Buying PPOR - What to Offer?

My daughter and hubby have found a house they want to buy and it's going to auction at the end of the month. It's a 3Bed BV with garage, well maintained but with original kitchen and bathroom and no built ins - 40 years old. Same owners for past 40 years who will consider pre auction offers. Daughter and hubby would certainly get their money back if they spent $30-$40 on updating the bathroom, kitchen and adding builtins and resold later - although that's not what they are planning on.

Past recent sales in the area are for a mix of fibro and BV but are mostly 4bed with or without a 2nd bathroom, with or without a 2nd garage or carport, usually with bigger land size by about 100sqm or bigger outside decks/pergolas and all have been modernised. Prices have ranged from $468K - $550K. RE agent said value of this home is 'close' at $439,000. Close to more or close to less - hmmmm............

Current owners want to rent back for 6 months so they don't have to rush to pack up and go and this is OK by my daughter and hubby. They are prepared to rent back to the current owners at $300/week which is about $100 below market rent. This is of course a massive saving to the current owners and the ability to rent back at all is also a sweetener. With talk of the market starting to move and a desirable neighbourhood of good quality homes that aren't sitting on the books for long what sort of figure do you think my daughter and hubby should offer? Is anyone still putting in offers at $20k below at the moment and are these offers being considered and taken?

All things considered, I was thinking -
make an offer in writing of $420K subject to building and pest reports.
Add that they'll rent back for 6 months at $300/week
Ask for an answer within 24 hours to test the waters and hopefully lock them in before others make offers.

All comments appreciated.
Olly
 
With talk of the market starting to move and a desirable neighbourhood of good quality homes that aren't sitting on the books for long what sort of figure do you think my daughter and hubby should offer? Is anyone still putting in offers at $20k below at the moment and are these offers being considered and taken?

Olly, you'll need to give a bit of a hint of the location to get answers to your "market" type questions. It's a big country after all......

Gools
 
My daughter and hubby have found a house they want to buy and it's going to auction at the end of the month. It's a 3Bed BV with garage, well maintained but with original kitchen and bathroom and no built ins - 40 years old. Same owners for past 40 years who will consider pre auction offers.
Well it is the 12th of the month now. You'll be hard pushed making conditional offers and getting acceptance when the vendors risk losing the momentum of the auction campaign. So any offer you make will need to be strong.

Daughter and hubby would certainly get their money back if they spent $30-$40 on updating the bathroom, kitchen and adding builtins and resold later - although that's not what they are planning on.
Gee I wish I could do renos that cheap :p Did you miss a "k" there?;)

Past recent sales in the area are for a mix of fibro and BV but are mostly 4bed with or without a 2nd bathroom, with or without a 2nd garage or carport, usually with bigger land size by about 100sqm or bigger outside decks/pergolas and all have been modernised. Prices have ranged from $468K - $550K.
This is a $72K range and of little value in knowing really. You really need to know the market worth of the property better than this.

RE agent said value of this home is 'close' at $439,000. Close to more or close to less - hmmmm............
I don't care what the REA said. It could be right or it could be underquoting or overquoting. That's why you need to know yourself.

Current owners want to rent back for 6 months so they don't have to rush to pack up and go and this is OK by my daughter and hubby. They are prepared to rent back to the current owners at $300/week which is about $100 below market rent.
So is the 6 month rent-back in the contract going for auction? Also renting below market like that opens you up to not being able to claim 100% of the deductions available to you.

This is of course a massive saving to the current owners and the ability to rent back at all is also a sweetener.
Well it is really only a saving of $100 x 24 weeks = $2.5K. Nothing to get too excited about.

With talk of the market starting to move and a desirable neighbourhood of good quality homes that aren't sitting on the books for long
It is not 'talk' of the market starting to move, it has already moved up by about 10% in the last 6 -9 months.


what sort of figure do you think my daughter and hubby should offer?
A little under what it is worth. But find out what it is worth.

Is anyone still putting in offers at $20k below at the moment and are these offers being considered and taken?
$20K below what? Asking price? Remember they can "ask" anything. Why would you offer $20K below asking price if it was $50K over val to start with? But yes, we always offer below. ;)

All things considered, I was thinking -
make an offer in writing of $420K subject to building and pest reports.
Add that they'll rent back for 6 months at $300/week
Ask for an answer within 24 hours to test the waters and hopefully lock them in before others make offers.
Locking them in prior to auction is a good idea. If I was the vendor though and you made me an offer subject to P&B - I'd say "No - go get your P&B and come back - then we'll talk".
 
Don't forget that by renting before moving in your daughter will be liable for some CGT when she eventually sells, so will have to keep good records.
Marg
 
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