How to buy undervalue property

[Eli1]

Hi,

I been following this forum for like 6 months. Got some valuable insight into property investing.

Few weeks back, I like Facebook page of Nathan Birch company "be invested". On the page I see so many posts from Nathan telling how he bought properties 100k to 150k below market value.

It got me thinking how he can buy property on such reduced price. To give you example he recently posted about property bought in Gold Coast for $235k whereas comparable sales were $280-290k.

So my question is; how he buy property at so reduce price????
Like he go to vendor or real estate agent and offer them $100k-150k less for asking price and then negotiate or what's his trick to buy at so reduced price.

I know many people will answer that he is good in marketing himself and probably brag about prices but even then no doubt he is doing very well of his age and have made real good money ......

 

[D.T.]

I've bought undermarket before. It's just a matter of recognizing it, being patient and having an ounce of luck.

 

[Eli1]

I've bought undermarket before. It's just a matter of recognizing it, being patient and having an ounce of luck.

Agree. If you are patient, something will come up eventually below market value... But what about if you are buying almost all properties on a reduced price. Let's forget what Nathan buy for his clients. Let's analyze his first 10 or 20 properties which he bought for himself. Almost all properties he bought were at less than market value. May be boy got some special negotiation skill????

 

[thatbum]

Agree. If you are patient, something will come up eventually below market value... But what about if you are buying almost all properties on a reduced price. Let's forget what Nathan buy for his clients. Let's analyze his first 10 or 20 properties which he bought for himself. Almost all properties he bought were at less than market value. May be boy got some special negotiation skill????

Its probably just a numbers thing. The more properties you sift through, the more under market buying opportunities you will find.

I personally use this theory as part of my own strategy.

 

[jpcashflow]

Knowing your market and being patient is the key!!

I bought a property on the weekend for 300K. The property was listed at 330 to 350 and my reports showed that the property was worth at least 320K.

But the vendor bought a property and needed to sell quickly.
Same type of house sold for 350K the same day and I acutally put an offer of 320K and got rejected.

So I bought a good property and a really good price!!

 

[neK]

Below market value is in the eye of the beholder.

Which is also why Nathan Birch makes the claim he does.
Say a property is listed for $250,000. He will buy it at $240k. He then claims its valued at $400k with a $20k reno. Presto, he bought it below market value.

Works on most gullible people.

I was at an auction where I was bidding on behalf of my brother in law. There were two auctions on the same day. The unrenovated unit sold for $619k, the renovated unit in the same block we bid and won for $571k.

Question is, did he buy under market OR did he pay market and the other guy just overpaid.
In my opinion, brother in law paid above market, and the other guy way overpaid. However someone else will say we picked it up at "Below Market Value TM"

Another property, picked up for my sister in law, listed for $499k, negotiated to $475k. Before settlement, the next door neighbour (mirror image) sold for $550k. My opinion is that we picked it up at market value.

It all comes down to knowing your market.

 

[D.T.]

Below market value is in the eye of the beholder.

Not if the bank agrees to do a topup a week after settlement

 

[Brady]

Also believe I purchase BMV for my Highbury SA purchase. I bought for $335k house corner block on 800sqm, I lost at auction weeks prior trying to buy vacant land on 800sqm location wasn't as good it went for $355k

To buy BMV I believe you need to have a good understanding of the market, had clients often buy BMV they didn't pay above the asking price - the price was set low and they purchased cash offer 1st open.

 

[Peter_Tersteeg]

I bought a property during the Sydney Olympics in 2000. We spent weeks looking at various properties and when the agent stated the asking price, we paid it, no questions asked.

We signed the contract on a Friday afternoon, but there was still an open inspection scheduled the next day. To that point there had been no interest. The agent was getting offers 15% more than we put on the contract.

We knew the market well enough to know a bargain when we saw it, and were lucky enough to take advantage of a slow point in the market.

Opportunities do occur if you're looking enough, patient and can recognize it when it's in front of you, but most of the time people buy at market value. I don't subscribe to the idea that buying below the asking price is below market value.

