Method of assessing

[stargazer]

Hi all

Was talking to a young couple the other day and they were telling me they bought a property for $255000 a while ago just before the govt were about to make changes to the FHOG.

It was Bank valued recently at $210000 and the market seems to indicate that with a motivated buyer they may get $220000.

Obviously they are dissappointed.

When i asked them how they come to the decision to buy the reasons were given were:

• Sick of looking
• Felt rushed not to lose the FHOG
• Alot of interest so they signed up on the day
• only seen the property once
• No due dillegence done

Basically they rushed into buying.

Whilst i have some experience probably research and assessing whether a property is a bargain or great price is not my forte.

What insights could one give to a young couple venturing into the property market.
Where should they by looking to get a feel for the values of the areas they are looking in.

I guess a template or checklist to assess the property is not overpriced etc.

Regards
SG

 

[vaughan]

If it's a PPOR and they plan to stay there for a few years: not really a problem.

If they went into the purchase thinking they were going to make a motza in a couple of years: lols.

 

[mikezen]

When I bought a ip 18 months ago, prior to this I researched the area thoroughly for a year until I knew 110% that I knew what to purchase and what was a steal , when i did find something finally to purchase I went in 20% under and got it

18 months on I got a valuation 10k less than what I paid for it, although I don't care as I'm long term and have a great yield it was still disappointing as I was so sure I had knabbed a bargain ,

I guess that's life, but I'm still buying and growing so that's the main thing

 

[travelbug]

This is quite common with the FHOG.

A friend bought her place just before it went up. She was a bit upset at not getting the extra money but when I showed her how prices had jumped in the few months since it was introduced she felt better.

Prices are artificially inflated because sellers know FHO are keen and have extra cash.

My advice is find a place that's good value and suits your needs WHEN you are ready. Don't let a few thousand dollars dictate your future.

 

[Erica]

Stargazer- there is no simple formula for determining the market value of a property, it takes a lot of research and time to build up a knowlege base of what the market is prepared to pay for a particular property at a given time.

What I'd suggest to a first home buyer would be idealy:

1. spend 6 mths before purchasing a property to go to heaps of open for inspections, take notes, and keep records.
2. once those properties have sold, look up the actual price they achieved, there are multiple free web sites for this, realestate.com.au lists sold prices (although it can take up to 3 mths for the sales to settle). One of my favorite sites at present is http:\house.ksou.cn for sold prices and rental prices. Or you could pay for a service such as RPdata.
3. by this time you should have a good idea of what the property you are looking for is worth in your area of choice. It took me 12 months of research before I was confident of the correct price to purchace my PPOR then 6mths to purchace my first IP.


On a second topic, if your young couple of friends bought in metropolitan SA a couple of years ago it may not be that they overpaid for their house in particular, it could be that their property has genuinly gone down in value, the Realestate Institute of SA releases quaterly market reports and Adelaide metropolitan properties dropped in value from Jun 2010 median @$410,000 to Mar 2013 @ $390,000. Certainly amongst myown circle of friends who have had to sell recently, a real fall of 10% in their house values was suffered.

 

[Peter_Tersteeg]

Sometimes having to save a deposit can be a god send. My wife and I got interest in property about 2 years before we actually purchased. We initialy spoke to a broker to determine our affordability and were we needed to save a deposit and given a target.

Over the following 2 years we saved the deposit, got married and had a massive honeymoon (hence why it took 2 years to get a deposit together).

In the meantime, we continued to look around whistfully at the properties. We went to inspections, auctions and got to know the market quite well.

When we eventually made a successful offer on a property, we knew we were getting a bargain. It remains one of the best deals we ever did.

 

[stargazer]

Hi

Thank you all for your replies.

Regards
SG