Strategy - Possible First Buy

[TJamesX]

To anyone wishing to provide advice;

I have come across a property recently that I am very interested in. Although in general I believe that prices in general are still overpriced - that doesn't mean that little gems may come up.... (i am still young and have plenty of time)

Without giving too much away about the property it has;

positives

- large land size
- large living area
- close to CBD (5-10 mins)
- potential to be cash flow neutral/slightly negative

negatives

- opposite train line
- suburb not the 'best' but adjacent to very good suburbs
- very old house

The upshot is the property is advertised as 'price above $XXX'. I have a belief that the property presents good value at 10-20% above this figure. The auction is in a few weeks time and I believe could go for 30-40% above this figure. So the question is;

I believe the agent has advertised low to generate interest but... does anyone have experience with agents selling before auction? Is it common? how can you approach it? and do they disclose what the reserve would most likely be?

The open-inspection is coming up soon - so my other question relates to - what are critical questions to ask about the propoerty at open inspection that may have not been disclosed?

Any help would be appreciated

Cheers
TJ

 

[Bandita]

Hi TJamesX.

Yes, I've realised at least that the quoting prices for auctions are a LIE Often in Melbourne at least. They love to say some thing like $250k+ The past four auctions I've been to at that price have gone for $301, $310k, $315k and $340.

I have no idea about where you're looking at, and your clues are nearly useless to help you much - sorry But if you gave us a suburb and asking price, we could at least tell you the median, what it might actually go for, etc.

If you really want some useful information, you need to be useful yourself - you obviously don't need to give the actual property address, but don't be so paranoid, people on this forum are here to help!

Cheers,
Jen

 

[Rolf Latham]

Hi Jen

Underquoting is one of my pet hates.

Its not a lie. Its attempting to gain financial advantage by deception - by definition........ in reality its fraud.

Strong words yes., but if youd seen the countless couples that have wasted money and time into pest and build etc etc into these 250 k plus mirages, people would feel the same as I do.

Its immoral and should be clearly illegal for an agent, to sign a vendor to an auction campaign with a vendor bait of 350 or bigger, and then go to the public with 250 plus. Someone is being deceived, so who is it ?

Ta

rolf

 

[Bandita]

Hi Rolf,

Totally agree with you!! It's unfortunate I've nearly gotten used to it in Melbourne. It could nearly drive you mad! You're looking at a property range of 250k-300k, only to find property after property listed in that range which turns out to be ridiculous. Of course, there's always the odd one out that has a bad selling campain and you can pick up a bargain after the property gets passed in. But in 10 auctions in Melbourne - I've only seen 1 that didn't go at least 20% higher than than the quoting price.

I'm a private sale girl - I just cannot see the "bargain" in the auction - not in Melbourne at least right now. Although I always check the property results each week to see what has happened with the auction properties we've been looking at.

Cheers,
Jen

 

[TJamesX]

Thanks for the replies guys,

JenD

Yep - I think they are definitly underquoting with this one. As far as the 'value' of the property goes, I have a reasonable idea. I've looked at selling prices around the area and have 12 month sales data for the actual suburb - so i'm pretty comfortable with whats going on in that area. I was mainly looking at it from getting a sale before auction - but the reality is, if they are underquoting and there is reasonable interest, they would want to take it to auction to get people to bid against each other

I've done the figures and what I believe it could rent for and have a max figure in mind. So with that I will go to the auction and be interested up to my max val and see where it goes from there - who knows what will happen.

The interesting thing is, the auction is on a Friday - I'm sure this is unusual. But unsure if this is to the bidders advantage (less people would probably turn up) or they are doing it as a tactic - ie you know that a higher percentage of bidders will be 'real' rather than sticky beak neighbours and people just slightly interested. And underquoting ensures that a number of real bidders would probably turn up.....

Lets see what happens...
cheers,

TJ