Finding the fair value for a property

We have decided to purchase a property and the loan has been approved by the bank too but we are still a bit unsure of the value of the property. The bank valued it at the exact loan amount. We are putting about 24% (including the First Home Grant) of the total price.

The property is about 8-10 years old and is located in a suburban CBD, very close to the train station. I have checked the median price for that area on http://www.homepriceguide.com.au and our purchase price is lower than the median price. Not sure if that makes any sense.

It's a 2 bedroom unit, 1 bathroom, 1 garage, security building with lifts and intercom. The area is about 70 sq m.

I just wanted to if my buying price is a fair value. Any suggestions?
 
We have decided to purchase a property and the loan has been approved by the bank too but we are still a bit unsure of the value of the property. The bank valued it at the exact loan amount. We are putting about 24% (including the First Home Grant) of the total price.

So am I understanding you correctly when I say that the bank valued the property at 76% of the price you are offering to pay?

The property is about 8-10 years old and is located in a suburban CBD, very close to the train station. I have checked the median price for that area on http://www.homepriceguide.com.au and our purchase price is lower than the median price. Not sure if that makes any sense.
This is only useful information IF you are buying a median priced property AND it was 3 months ago. (The data is 3 months old by the time you get to see it). Time to get a bit more accurate.


It's a 2 bedroom unit, 1 bathroom, 1 garage, security building with lifts and intercom. The area is about 70 sq m.
That does not help a lot. :p in all honesty. If you want to send me a private message with the address, I will run up a report for you gratis. If you don't trust me, fine, then go and register at www.findemeahome.com.au and put in the property details. I find Residex, whose engine runs this site, reasonably accurate for what you are trying to gauge. They'll give you 15 free estimations per e-mail address.

I just wanted to if my buying price is a fair value. Any suggestions?
I'd be concerned too if my first statement is correct. But bank valuers have been marking prices down a bit. Still, time to do some homework.
 
So am I understanding you correctly when I say that the bank valued the property at 76% of the price you are offering to pay?

Yes that's right. Well, the loan amount I got was the 76% of the total price. Should I be concerned about that?
 
Yes that's right. Well, the loan amount I got was the 76% of the total price. Should I be concerned about that?

Well you might be confusing things. If you were getting a 100% LVR loan then YES, I'd be very concerned. A margin of 5% either way - it sucks - but you get that. 24% - you're either paying way, way too much or the valuer is a moose. Either way you need to know so you can either - walk away from the deal or get a different lender / valuer combo.

However, if you were getting a 76% LVR loan - then you don't really have a problem.
 
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i wouldnt be surprised if it was a 76% lvr

aitsmoi - what did you pay for the property (i.e. what is the full amount as per the contract) and did the value have the same amount as this?
 
i wouldnt be surprised if it was a 76% lvr

aitsmoi - what did you pay for the property (i.e. what is the full amount as per the contract) and did the value have the same amount as this?

The price of the property is $336,000 for 70 sqm area + 14 sqm garage, 2 bedroom, 1 bath, security building. I am putting about 24% (including the First Home Grant) of it and the bank approved the remaining 76% loan.

I was wondering what is the usual area for a 2 bedroom unit, whether mine is a bit smaller.

I have a friend who bought a 2 bedroom unit (118 sq m) in a nearby suburb with similar specs as ours with a much larger veranda and with access to more light inside the unit for $385,000. But their location is next to the railway line and very disturbing (although the building is only 6-7 years old) and they pay higher strata because of swimming pool, gym etc.

Comparing these 2 units, their per sq m cost is lower than ours. What do you reckon?
 
The price of the property is $336,000 ... the bank approved the remaining 76% loan.

You scared everyone, becasue they thought you meant the bank valued the property at 76% of the purchase price. From what you are saying, it seems like the bank has valued it at $336k (correct?)

As to value - the only way you can tell is to see what other properties have sold recently (say in that past month) in the area of similar age and build.

Cheers,

The Y-man
 
Comparing these 2 units, their per sq m cost is lower than ours. What do you reckon?

Here is my experience with these things:

1. if you decide you are paying too much, and decide not to go ahead, despite the bank valuation coming in ok, etc, etc, you will discover that you will not be able to find another unit in that price range again, and forever beat yourself up "for letting that deal go" :)

2. if you decide to go ahead, the very day after you sign everything, the unit next door will go up for sale at 30% less than yours, and you will foerever beat yourself up for "paying too much" :D

If it is roughly in ball park with your friends (and it sounds like it is), I wouldn't worry too much about the price.

I WOULD however be more worried about outgoings, ongoing maintenance, BC/OC activity, sinking funds, nearby developments.... these things are MUCH more important in the big picture.....

Is it for yourself or are you going to rent it out?

Cheers,

The Y-man
 
What do you reckon?


If you went to the bank for a loan at 76% of purchase price and they approved the whole loan then it was valued at purchase price.

If it was valued a bit less then they may well still give you the loan, because they still have adequate secutity. If they say they want you to now pay mortgage insureance because you are on a higher LVR as a result of the valuation then it came in a good 10% below what you paid.

I reckon that if you think you paid top dollar, then you probably did.

However in a rising market todays top dollar buy looks like a steal in a year .... unless you bought at the peak of a market .... but no one can predict when the party will end.

As for your friends apartment ... I would sooner live in a smaller apartment and be able to sleep and watch the TV than be unable to do those things in a larger apartment for the same price.

cheers

RightVallue
 
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