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Dilemma

Discussion in 'The Buying & Selling Process' started by lewy89, 2nd Mar, 2016.

  1. lewy89

    lewy89 Well-Known Member

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    Hi,

    First time posting on here and just got a bit of a dilemma.

    So I purchased my 1st home in October 2014 and have been renovating it since. I purchased the home for $490k and have spent between $40-$45k renovating in the 15 months or so that I have been living here.

    Due to work commitments I am now looking at selling and moving. I am in no great rush per say but it's more of a nicety than anything else. Now I have met with several agents and asked their thoughts, ideas, marketing strategies, costs and what they expect the house to go for and have just signed with an agent recently. This agent had a very keen buyer on the books and this week this potential buyer has come through the house twice to have a look. Has said he is interested and expect him to put an offer on today which is well BEFORE we have even gone to market.

    My dilemma is this... (depending on what his offer is of course), but do I take the offer (if its a half decent one) from this potential buyer, or, do I spend the $4000 in marketing and staging the house cost and hopefully get more??? Or run the risk of spending that extra $4000 and then watching the best offers on my house being $10-20k less than what was originally offered?

    Again, I know it is difficult to comment (and I have been discussing this with the agent) but I am a first time seller and would be interested to know what other people have done in the past and what their thought process is.

    Thanks

    Guy
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Thats what you need your crystal ball for. No way to know really without trying it. What about writing now some figures such as for what you want ideally and what you would take to sell and then wait and see what the offer is.

    I have found that if you think you would take say $500,000 and suddenly someone offers $505,000 you immediately adjust your expectations upwards but writing it down helps remember what you wanted originally.
     
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  3. lewy89

    lewy89 Well-Known Member

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    Yep understand that. I have my ideal numbers crunched but was just curious to see what other peoples thinking process was and if there was something that i potentially overlooked. In saying that its all dependent on this potential offer either way.

    I dont want to be the mug who sold his propery for 20k less than what it could've been, and i also dont want to be the mug who didnt sell his property when he had a good offer and then lose 20k on my next best one.
     
  4. Greyghost

    Greyghost Well-Known Member

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    Why be the mug that sells his property at all?
    You have spent 10% of the purchase price renoing. Sounds like you may have overcapitalised at this point to just sell it again.

    Is it a nice area?
    Is there growth potential in that suburb?
    Does it hurt your Cashflow holding it if rented?
    How much out of pocket would you be each week/month?
    Is it preventing you from moving on or creating a roadblock if you kept it?

    I only ask as after all of your work it looks like you will come out break even or make a tiny bit of coin, it seems like a lot of work has gone into it just to walk away. What if you got 4-5% growth a year out of it.. Wouldn't it be worth keeping it for 4-4 years at least?

    I know this is off topic but I'm just trying to play devil's advocate...

    Cheers
    GG
     
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  5. lewy89

    lewy89 Well-Known Member

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    I have spent alot renovating. I admit that. But at this stage im looking at a 5 - 8% profit after agent fees, taxes, solicitor fees and all the money ive poured into it. Im not an expert by any sense of the word but i dont see that as overcapitalising.

    I dont require the cash from the sale of the house, but It would be nice to have some of it so i can purchase another property.

    There is no problems with the area whatsoever and i have considered renting however havent really explored it and besides it leaves me with the same lack of cash for the immediate future. It would be positively geared if I did happen to rent it out however.

    It is good to hear another perspective so I appreciate it. But driving 30 40 min home after night shifts is going to kill me one day!!!
     
  6. Melb_gal

    Melb_gal Member

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    Hey @lewy89 ,

    I know this isn't really helping you answer your question, but the only regret I have during my journey of property ownership is selling them! My very first purchase netted me $125k profit in only 2 years of ownership but had I known more about mortgage options and how to leverage to acquire more properties, I'd be sitting pretty now!
    My advice to you is to discuss your options with a mortgage broker (find one on this forum) rather than your selling agent, who is relying on the sale of your property for his paycheck after all!
     
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  7. lewy89

    lewy89 Well-Known Member

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    @Melb_gal

    Wow. That's a crazy good ROI. It's good to hear other thoughts so I appreciate it.

    I honestly have never even thought of a mortgage broker so maybe that is something I should research into. Thanks for your input.
     
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  8. Big Will

    Big Will Well-Known Member

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    My father's worst decision he made (but kind of forced due to banks as lending was ALOT tigher back then) was selling an 2 bed apartment that was CF+ (it was so CF+ that he was living in the unit and the rent from the other room was paying the mortgage!) in St Kilda for $40,000 back in the 1980s. Would easily be worth $500,000+ today (more like $600-700 maybe).

    Drawing against the equity is a good strategy if it is a good quality asset in a low volatile market (e.g. no a mining town) and you use a buy and hold strategy.
     
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  9. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    Not a good place to keep and rent out?
     
  10. lewy89

    lewy89 Well-Known Member

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    Yeah I am starting to change my tune a bit after listening to you guys and asking for advice from some friends. I think I am in a better position to rent it out and then use the equity to fund another property purchase. Just gotta find a mortgage broker to narrow down the numbers.

    Appreciate everyones efforts and opinions greatly
    Thanks
     
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  11. Azazel

    Azazel Well-Known Member

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    Yeah no rush, do some more research and it should become more familiar.
     
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  12. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    Keep it and be like one of many of us who started their portfolios with a humble original ppor come ip....

    Edit: decided to change the spelling of a word... to be on the safe side! :)
     
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  13. USC

    USC Active Member

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    What about renting closer to work, rather than buying?

    Do you need to own the house you live in?

    If not, you could use the equity to buy another investment property.
     
  14. Azazel

    Azazel Well-Known Member

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    Go Trojans!
     
  15. Leo2413

    Leo2413 Well-Known Member Premium Member

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    what word....read the sentence a few times and couldn't work it out..
     
  16. Azazel

    Azazel Well-Known Member

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    Only word I could think of a 7th grade innuendo is come?
     
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  17. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    Starts with "c", related to safe. Not worth exhausting brain power figuring out though. If you do figure it out, can you tell me if the original spelling was correct?
     
  18. Leo2413

    Leo2413 Well-Known Member Premium Member

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    @Gockie ohh.. I got it . Yup all good. :)
     
    Last edited: 2nd Mar, 2016
  19. Azazel

    Azazel Well-Known Member

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    I have no idea...
     
  20. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    If you've signed with an agent I'm not sure how easy it's going to be about changing your mind and not selling. They won't be happy about it, but I'm not sure about the legalities.

    If you go see a broker, get a rental appraisal done so they can include the proposed rent in your servicing. You can also get an idea about what your cashflow will look like if you keep it.