buying a property - how much should i offer ?

[mega8882]

i'm a first time poster so hello everyone.

hope you can help me here.

me and my wife is looking for property around 350-380 in melbourne south east area.

and then i stumbled upon this small house (2 br + 1 study + 2 bathroom + 1 garage) in glen waverley - vic.
the land / block size is around 260 m2, and the building itself just a tad bid smaller. The building is around 15 yr old.

the property is advertised for 370+. although the agent said that it was 390+ and it has been on the market for around 4 weeks.

the house itself is perfect.

i heard about that we need to put an offer a bit low. so we try 350 via phone, but the agent said that it's a bit too low because there's another 2 offers that pretty close with the asking price (i think around 365 mark).

i know that i shouldn't trust what the agent said.
but how much i should put an offer for ?

i was thinking to put an offer for 355 / 360
with condition that i can pay 25% deposit in the next week and flexible settlement date.
will that help ?

i know that we should just offer what we think the property worth.
but that's the thing. this will be our first home

btw, is it appropriate to copy and paste the link from realestate website here ?

let's fire up some suggestions!

 

[mega8882]

also, is it appropriate to just contact the vendor directly ? (it's owner occupied).

another one, is it worth it to pay to use rpdata ?
and also about onthehouse.com.au, is the sold property report worth it ? (i know it's only $5, but yeah i'm cheap )

 

[The Y-man]

btw, is it appropriate to copy and paste the link from realestate website here ?

let's fire up some suggestions!

As long as you don't mind someone else going in and putting in an offer.....

Cheers,

The Y-man

 

[The Y-man]

also, is it appropriate to just contact the vendor directly ? (it's owner occupied).

They'll refer you to the agent - they need to pay the commission regardless of whether the agent deals with you or not.

Cheers,

The Y-man

 

[The Y-man]

i was thinking to put an offer for 355 / 360
with condition that i can pay 25% deposit in the next week and flexible settlement date.
will that help ?

Any other conditions? (Finance, building etc)

As a vendor, I'd like to see an unconditional finance offer - as it takes so long these days to process.....

Cheers,

The Y-man

 

[mega8882]

only subject to finance. but it just as a safeguard in case i didn't get it.
my finance was pre-approved but who knows.

y-man i'll send the link to you via pm if you don't mind take a look at it.

 

[Propertunity]

i know that we should just offer what we think the property worth.

Only offer what your DD tells you that it is worth. If you don't know, you have no business making offers at this stage.

If you are new to all this, you could do what I did in my early investing career and pay a valuer $275.00 to do a val for you.....that way you know the property's true worth. You need to ring the lender who you got your pre-approval from and ask them who is on their panel of valuers - pick one of them.

Alternatively, most BA's also provide a service that will put a report together with an opinion of market worth and their opinions about all sorts of things to do with the property, for a fee.

When you are more experienced you do this yourself and use rpdata, residex or streetsales for your next purchases.....but don't stuff up your first one due to inexperience.

 

[Property Meister]

If you are new to all this, you could do what I did in my early investing career and pay a valuer $275.00 to do a val for you.....that way you know the property's true worth. You need to ring the lender who you got your pre-approval from and ask them who is on their panel of valuers - pick one of them.

This I completely agree on, however, I have never been a big fan of this approach,

I know that bank valuers will be conservative, fair enough, becuase if they get it wrong, they can get into all sorts of problems,

REA's might give a higher one to a seller, or a lower one to a seller for the sake of getting a sale.

all of these discrepancies I agree is a part of life,

however, what I d like to know is how are the valuers in todays market reacting to all the Doom and Gloom, recent interest drops, and at least one in 2009, and an artcile about 2009 being a worse year in 2008,

surely they miust be getting more conservative=much much more variations in valuations which makes it much difficult for the OP!

 

[Propertunity]

I know that bank valuers will be conservative, fair enough, becuase if they get it wrong, they can get into all sorts of problems,

Well, if they get it wrong - they all have to have Professional Indemnity Insurance - and it is there for a reason. You'd make a claim.

REA's might give a higher one to a seller, or a lower one to a seller for the sake of getting a sale.

REA's (in NSW are regulated by the Dept of Fair Trading) and as such are liable to justify (in court) for the "estimated selling price" figure they put in the Selling Agency Agreement (SAA). Now the figure put at the "price at which the property is to be offered" in the SAA is a different thing altogether and can have no bearing on logic whatsoever - we all see evidence of that.

however, what I d like to know is how are the valuers in todays market reacting to all the Doom and Gloom, recent interest drops, and at least one in 2009, and an artcile about 2009 being a worse year in 2008,surely they miust be getting more conservative=much much more variations in valuations which makes it much difficult for the OP!

