discount expected? - buying house thru mutual friend

[onion33]

Situation - a friend of friend wants to offload an IP (has plans for something else in progress). The IP fits the criteria of what I'd like to invest in.

As the seller wouldn't need to advertise etc, what % of discount off the market valuation would I propose and for what reasons (e.g. Not paying agent fees)?

Thanks

 

[neK]

Expect to pay more... unless you are both experienced investors who can price it right and not get offended at the amounts being offered.

Everyone thinks their house is worth more.... just like how they think their poop don't stink

You could go get multiple agent values - followed by a professional valuer and then decide on a price from there.

 

[Terry_w]

nek is right. It is worth more than it is in the eye of the owner!

But I suggest you just ask for the agent's fee as a discount - . Base you price on the lowest comparables you can find.

 

[willair]

Situation - a friend of friend wants to offload an IP (has plans for something else in progress). The IP fits the criteria of what I'd like to invest in.

As the seller wouldn't need to advertise etc, what % of discount off the market valuation would I propose and for what reasons (e.g. Not paying agent fees)?

Thanks

Maybe just say nothing,and wait till the vendor or mate of a mate tells you the price face to face while standing outside the property ,,that way you will know upfront ,,some times it's better to just say very little because if they know you are interested then add another 10%..imho..

 

[onion33]

Thanks guys. Helpful stuff.

What would be more reliable? A formal valuation or real estate agent estimate?

If the vendor organises the formal valuation, how can i feel comfortable knowing it's fair (e.g. hasn't got a mate in the job to do it)?

Thanks!

 

[Terry_w]

Thanks guys. Helpful stuff.

What would be more reliable? A formal valuation or real estate agent estimate?

If the vendor organises the formal valuation, how can i feel comfortable knowing it's fair (e.g. hasn't got a mate in the job to do it)?

Thanks!

A qualified valuer = you should instruct.

 

[alexlee]

Thanks guys. Helpful stuff.

What would be more reliable? A formal valuation or real estate agent estimate?

If the vendor organises the formal valuation, how can i feel comfortable knowing it's fair (e.g. hasn't got a mate in the job to do it)?

Neither means anything unless you both agree to it. Fact is, the vendor has a number in mind already.

 

[grow]

a valuer will be the best independant advice and will compare other sales and do a good report. I have paid for 2 in Cairns 700 and 850 and they were well worth the $

 

[Big Will]

Thanks guys. Helpful stuff.

What would be more reliable? A formal valuation or real estate agent estimate?

If the vendor organises the formal valuation, how can i feel comfortable knowing it's fair (e.g. hasn't got a mate in the job to do it)?

Thanks!

Registered Licensed Valuer they will cost but their value has to stand up in a court of law.

If you feel the owner is going to have a biased one get your own done.

If you still cant make a compromise after that then maybe get another 3 REA estimates and talk further.

 

[onion33]

Alright. The bank valuation came back at 320k.

What should I offer? I know the vendor would take it to auction, so what does an auction normally cost?

Thanks heaps!

 

[Perp]

I would think $320K. The real estate agent, and auctioneer, are usually costs to the vendor, but they're the price the vendor pays for the benefit of knowing they're getting the most that the market is willing to offer.

As the vendor is forgoing this benefit, it's only fair that they benefit from forgoing this cost. Otherwise, they may as well go to the open market, if there's no benefit to them of selling privately.

If they're very happy with $320K, they may wish to split the costs saved ($10-12K?) with you and offer you an approximately $5-6K discount, but that would be generous of your friend's friend.

 

[onion33]

That's a good point Perp. Thanks.

I'm going to put in a condition for building and pest inspection. My loan is days away from being approved by the bank (not that they've seen this particular propety). Do I need to put in a finance condition to the offer (if I wait til the loan is fully functioning?)

 

[Big Will]

I would always put STF even if I had cash money for the property.

 

[SamL]

I would always put STF even if I had cash money for the property.

Why even if you had cash? You could miss out on some good deals because of this. I.e The vendor might accept someone else lower offer than yours just cause they know that it is unconditional with regard to finance.

When I bought recently this is what happened with me, I had two offers on the table, one with a STF clause and one without (with a lower price and less of a deposit). The vendor took the lower price and deposit to remove the STF clause.

 

[Big Will]

Why even if you had cash? You could miss out on some good deals because of this. I.e The vendor might accept someone else lower offer than yours just cause they know that it is unconditional with regard to finance.

When I bought recently this is what happened with me, I had two offers on the table, one with a STF clause and one without (with a lower price and less of a deposit). The vendor took the lower price and deposit to remove the STF clause.

He is buying from a mate so there is no competition. Why STF even if I had the cash it could be better used buying 2 or more properties. If there is competition and I really wanted the property then yes you could remove it.

 

[Perp]

Why even if you had cash?

Some buyers insert "subject to finance" in order to protect themselves against a low valuation; your ability to borrow is only one half of the equation.

e.g. You have a $50K deposit and want to buy a $500K property with a 90% LVR loan of $450K. You meet the bank's serviceability criteria for a $450K loan with a very comfortable margin and you're confident you'll get a loan somewhere so you purchase unconditionally.

This can cause you strife if the bank only values the property at, say, $460K. All of a sudden you don't have enough to settle, but you have an unconditional contract.