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How much have you paid?

Discussion in 'General Property Chat' started by Bayview, 28th Jun, 2016.

  1. Bayview

    Bayview Well-Known Member

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    The NG threads are flying around, this one is about the aspect of the argument that investors are driving up the prices....forcing the FHB's out of the equation.

    Personally; I don't subscribe to that; I try to buy my IP's cheaply thanks; maximise the cashflow, minimise the loan amounts etc.

    So, can we all - if you are willing - tell about what you have paid for your IP's, and if you have paid over or under the asking price, and how long they were on the market when you bought them?

    Are you trying to drive the price up, or down?

    Did you buy for CG only and hence would pay whatever it cost to get into that area at that time; or did you skulk around a neighborhood for months until you snapped up the bargain that no-one else wanted, etc?

    For example; we owned 5 IP's at one point...all bought using equity from our PPoR for the deposits and purchase costs, with separate loans for 80% of the rest of the purchase price, IO variable rates....not earning a squillion dollars from PAYE, so had to maximise every step - including the rent return if possible, and hope for the CG as well.

    Paid below the asking price for each...even our PPoR purchases (there have been 6) - 5 of them were below asking; the most recent was $5k above the asking price; to secure it before someone else did.....it was not a FHB level purchase.

    Let us know.
     
    Last edited: 28th Jun, 2016
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  2. Natedog

    Natedog Well-Known Member

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    Every established property we have bought specifically as an IP has only been a negotiation with the vendor, we have never been in a multiple offer situation or at auction so have never thought we've paid too much. The timing of our purchases has been at times when no one really wants to buy.

    The 2 established we have bought as PPOR's we probably paid more than we needed to, but that was because it was more an emotional purchase.

    So if anything, when I am acting as a PPOR buyer I am fuelling the fire....when I'm buying for IP I am trying to keep the price down.
     
  3. Bayview

    Bayview Well-Known Member

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    In these examples; how did the Bank vals come in when the loan docs were being processed?

    When you say "needed to", did you offer over the asking price?
     
  4. Tonibell

    Tonibell Well-Known Member

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    For all purchases we have paid more than anyone else was prepared to pay.

    Mostly we have purchased at auction and in those cases there was always other bidders - really only one property that might have been FHB territory.
     
  5. Fargo

    Fargo Well-Known Member

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    For most of my properties I paid less than other people where prepared to pay, by meeting the sellers settlement requirements and buying unconditionally. One seller who wanted to pay out his divorced wife but couldn't because she wanted too much so he sold to the lowest tender so his wife would be like him and end up with nothing. Another one wanted to keep a part pension and health care card so the payments where in instalments over 20 years.
     
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  6. paulF

    paulF Well-Known Member

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    I'm pretty sure i've read it somewhere on the old somersoft platform but someone said something on the lines of "you make your money when you buy"! I've always kept that in mind when i made offers on my two places. If it's an older house, I aim for land price or something close to that. And if it's a newish place i go for something in between land price and the conservative bank valuation values. And also i tend to wait and see if a property misses on auction day.
     
  7. joel

    joel Well-Known Member

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    First one: about 7% below asking price
    Second: middle of their "asking range"

    I made about 15 offers in the last 2 months, mostly on entry level homes that needed a LOT of work, yet FHBers (always couples) would offer about 10% above the asking price every time. Rather than try to outbid them, I looked elsewhere.

    Edit: I think many people have been inspired by renovation tv shows, and seem to pay more just for the opportunity to renovate.. it's madness
     
  8. wylie

    wylie Moderator Staff Member

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    We've only paid over the asking once, and that was paying $156k on asking $155k. I found the house driving my baby around to get him to sleep, called the agent about 2pm, was told there were four others looking at 5pm and I could tag along. Faxed hubby about 5.15pm and asked him to please sign the contract I'm sending through. Didn't hear until about 9pm that night that we got it. Another buyer tried everything to gazump us, including bring in his solicitor. Honest agent and honest vendor honoured our contract. They could easily have ripped it up and decided on a story between them that the other contract was higher. Thank goodness for honest people.

    I'm guessing most offered just under asking, but I wanted it and lashed out and offered $1k over :p.

    That was 18 years ago. We then looked at buying the next door house when it went on the market 12 years ago for $650k (ridiculously overpriced). A year later it was more realistically priced and we paid $460k.

    As a development block (each can be developed individually but two together is more appealing, though the houses must be kept), we were verbally offered $1.6m for those two six months ago. We said "thanks but no" and next day same developer offered $1.8m (that would have been a very easy $200k thank you very much - for him).

    We've spent about $30k on each (both were dumps when we bought them and we did what we needed to make them more attractive for renting). So paying over the asking doesn't always mean you aren't going to make a good profit.

    We would pay huge capital gains tax if we sell them together so we will spend even more on splitting and creating a separate clear block and will pay less tax as we can then sell over several tax years.
     
