Determining market/final price?

[Bhp19]

We (wife and I) have found a property we are interested in buying initially as an investment with the intent to make a PPOR in 10 years + time.

It is being marketed as 7 bed, 4 bath and is currently being let as 4 flats and the advertising has no listed price, just 'express sale'. We figure it's a good way to buy future dream house (needing future renovations) at today's price that is CF+ therefore helping with holding costs, problem is we have no idea what market value is due to its odd configuration of beds/baths!

I have checked on the house, mywealth, BOQ app, CBA property app etc but am still not sure just how accurate these are and all the agent has said is an offer of $xxx,xxx was rejected.

In this case could it be worth using a private valuer?

 

[Bhp19]

Has anyone on SS ever had trouble guaging the value of a property advertised with no listing price, with no comparables in the area and if so how did you come to/decide on a figure to offer?

 

[superAndrew]

There are three methods to value a property:

1. Sales comparison approach
2. Income approach
3. Cost approach

The income approach is usually used for commercial property but can also be applied for residential. You could apply it your property to give you an indicator since it is not your traditional house and is income producing.

However the value of a property does not necessarily have to equal the price.

Personally I would look at comparable 5 bedrooms if you can find and make an offer that is around that mark or slightly higher, depending on how hard you want to negotiate.

Cheers
Andrew

 

[Chris B]

Do you know how long the current owner has had it and what they paid?

There are probably very few comparable properties, so the yield is probably going to be the most helpful way of comparing it to others but do you know if they have appropriate permission from council to rent it out as separate flats?

 

[A Jeremy]

My advice is to carry out a feasibility study on what it is worth to you, figure out how much you are willing to pay for it and then offer far less than that.

As always, you have no idea what the seller's motivation for selling is and often people acquire properties for a song.

 

[Bhp19]

Do you know how long the current owner has had it and what they paid?
~do you know if they have appropriate permission from council to rent it out as separate flats?

Last sale was in 1991 for $61,000 but the sale prior was 1990 for $157,500, not sure if these have been mixed up though, is that when the recession happened?

It is advertise as 'registered as 4 flats' but I am in the process of finding out exactly what approvals it has.

 

[Bhp19]

Jeremy, what do you mean 'what it is worth to do'? Do you mean start with my desired yield then work back to a price from there?

Andrew, I think the income way might be best to work out 'our' price but it would still be good to have something independent to justify our offer also.

On top of this, how do I find out how long it's been on the market?

Thanks all for your responses.

 

[imbi3]

On top of this, how do I find out how long it's been on the market?

Thanks all for your responses.

If you have access to PriceFinder access you might be able to find out. I am happy to do it for you, PM me if you want

 

[A Jeremy]

Oops, I meant 'worth to you'.

Valuations, while often befuddling, are supposed to be based on the economic theory of finding a buyer in a reasonable amount of time. If a certain set of circumstances came to fruition I believe you could sell a $500k property for $1mil but that would be dependent on something very specific such as the buyer is an octogenarian and the house is the site of their first family home.

My economic theory is time vs money. If you are willing to wait - for the market to change, for a deal to come along, for one of your thousand lowball offers to be accepted - you can pay less to acquire possessions.

Inversely, if you are willing to wait you may be able to sell for a higher price. Some people call very low offers offensive and when it's suggested to them they say that they could never do that but that's the market and it's how people become wealthier every single day.

I've gotten very much off topic but for buying a PPOR, I would calculate what it is worth to me and how much I am prepared to pay for it and then refuse to pay a cent more. I guess you still have to figure out what they seller may be expecting because if your whisper number is higher than theirs you won't want to offer more than the lowest they are willing to sell it for.