How important do you think the Residex price estimate is?
I am looking at a property in a regional area (Mildura). It is a newly renovated property in great condition. The Residex price estimates are good except for the ‘upgraded sales price test’ which is based on capital growth in the suburb and the property’s last sale price. This estimate is a long way under the asking price and it severely affects the Residex overall price estimate. However the property is returning a strong cashflow with returns of 9%.
Should the result of this one test make me look elsewhere?
Thanks
Ruth
it is regional property, you need strong cashflow to offset the lack of capital growth. If you Then want strong returns, you will need to continue with good maintenance scheduling.
Importantly, do you believe in the Residex estimate based on what you know about other properties for sale in the area, and recent sale prices? Would you consider putting in a lower offer instead of paying the full asking price?
What do the comparable sales look like within the area? That’s one of the best things (in my opinion) about residex reports – the snapshot it provides on sale prices of similar properties within a close proximity.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
The Test 1 Comparable Sales price is about $30K higher than the asking price. I usually like to refer to the comparable sales list too, and while there are none in the actual development where we are looking there are only 2 on the list of 45 that are priced below the place we are looking at. I have also searched at onthehouse.com.au and found the price to be comparable with others in the area.
After I purchased my proprety, I'd request for a residex report on the house and it wasn't accurate at all… At the time I'd purchased the house for $475k (got it dirt cheap), council valuation was $450k and bank valuation was surprisingly $520k to $580k… and my valuation at the time was around 550k to 600k… residex price estimate was $443k
anyway, a house sold 6months later 3 house from ours for land only (the purchaser was a developer). same block size and all… for $705k
i guess residex was way off its estimate on that one.
Residex is a useful tool for due dilligence – however, I would be very reluctant to base a property purchasing decision on it alone. In my experience, the values it generates usually seem reasonable – but there are occasions where the value is over/under by quite a bit. Remember also, the street rating that’s chosen in the report can dramatically alter the end value.
At the end of the day, it should only be one part of an overall due diligence process.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
I prefer to use pricefinder (PF) price estimate tool; its more flexible and personalized- you can adjust how you think the comparable sales are compared to your target property.
But yes due dilligence still need to be carried out.
If you want a PF report i be happy to provide one for free go to- http://www.shapehomeloans.com.au/free-property-report
Regards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
I agree with the others.
I have found Residex not be useful. Especially if the house is not “average” – they don’t know if it has been done up or improved or has it got airconditioning.
RP Data has more accurate stats
Hi ibluedento
I have recently purchased an IP in Mildura. Which street are you considering buying in?
Thanks
EngeloRumora | Ohio Cashflow
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Email Me | Phone MeF@#$ THE REST WORK WITH OHIO CASHFLOW TO INVEST
engelo 10 I ended up missing out on the house. That’s what happens when you convince your sister that she should get involved in property investing! She ended up making on offer on the same property as me (neither of us was aware of the other’s interest!) and her offer was the successful one, LOL!
lbluedento wrote:engelo 10 I ended up missing out on the house. That's what happens when you convince your sister that she should get involved in property investing! She ended up making on offer on the same property as me (neither of us was aware of the other's interest!) and her offer was the successful one, LOL!That is really funny (for me, probably frustrating for you!!!)
I have never heard of that before. Hope you find the right property, and don't tell your sister this time!!!
Luke.
I have used Residex as an indication of future growth potential but not as an indication of actual property value, time will tell how accurate they are. I could understand why that may not be inaccurate valuation method as others have mentioned on here.
hahahaha,
That is funny, keep the good deals to yourself hehe
EngeloRumora | Ohio Cashflow
http://ohiocashflow.com/
Email Me | Phone MeF@#$ THE REST WORK WITH OHIO CASHFLOW TO INVEST
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