    Last edited: 28th Jun, 2016
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  9. Big Will

    Big Will Well-Known Member

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    Currently negotiating on one and I am 11% below the asking price, vendors are 4.6% below asking price (1.5% below their auction reserve).
     
  10. jodes

    jodes Well-Known Member

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    This bit about being inspired by TV shows and paying more is totally true- have seen some true dumps lately and they are the busiest home opens by far! (and don't sell for very much, if any below the renovated price...)
     
  11. chylld

    chylld Well-Known Member

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    3% above (first property, didn't know what an IP was at the time, yay FHOG) then next one 8% below.
     
  12. Leo2413

    Leo2413 Well-Known Member Premium Member

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    Never paid over asking price and always bought quite below. Always have offers on multiple acceptable deals at the same time. All it takes is one 'yes' in a buying campaign and that's a great deal done. I see each acquisition as something super serious and I only want to go ahead with a deal that I know from the outset is fantastic. It may take a little more work and time to get it but that's totally fine with me.
     
  13. Mumbai

    Mumbai Well-Known Member

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    Never paid asking price. Always negotiated hard. Now, whether it was BMV or not, I dont know.
     
  14. Leo2413

    Leo2413 Well-Known Member Premium Member

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    For me BMV is when you purchase a property at a price where there is much comparable stock sold at prices higher. This happens for all sorts of reasons imo, eg poor REA, distressed seller and you jump in quick etc etc.
     
  15. Mumbai

    Mumbai Well-Known Member

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    With standalone houses, it is a bit hard to get a 'like for like' comparison. I guess, i got some properties BMV, but its always subjective.
    Taking your example, a poor REA lists a property for lot higher than market value. It stays on the market for long time, rejecting some good offers. An investor jumps in, negotiates hard and gets it for lot less than asking price and some offers that REA previously had. This may still not be BMV and just be the right MV.

    Not arguing on your logic, just saying that, I struggle with the BMV term.
     
  16. Leo2413

    Leo2413 Well-Known Member Premium Member

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    I hear what saying mate. Although in this scenario you laid out, even if the REA sets the price too high and then you can get it under asking price, you would still look at many comparable sales to see if the reduced price is actually a good buy or still inflated. So really you wouldn't purchase it if the reduced price is still not below the majority of comparable sold prices. That's how I see it anyway, but I agree there is always some subjectivity when comparing.. but I think you can still decently compare stock give or take a little..
     
  17. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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    Never bought anything with an asking price.

    PPOR
    Paid $313,000


    About market price, would have paid over if necessary. Not easy to find a north facing, 1 bed apartments with no common walls, floor-to-ceiling windows, low strata fees, privacy, 5min walk to train, 1 min to bus in the area. Had been on the market for a month, but crashed on finance and I swooped.

    Prior to IP1 and IP2, I went to 100s of opens to get to know the market intimately.

    IP1
    Paid $460,100


    At least $20k under market. Selling agent had higher offers come through after we were unconditional. Two buyers offered $460,000 as a starting point and were told “Sorry, there’s a higher offer” due to my extra $100. In the days they mucked around thinking about their counter offer, the vendors bought elsewhere and we wrapped up the deal. The other buyers both came back with $480k but were too late. Nice when things come off. Had been on the market for 2-3 weeks.

    Re-val 90 days later was $525,000.

    IP2
    Paid $500,000


    $40k under market. Bought it unconditionally at the first open. Agents was from another area and the open conflicted with a few other comparables so hardly anyone showed up despite the market being super hot. I put time pressure on and we had a deal that afternoon. It didn’t hurt that I signed the cheque in front of the agent at the open.

    IP3
    Paid $612,000


    $50k under market. Agent didn’t know it was zoned for development (turns out it was their last sale before retiring) Bought it at the first open. Was willing to pay $60k more than I did. Market is up 10% since I bought 12 months ago.
     
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  18. Perthguy

    Perthguy Well-Known Member

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    I have 3 examples:-
    1. A Melbourne IP - auction, no reserve, house not habitable, potential development site, competing at Auction with one investor. We drove the price up because of the potential. Sold at Auction where 2 investors were competing for the property. No FHBs expressed an interest.
    2. Cloverdale 1 - on the market 18 months, very run down, at home opens FHBs particularly expressed they were not interested in the property, bought well under market value due to lack of interest from any other buyer.
    3. Cloverdale 2 - on the market nearly 6 months, low valuation from banks caused a previous deal to fall through, competing with one other investor, bought for nearly $100k under initial list price.

    So 2/3 times we drove the price down.
     
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  19. wylie

    wylie Moderator Staff Member

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    In my experience, that is not a new phenomenom. Good houses (I'm talking mostly timber and tin queenslanders) that have not been updated (and often badly) have been valued highly long before the home improvement shows were a fashion. I don't mean "falling down" or "termite ridden" but good honest unrenovated queenslanders.
     
  20. Beano

    Beano Well-Known Member

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    Comparative properties to assess market value
    Easier said than done.
    On some properties there are no available comparative properties anywhere listed in Australasia at the time of negotiation
    So your sale is the market price!
     
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