I'd love to sell my house for $1M, but if you negotiate hard I'll let it go for $800k, a 20% discount! Other sales suggest it's probably worth about $600k though, but I'm not interested in selling at that price.

 

[Deltaberry]

Agree. If you are patient, something will come up eventually below market value... But what about if you are buying almost all properties on a reduced price. Let's forget what Nathan buy for his clients. Let's analyze his first 10 or 20 properties which he bought for himself. Almost all properties he bought were at less than market value. May be boy got some special negotiation skill����������????

He either has a lot of time (which he does) or they are not as undervalued as he thinks. If you think about it, anyone can say they bought under market value. Even I would like to think everythying I bought is under market value.

If you can sell it on the next day for $500k more, that's buying under the market value.

 

[danwatto]

I've read several authors state that you should attend 100 inspections (same property type, same area) before making an offer, and that after 100 you will know the market, and will spot a bargain when it comes.

I don't have the time or the patience though and start making offers pretty soon, just low ones that don't get accepted, then slowly increase them each week closer to comparable sales.

I do see true large BMV sales do come up when looking at sales histories, and I often query what happened and it can be a mortgagee sale or something where only 1 buyer registered at the auction, and I wish it had been me.. With enough time and patience one can find these opportunities but it's not easy.

 

[pinkboy]

I've read several authors state that you should attend 100 inspections (same property type, same area) before making an offer, and that after 100 you will know the market, and will spot a bargain when it comes.

I don't have the time or the patience though and start making offers pretty soon, just low ones that don't get accepted, then slowly increase them each week closer to comparable sales.

I do see true large BMV sales do come up when looking at sales histories, and I often query what happened and it can be a mortgagee sale or something where only 1 buyer registered at the auction, and I wish it had been me.. With enough time and patience one can find these opportunities but it's not easy.

Perhaps 100 inspections!


pinkboy

 

[SOP]

I personally think there is only one way to secure a bargain. That is to know your market. Follow sales and rental returns. This can take months. Even years.

Once you really know a market you will be able to jump on the bargains when they arise.

SOP

 

[Newbieatlife]

below market value in my opinion is below what the bank will value the property at because unless you're planning to flip and sell, the only thing that really matters is how quickly and how much equity you can pull out for your next 'below market value' purchase

it gets a bit tricky in a rising market not because BMV properties are hard to find, but even banks become out of touch with what properties are actually worth

 

[vaughan]

Thomas Edison said: “We often miss opportunity because it's dressed in overalls and looks like work.”

Same for "under market" properties. They are often in regional areas, look like they need a lot of work, or otherwise have something that turns-off typical buyers. (If typical buyers weren't turned off then the properties would be sold already.)

For a long time, most of 2770 was like this IMHO.

 

[JamesP]

My apologies the claims are substantiated. The website has been timing out for me over the last few hours hence not being able to edit my previous post.

Source: http://****************************/topic/10077322/1/

 

[Deltaberry]

below market value in my opinion is below what the bank will value the property at because unless you're planning to flip and sell, the only thing that really matters is how quickly and how much equity you can pull out for your next 'below market value' purchase

it gets a bit tricky in a rising market not because BMV properties are hard to find, but even banks become out of touch with what properties are actually worth

That's true. You can get caught out quite easily.

Unless the bank values are backed up by fundamental numbers such as rent, salary and GDP, the bank value can drop quite quickly in the turn of a market and if you've drawn out money out of your below market value property, you could be in a lot of trouble.

 

[MTR]

Watch out for out of area re agents, some not all get it totally wrong and under value property, then it is a matter of being cashed up and ready to pull the trigger.

 

[Ricky Tarr]

"Below market value" is meaningless.

Whatever a property sells for is (by definition) it's true value to the market in which it was advertised.

Maybe the market was small, or it was only on the market for a short period, but property always sells for the "market value". The only exception is for "off market" transactions eg: between family members.

 

[neK]

It was a link that JamesP posted to substantiate his claim about Nathan Birch.
I just reposted the link as a TinyURL.

I too have had negative experiences with Nathan. But not along these lines.
However it does shed some light on his "Below Market Value" claims.