Listing price VS real value of houses

[DanielG]

Hey guys, another question here.


I got an RPDATA report for a house I was interested in. I analyzed the report and I am finding it confusing. The house in Marsden I was interested in had a selling price of $330,000. Now usually I think if a house has a selling price of $330,000 then I should be offering about $310-315 K, yet in the RPDATA report, in Jul (latest figures shown), similar size houses (same size, make, number of rooms, bathrooms etc etc) in the same suburb were selling at approx. $280,000. Now I thought that maybe houses had gone up in the past 5 months, yet when I did a profile search for the Marsden area, it has had negative growth.

I'm just a little confused as it doesn’t make sense to me at all. Searches of similar houses are producing the same asking prices, around $330-360K. Obviously as an investor, I don't want to overpay. Is it possible that houses in the area are being listed for $50k more than what buyers would accept? Should I bed upper $200k range?

 

[Edmond Dantes]

Hey guys, another question here.


.... Now usually I think if a house has a selling price of $330,000 then I should be offering about $310-315 K,....

I'm not an expert here, but how did you come up with that idea? have you check recent sales, auction results for similar properties in your area? I find this more valuable that any report you buy on the web.

what does your research tell you?

 

[DanielG]

Well yes I the report I bought was RP data, which is the best from what I hear.

As for paying offering $15K under the price listed, I guess I am talking from my experience when talking to agents about selling my IP. The agent told me it should see for $230K so I should list it as $245K, so I guess that was about the standard.

 

[Propagate]

We found the same thing in the suburb we have been looking at. Sold data (from October) was suggesting $290k region for 3 bed houses. Most listings were coming on at $330-360k with the rare one at sub $300k but obviously needing a lot of work.

We looked at a place on at $349k and started our offer off at $295k, we got shot down in flames.

We have had an unofficial offer accepted (waiting for S32) at $335k which would be where your $15k under comes into it.

So, I have no idea if the sold data is misleading, if we've paid too much, or if there has just been a surge in values over the last couple of months.

Either way, the numbers still work on this property for us so we decided to go for it. In a few years time an extra few k on the purchase price will be pocket change. It would have been nice to think we'd got a 'bargain' but the risk of being priced out of the area whilst waiting for that special property at a bargian price is greater than paying what may be a little over market value in my opionion.

It will be interesting to see what the bank values it at though.

T.

 

[Gools]

Daniel, it sounds like you are starting to work out that listing price and selling price have nothing in common. Of course the vendor/agent will want to try and sell the property for more than the market value. That's where you have to do your correct research and work out what the real value is. Compare like with like, don't compare averages. Do some foot work and see what certain levels of houses are selling for and go from there. Don't be the person paying too much over market value. $30k might be loose change in ten years time but $30k is the deposit for the next IP too......

Do the reasearch and offer current market value. Easy!!

 

[Neophyte]

My superficial impression is that in predominantly private sale areas agents over-quote to try to talk the market up. In auction areas under-quoting is the main phenomenon to draw in lots of warm bodies.

I really don't have a good feel for the over-quote on low-end private sales. When I looked at some Melbourne outer east units a while ago they were definitely under-quoting by 5-10%. e.g. saying $300, but selling for more than that within days of listing.

 

[DanielG]

Daniel, it sounds like you are starting to work out that listing price and selling price have nothing in common. Of course the vendor/agent will want to try and sell the property for more than the market value. That's where you have to do your correct research and work out what the real value is. Compare like with like, don't compare averages. Do some foot work and see what certain levels of houses are selling for and go from there. Don't be the person paying too much over market value. $30k might be loose change in ten years time but $30k is the deposit for the next IP too......

Do the reasearch and offer current market value. Easy!!

Yes I feel like a real noobie for being so shocked by this. I guess real research and local commentary are two different things duh!

But $50K over what houses recently sold for (like I said, same house size, build etc etc)????, I just feel like if I offer $50 K less than whats being asked, theres no way ppl will accept, as sellers are being conditioned by agents to sell at a certain price range.

 

[Gools]

I just feel like if I offer $50 K less than whats being asked, theres no way ppl will accept, as sellers are being conditioned by agents to sell at a certain price range.

No stress Daniel. If they are asking that much over then no one will offer them what they want. They'll eventually have to come back closer to your offer price and the agent should contact you to negotiate at that stage. If by chance someone does offer what they are currently after then don't worry, there will other properties to buy*.

* - That is if it is for an IP. If it's as a PPOR then you might want to pay that little bit extra if it will be one of few that suit your purpose/style.

 

[stumunro]

This is where you need to really look at your strategy.

Yes RPDATA may give you comparables which are 30k less than asking price.

In a moving market this will be natural as with every sale, agents will try and beat it, and in a strong market vendors will rarely negotiate lower.

Does your strategy allow you to pay market value or more, because it's a great deal?

OR should you be targeting markets which are in less demand.

Good luck.