Can I get some advice in how to value a property

[Property Meister]

was wondering if someone could reassure me..

ive been looking at a particular suburb, at 2 bdrs

now, from the ones ive seen, its quite easy to compare some of them, some are not,

eg some have the insides completetly refurbished/renovated, while others have the original,

when making direct comparisions, I usually try to compare apples with apples,

however, I ve just come accross a few, they are generally located very close to eachother, they are similar in position ie not one on main road, one on quiet street etc

however, 4 I have seen, 2 are advertising around the $380 to $420 range, 2 have a firm price of about $385k which is about what the market is right at.

one surprised me becuase the ad is quite crappy, no photos except for a photo of a park , with a short description but it says offers about $350k,
so based on the above research, if the 4 want between $380-$420k, and then another one came along that was similare, then $350k would be a good buy in my eyes. however, unless the agent is bad or the seller is motivated to sell, then I can't tell why this one may be up to $50k cheaper, WHAT AM I MISSING, I obviously havne;t seen this $350k one, but I am quite worried, that if I actually have a look at it and I walk around thinking "whats the difference" , HENCE failing in my due diligence

Im starting to feel a little more comfortable, and then comes another property which looks quite similar to the others, except the insides haven;t been renoveated, so another $5k-$30k to renovate (depending on what extent I want) but they are advertising for $450k-$500k, I just can;t see the difference between them to justify the extra $100k, ESPECIALLY when the inside is just older then the others...

the only thing I can think of is land area, however, most agents either don't know, or don't seem to be interested in telling you the dimensions, most say "dunno" or "you could come down and measure it yourself"

so any pointers would be great, I understand that I may be missing out on a fundamental aspect of it, but Im trying to learn, so I am putting my pride aside!

 

[BayView]

This is the normal mindset when you've found something you might want to buy; is it good value, why doesn't someone else buy it, what's wrong with it and so on.

If it sounds like it could be a good buy, and you know the values reasonably well in the surrounding area, then make an offer with all the usual "subject to's" in the offer.

This will get it off the market while you do some further research, pest, building inspections, check out the streetscape, location to amenities etc.

Trust your judgement and do it.

 

[HandyAndy888]

Ask yourself if this 20-30k will make a significant difference when the value doubles in 10 years...

 

[Property Meister]

thanks everyone, but surely I am missing something,

ive obviously looked at location,
proximity to stuff
age of the insides
surrounding properties...

the only thing I have not looked at as previously mentioned is area

 

[Max Carnage]

Ask yourself if this 20-30k will make a significant difference when the value doubles in 10 years...

Why will it do that?

 

[Belu]

Unrenovated 2br units don’t appeal to a lot of people. First home buyers generally want a "move in and its done" type arrangement and would rather the bling of a renvoated so it cuts them out. Then you have passive investors who don't want to have to do work to a property so cuts them out, also investors like me who borrow a large % and don't have $20-30k cash to reno it on day 1.

So the potential pool is smaller, hence why they tend not to sell as well.

Also "offers over $350k" means they are looking for around $380-$400k, agents in melbourne generally when quoteing a single price are quoting at 10% under the reserve/expected price.

Cheers

Ben

 

[Property Meister]

Unrenovated 2br units don’t appeal to a lot of people. First home buyers generally want a "move in and its done" type arrangement and would rather the bling of a renvoated so it cuts them out. Then you have passive investors who don't want to have to do work to a property so cuts them out, also investors like me who borrow a large % and don't have $20-30k cash to reno it on day 1.

So the potential pool is smaller, hence why they tend not to sell as well.

Also "offers over $350k" means they are looking for around $380-$400k, agents in melbourne generally when quoteing a single price are quoting at 10% under the reserve/expected price.

Cheers

Ben

I must correct something, the actual ad for the $350k one says, "$350,000 plus buyers must inspect.", also this one has NO photos of teh actual property so I don't know what it is..

I see your point about FH buyers wanting to move in right away with hte bells and whistles, but this unrenovated one, they are adversing for between $450-$500, so what I was trying to say is that, it has a smaller potential buyer base, it also needs to be spruced up to be 'trendy' which assuming will cost $5k-$30k depending on the extent,
and the weird thing is that considering that it needs more work, has a smaller buyer base, they want up to $100k -$150k more, so im thinking that I have missed out on a fundamental that makes it so much dearer!

