Allow valuation prior to purchase?

[zenq]

I'm selling a property and recently had a low ball offer from a buyer. They are miles from an acceptable price, and I doubt they have the cash to give me a priice I will accept.
They have now asked if they can do a valuation to base their offer on this.
I have asked if they want to do a bank valuation or a private valuation. I'm inclined to allow a private valuation (provided I can see the report) but not a bank valuation (unless they want to make an unconditional offer. Currently offer is subject to finance, so I figure they will get to do a bank val through their finance process). I don't want to have sale price "set" by a fire-sale bank valuation. The property is unique in size, features and development potential in the area so their are not comparable sales to get a decent valuation figure, they tend to compare it to neighbouring smaller properties with no development potential.

Is it normal to do a val prior to purchase? Am I being precious? If these buyers can't at least offer something in the ballpark I consider I don't really feel like wasting my time with it. I've already put in a counter offer and won't accept anything much lower, so feel like the discussion is just about over. Plenty more fish in the sea.

Cheers

Dallas

 

[csc2]

[

Your being precious...what do you have to lose?

It will give you an idea of what the valuation comes in at if they will give you a copy and will cost you nothing...........from my experience lately bank valuations are starting to come in on the low side..

Have you thought your expectations are too high?

If your serious about selling, help where you can to close a deal otherwise its a pointless exercise...

For sure you have a price in mind but will you actually get close to this?

Buyers now days are quite informed....maybe he is bargain hunting, but if hes prepared to outlay $$ to obtain a quality valuation he must be reasonably serious..

I'd run with it no problem...after all there's no sale until you sign off on any deal...

Best of luck.

 

[csc2]

PS: I just noted Cairns as your base.

If the property is in Cairns then maybe your expectations are too high currently.....its not exactly booming up that way....

Jump onto RP Data or PDS and do some research on similar homes in the area............sales are a bit thin all round compared to the last two years...

 

[zenq]

The property is a 12 acre block with a DA, in a suburb full of 1 acre blocks. When I have had valuations done the best they can do is compare it to nearby 1 acre blocks, and the valuers have told me they have given no premium for subdivision potential.
If the owner gets a bank val they will just get a figure with no justification for the value. At least if they get a private valn they (and I) can assess the "comparable" properties and see if they are really comparable.
I'm in the process of seeking expressions of interest on the individual blocks so not too fussed about a buyer fiddling around outside the ballpark.

I've emailed the agent to ensure they have qualified this buyer thoroughly, because I'm not getting the feeling they are serious/financial enough.

Cheers

 

[csc2]

If you not happy knock it on the head then.....

Is it a sole agency?

If not, obtain new feedback from other agents on market value which may add to your headache or give you some serious direction on which way you should move.

If you not desperate to sell. hold.the market will turn.....eventually...but in my opinion not soon/

12 acre block...you wont be rushed off your feet with buyers...........

if you stole the block originally consider your profits seriously....

in this market personally having a 12 acre block, id cash out and move onto something that generates an actual income...dead money land usually unless you have plenty of cash to hold continually for long periods,,,

 

[zenq]

I feel like the RE should be pushing the client to present their BEST offer, they are miles below the asking price range so lets see if they can come up with something I will consider. If not, why waste anyones time. If it falls over at finance so be it. I'm not going to accept a crappy figure just because its got a suspect bank valuation to back it up, so it isn't going to change the outcome.

 

[boods99]

Hi Zenq,

Have you thought of maybe commissioning your own full valuation? This way you are able to be in control of the process and it will also give you a realistic price to work with. I'm not saying it is the case with your situation, however, most of the time, Vendor's expectations are way higher than what reality dictates, especially when it comes to development sites. A small expense now could save a lot of time and anxiety.

Boods

 

[Brett IP]

I feel like the RE should be pushing the client to present their BEST offer, they are miles below the asking price range so lets see if they can come up with something I will consider. QUOTE]

Youve answered your own question I suppose, dont pursue any further unless you are happy with the figure they present. If you dont need to, why settle when unsure ?