I'm not a valuer and can't speak for them but in my experience, valuers cannot react to: things that might or might not happen in the future: "interest drops, and at least one in 2009, and an artcile about 2009 being a worse year in 2008" - that would be speculation not valuation.
I suspect valuers would do what they have always done, which is to use comparable recent sales and the summation method in coming to a val.
They may well make comment (as I've seen and maybe you have too) that the val they give may have a certain level of exposure to price volatility due to all sorts of factors such as 'interest rate movement', 'local supply and demand' etc.
Then they've done their job and its up to the lender's risk assessment (and the MI's too) after that.

 

[Property Meister]

I suspect valuers would do what they have always done, which is to use comparable recent sales and the summation method in coming to a val.
They may well make comment (as I've seen and maybe you have too) that the val they give may have a certain level of exposure to price volatility due to all sorts of factors such as 'interest rate movement', 'local supply and demand' etc.
Then they've done their job and its up to the lender's risk assessment (and the MI's too) after that.

thanks Propertunity,.

are you 200% sure about this, the only thing, is that I have a friend, who I was helping renovate, actually ,all I did was move the bed,

she got a valuation on property for her PPOR which she was renovating (ie painting the walls, room at a time, installing new sinks, new curtains etc. etc.

she got 2 valuations in 2 days, 1 valued at $470k, the other valued at $550k, the only difference was the big rubbish bin in her front yard was gone, this only happened about 2-3 months ago,

so naturally, I was a bit surprised at such a discrepancy all simply because without the rubbish bin looked better,

 

[Propertunity]

she got a valuation on property for her PPOR which she was renovating (ie painting the walls, room at a time, installing new sinks, new curtains etc. etc.
she got 2 valuations in 2 days, 1 valued at $470k, the other valued at $550k, the only difference was the big rubbish bin in her front yard was gone, this only happened about 2-3 months ago,
so naturally, I was a bit surprised at such a discrepancy all simply because without the rubbish bin looked better,

Was it the same valuer or a different one?

 

[The Y-man]

Only offer what your DD tells you that it is worth. If you don't know, you have no business making offers at this stage.

I think it depends on whether this is a PPOR or not. When it's a PPOR, I don't think the decision an be as clear cut, and that price considerations are outweighed by other lifestyle factors.

Cheers,

The Y-man

 

[Propertunity]

I think it depends on whether this is a PPOR or not. When it's a PPOR, I don't think the decision an be as clear cut, and that price considerations are outweighed by other lifestyle factors.

Yes, Y-man I agree..........to a point. I'm not a personal fan of overpaying for anything - my own PPOR included.

Additionally, over time, ppl tend to use the equity created in their PPOR as a deposit on their first IP. Obviously, if they have overpaid for the PPOR it will either mean waiting extra time to get the deposit out of equity or a reduced deposit - meaing they might have to pay LMI when they might otherwise not have had to do so. So how much and where etc for a PPOR can be important.

Of course if its only a PPOR and no investments need to be funded from it in the future .................then knock yourself out and just buy where you want for what you can afford (or stretch yourself to) and enjoy!

 

[Property Meister]

Was it the same valuer or a different one?

completely different, I'd expect some discrepancy, but say I was interested in buying this one, and if I got 2 valuations, basically 2 days apart, and with no difference in the property, Id be pretty confused!

so if the vendor wanted $550k, say they were negotiable $20-$25k, that would make it $$530k, however if the valuation was $475, and I was offereing $450-$470, then I would be completely wasting my time and theirs,

and say I found a similar property next door to it, and I thought they were similar, then I would go and offer $450-$470 for the next door one, and they wnated $550 as well, and then all my expectations would be clearly incorrect...

this is what I suppose scares me a little and hence I haven't thought about getting a valuation when looking to buy one, but simply past sales in close and recent times.

 

[mega8882]

i also heard about that 2 valuers can give totally different value.

it's just like 2 people with different experience level trying to put a value in the same thing. it's never going to be the same.

that's why i never trust valuer



fyi, i always made my purchase based on extensive research.

that's why it's annoy me that i haven't done that much research with this property.
but it's going to be our PPOR, as my wife put it on her facebook "it's like falling in love again" lol -.-

 

[Lamingtons]

On the other side of the fence. My friend didn't believe how low the valuation from the bank came in at and she paid for a separate valuation that came in exactly the same. How odd.