 

[Belu]

location? size? number in block? noise of area? location to transport?

 

[Property Meister]

location? size? number in block? noise of area? location to transport?

Ill try my best to answer

location: close to others in comparison,
size: not 100% sure because even the RE doesn;t know

Number in block: 1 vs about 5-10, ahh maybe this is the big differnece, would 1 vs 5-10 make that much difference, I understand 1 vs 100 is noticeable, but 1vs5 would it make much difference in peoples experience

Noise: same as others
location to transport: same as others..

 

[Belu]

if say you have an 800sqm block with 5 units on it you "own" 1/5 of that land, whilst if it had 2 or 3 you own a fair bit more land, and hence a higher price tag.

plus less people in body corporate is less fuss, which generally outweighs more cost.

 

[Minxdamanx]

and also don't forget the seller's motivation.

Something cheaper might mean the owner needs to sell quickly / something dearer and not so 'nice' might just be a fishing expedition.

 

[Property Meister]

if say you have an 800sqm block with 5 units on it you "own" 1/5 of that land, whilst if it had 2 or 3 you own a fair bit more land, and hence a higher price tag.

plus less people in body corporate is less fuss, which generally outweighs more cost.

perfectly understand this scenario, ihaven't manage to get land size so im jumpng to conclusions, but hoping that the $100k+ one has much higher land content

and also don't forget the seller's motivation.

Something cheaper might mean the owner needs to sell quickly / something dearer and not so 'nice' might just be a fishing expedition.

sure, well, if its still avaialbe in a few weeks, we will know that its not the bargain of the century or bargain at all!

 

[BayView]

Why will it do that?

If you study the history of house prices - not house medians, but a house's price, it will probably tell you that it doubles in value every 10 years or there abouts.

It's amazing; you'd think that it won't happen, given all the mess we're in right now, but I've been around and in real estate for a pretty long time, and it just seems to keep on going up in my experience. A house I bought in Boronia in 1985 for $93k is now worth around $325-350k give or take a few grand. That's about the statistic being talked about here. Just a standard 4 x 2 orange brick sheeple home with a garage in the burbs.

Same with the share market; I still hear people saying that over the long run, shares outperform property. Yet, we have just seen 50% of their value wiped out. Hard to believe what they say, right?

Short term vision is the wrong pair of glasses to be wearing, and don't forget; if the prices are low now, then now is the time to buy, as they will go up sooner or later.

If you don't beileve all this; don't buy. More for me.

 

[RumpledElf]

Prices are weird - within 4 months on our IP's street we had three double blocks - one sold for $65k (for sale for a year before selling), one listed for $169k (not sure what it sold for, was for sale for less than a fortnight) and one still for sale at $240k, been for sale for at least 6 months, probably a lot longer. Sure, the houses are different inside but that's a huge variety in price ...

 

[Aimjoy]

eg some have the insides completetly refurbished/renovated, while others have the original,

PM,
This kind of price difference was also seen in the last SYD boom a few years back, where un-renovated were selling more than renovated. Reason may have been that buyers wanted to put their own stamp on the property with their own taste in renovation............not sure but that could be the reason here too IF we are talking sales price not asking price

however, 4 I have seen, 2 are advertising around the $380 to $420 range, 2 have a firm price of about $385k which is about what the market is right at.

Asking price is completely irrelevant to market value - the only prices that count are sales prices.

 

[Property Meister]

PM,
This kind of price difference was also seen in the last SYD boom a few years back, where un-renovated were selling more than renovated. Reason may have been that buyers wanted to put their own stamp on the property with their own taste in renovation............not sure but that could be the reason here too IF we are talking sales price not asking price

Asking price is completely irrelevant to market value - the only prices that count are sales prices.

yep, completely agree with you, something is only worth as much as someone is willing to pay,

the $100k+ property does look a little better, but Im not sure its worth that much extra... I might have a closer look at it and call the agent...I don't want to sound too dumb to the RE agent