Cheers

 

[zenq]

I got an estimate to do a valuation on the land as a subdivision prostpect: ie looking at value of individual blocks (only 4 blocks) and an overall price and was quoted 3500. I can't see the value when I can compare the recent sales myself. Its not like its binding or anything! The market is very slow ATM here, also, so I feel the valuation doesn't have much current "comparables" and as mentioned the types of blocks nearby don't compare. I did have a vaulation 9 months ago and the buyers offer was about 20% below this so they aren't anywhere near where I would consider selling.

Hi Zenq,

Have you thought of maybe commissioning your own full valuation? This way you are able to be in control of the process and it will also give you a realistic price to work with. I'm not saying it is the case with your situation, however, most of the time, Vendor's expectations are way higher than what reality dictates, especially when it comes to development sites. A small expense now could save a lot of time and anxiety.

Boods

 

[cmason]

Hi Zenq,

Have you thought of maybe commissioning your own full valuation? This way you are able to be in control of the process and it will also give you a realistic price to work with. I'm not saying it is the case with your situation, however, most of the time, Vendor's expectations are way higher than what reality dictates, especially when it comes to development sites. A small expense now could save a lot of time and anxiety.

Boods

agree. Was different with me as I was selling my property myself but the first thing I done was get an independent valuation to give me a better idea. I also got 3 free REA valuations and made my own mind up based on these valuations. Had no issue forking up what was then $600 for the independent valuation as it gave me peace of mind as to the value of the property

 

[boods99]

I got an estimate to do a valuation on the land as a subdivision prostpect: ie looking at value of individual blocks (only 4 blocks) and an overall price and was quoted 3500. I can't see the value when I can compare the recent sales myself. Its not like its binding or anything! The market is very slow ATM here, also, so I feel the valuation doesn't have much current "comparables" and as mentioned the types of blocks nearby don't compare. I did have a vaulation 9 months ago and the buyers offer was about 20% below this so they aren't anywhere near where I would consider selling.

Zenq,
Are you aware of all the costs associated with the subdivision process? Things such as consulting engineers, fees to council, fees to dept of planning, headworks, fencing, environmental studies, geotechnical studies, traffic studies, surveying, town planning, upgrading of drainage, public open space contributions, provision/upgrading of roads, the list goes on...

What I am getting at is, that after taking into account all of these costs, as well as adding an acceptable profit margin for the developer (I can't speak for all developers, but I can assure you most don't embark on these projects for the practice) the net present value of the land as is, is almost always lower (much) than the Vendor's asking price. Most simply do not know how much it costs to develop their land.

If you were to pay the asking price for 99% of the development sites on the market you would go broke very quickly...

Boods

 

[zenq]

Zenq,
Are you aware of all the costs associated with the subdivision process? Things such as consulting engineers, fees to council, fees to dept of planning, headworks, fencing, environmental studies, geotechnical studies, traffic studies, surveying, town planning, upgrading of drainage, public open space contributions, provision/upgrading of roads, the list goes on...

What I am getting at is, that after taking into account all of these costs, as well as adding an acceptable profit margin for the developer (I can't speak for all developers, but I can assure you most don't embark on these projects for the practice) the net present value of the land as is, is almost always lower (much) than the Vendor's asking price. Most simply do not know how much it costs to develop their land.

If you were to pay the asking price for 99% of the development sites on the market you would go broke very quickly...

Boods

Already have DA, Works approval, so have spent heaps already on consultants, engineers, surveyors, town planners etc etc. Total estimate for "Things such as consulting engineers, fees to council, fees to dept of planning, headworks, fencing, environmental studies, geotechnical studies, traffic studies, surveying, town planning, upgrading of drainage, public open space contributions, provision/upgrading of roads, the list goes on...", also legals, RE fees, etc still outstanding is from $200K-$250K (depending on level of finish) more.
Estimated total sale price for individual blocks approx $950-1050K.
My last bank val was around $500K. I figure this leaves a difference of about 200-350K between a fairly recent valuation and the gross profit. Since then have completed traffic, water and other essential engineering to complete works aproval. Now I can start selling off the plan. The buyer offered $435K. I'm not interested in stuffing around unless they are planning to make a serious (lets start with not laughable) offer. I'm proceeding with off the plan sales so really only interested in very high 5s on the whole block for now, though will reconsider if can't get the pre-sale interest I need to justify pouring more money into it.
PS, have advertised one the blocks (with a basic home and gardens) for $400K and have already had some interest, so these guys are really not in the market for the whole property.