell my property that I can sell it to someone who will pay full price for it, rather than a knowledgable investor who will try to knock me down on it, knowing the current state of the market. Or get a bidding war going, where I can sit back and enjoy! Just remember….houses are like buses, another one comes along if you miss the first one. Also, your $90K house was reduced by only $4K, you want to be able to get a house where you’ve gotten a discount under the Residex value….possibly because the vendor is desperate to sell or some other reason. [
] Now that’s a bargain!
I welcome those types of uniformed ‘investors’ in the market, because they drive up the market value, it’s then just a matter of biding your time and making knowledgable, informed buying decisions when you’re buying another property in that market.Hi all
what is the real value anyway??
its a very imprecise thing, whenever buyers and sellers agree on a price then you have the market value. Some could equally argue that those you sold for a lesser price were fools because they undersold there properties.
Also with these reports they are median prices so unless you have 2 identical properties once again it can be imprecise.regards westan
I find +ve cashflow deals in New Zealand which I sell to other investors. To be on my database send an e-mail to [email protected]
Some people would argue that the only true indicator of value is the actual price achieved on the market.
Following that reasoning whatever the property sells for on the open market sets the valuation.
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Thanks for all the different opinions. What I still don’t understand is: isn’t the lender’s valuer the person who decides in the end whether you paid the right price for it?
He/she could easily value the property at a price less than you paid for it, then won’t give you the 80% LVR on the purchase price. Or am I wrong?Well there is value and value.
Banks always tend to be more conservative.
Now what I found out when I bought one place….
my bank had the valuers do a drive by (and no it wasnt with guns….sorry) anyway, this company that did the value, drives by checks the area and gives the bank the valuation.Thats what they base the loan on, usually a range, if the house fits in the range, you get the loan (percentages, deposits and all that aside)
Now, a real estate agent, is more driven by the market, to which they bump up the prices, often with too high an expectation, to suck a vendor in….trust me i’m a salesman! routine.
Would be investors – like me, add to the inflated prices…even if we knock them down.
Now to add to this, some real estate agents use RP data to access, sale history, owners names, lot and portfolio and all that for title searches….RP Data lists properties in NSW and QLD, other states I believe use a different system but similar.
These Data sites list the last sale price, county, size of land and other details, however!!! they are always a bit behind. Takes some time to list a property as being sold and therefore the price. Real estate agents have access to this (I guess user pays fee) Steve have you got access to this that gives you an edge to barter for a property?
For instance, you see a property last sold or bought in 1950 for $6k, the current market trend might be around $660k. Yep rub your hands together! If you have access to this, and can use it to your advantage..you can say offer a huge amount less…and just might be lucky…but it will depend on the demand in the area, might get gazumped on price….
anyway I digress, back to the bank valuation. They differ, they use different people, some enter properties, others just research the area and name a figure. Quite often they go on historical data, which is also out of date….eg demographics, which can work against you if you are desparately trying to get a loan!
At the end of the day…..one man’s junk is another man’s treasure, or supply and demand is determined by what people are willing to pay on the day.
sorry I have rambled!
Elves.
I’ve just shelled out a whopping $20 on a postcode sale report from propertyvalue.com.au and would have to say it’s the best $20 I’ve spent in a long time. Should save me thousands.
Found out that:
a) Most properties in the area I’m browsing are selling 20-60% less than the general advertised asking prices. I now think growth in this particular market is a myth, pushed along by eager agents and even more eager vendors. Only the odd house is selling near the advertised price, presumably to out-of-towners that don’t know the market. (even so, they are still very cf+, but would be higher yielding at a realistic price)b) 80-90% of properies sold in the last year went straight past me without me seeing them. Not listed on the internet or the local newspaper. These ones generaly sold for a much lower price than the ones I had seen on property.com.au .
How will I use this data?
a) Use the low prices as a reference when I negotiate my next purchase as they are much lower than I was expecting. I probably would have paid too much.
b) Use the higher prices as a list for the bank/valuer when I decide to refinance my existing properties. Fingers crossed, they’ll agree with the hype!
c) Get more chummy with the agents so I can get a piece of the action with the really cheapies that never get the chance to be publicly advertised.
Cheers,
MikeNote:
Residex reports don’t take into account improvements or renovations.
Celivia :o))
Many of the coy’s that give valuations differ in their estimates. domain.com.au gives val’s as does PI mag, and many other places- they differ widely. I guess only the valuer-general’s office has the “true” data. Dunno if that’s residex’s source or not.
I am with Simon- “market value”. Past sales do not indicate future values, I reckon. If you don;t want to pay the price, you might be missing out on something you want. The person who paid the higher price might be considered a “fool” but that fool has the property, and has paid the price for a reason.
You can offer basement prices because of a property report, but the market will always determine the *sale* price, which may differ wildly from the offer you’ve made.
It all comes down to what you want. If you want the property, ya godda pay for it :o) Perhaps the buyer did get ripped off, but if people pay prices like the new purchaser paid, within about 3 more sales, the price will have risen to that anyway.
Look at the sydney market- noone really knew what their property was worth- the market was going wild.
Perhaps the pother thing is that we’re still on a rise in RE in some areas. Whilst there’s been stories of props getting cheaper, i guess your experience, Celivia, is that the market in that area is still rising.
kay henry
Celivia- in relatoin to your other Q about the prop value being less than the purchase price… my information is that vals depend on LVR. If your LVR/equity is reasonable, i don’t think the banks even require a valuation.
Bank valuers work on markets too- thew valuation will come back with comments about the location being a “rising market” etc. That report should save the purchaser from the bank forcing a revaluation due to “negative equity” fears.
kay henry
I recently found out some banks do not do a valuation at all, others do a drive by while others work on the rental income, so if you get refused by one bank due to valuation, it feels like a dead end, when it is only a hump in the road.[8D]
I bought a house for $75,000 a yr ago, which came in with a lower valuation, so I had to scrape to put in more money(credit cards lol), I was fuming at the time, 4 months later the agent then told me the home was worth $125,000 tops, (a top agent in Qld) I sold it next day for $145,000, another matter of months worth $200,000. My advise take no-ones word on anything, use your own judgement.[8D]Lets have a think about shares for a second.
We have experts solely employed to calculate the worth of companies and hence by simple division the value of a share. Is this reflected in their real worth?
The real worth of a share is shown in the newspaper daily. There is a buyer sitting there with his money where his mouth is and the buy keyed in at that price he believes to be the true value. A seller is also in the same position. When these two values meet there is a trade and there is the real value for a share.
Some people suggest the share values to be more volatile than property values – are they?
Imagine your house was on the market and every day you had a serious offer. Some days the offer will be higher or lower than others. This offer is a true reflection of what the market believes the house to be worth. How can this value ever remain faithful to a report written perhaps months earlier?
Some food for thought at 8.30 on a Friday morning…
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Well done Simon [^]
An excellent explanation, you obviously do your best work in the morning…Sue [
]“Be careful not to step on the flowers when you’re reaching for the stars”
Originally posted by markpatric:4 months later the agent then told me the home was worth $125,000 tops, (a top agent in Qld) I sold it next day for $145,000, another matter of months worth $200,000. My advise take no-ones word on anything, use your own judgement.[8D]
I think you should get as much advice as possible and then make an evaluated decision. Your own judgement may be wrong as well.
ChrisAll post are IMHO.
] Now that’s a bargain!
]
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