Overpriced acreage on creek flats in WA close to Mandurah

Hi there. I need a smacking.
The perfect property for us to live in permanently is around $50,000 more than the bank valuation which is based on the comparable sales in the area.

No work needed to the 16 year old house, creek flats cut into 5 paddocks, easy maintenance on 6.8 acres. Proper dirt for grass and not sand. No flooding or water hanging around. Fenced pretty well.

It's a private sale and been on the market for 3 years. Sellers will sell for no less than $755,000 and valuer says $700,000. I can see the valuers point of view in sale price. Nothing else is selling for that much. Just new houses on smaller blocks with maybe a shed.

We should be walking away right?

 

What are you prepared to pay?
Is the valuation going to impact you? (financing etc)
If it's going to be permanent the valuation could be irrelevant

 

Banks lend on the valuation. So 80% loan o $750,000 is $600,000.
80% of $700,000 is $560,000.

That's a difference of $40,000 that has to be repaid to the bank.

We would need to put in the $50,000 extra in cash to make up the valuation.

 

Show them the valuation documents? And remind them that this number is only likely to go down the longer the property sits for the foreseeable future. Sounds like the seller needs a reality check.

 

Again what are you prepared to pay? Are you prepared to pay more than the valuation?
Do you have the money to cover the shortfall?

 

We had a similar issue with our rural block, there were so few comparable sales that the valuation didnt keep up with the prices people are willing to pay. I paid $30,000 over bank valuation for ours and it was the cheapest property that had been sold in the area for 3 years.

 

So ?

If you really like the place, throw in the 50k, in 10 or 20 years time, it will be peanuts most likely.

If you do not have the dosh, well that is another issue, but all you can do then is this....

Advise vendor, you do not have the extra money they seek and the bank does not agree with the ask price, we would love the place and please contact us if you will take our genuine offer that the bank will also be happy with.

 

Was the bank val done with an O&A in place? If not it's likely the val will come in fine once a contract is in place.

Put in your offer based on what you can afford, subject to finance/ valuation.

 

If it’s been on the market for 3 years then clearly the vendor is sticking to price wanted, or very close to it. Obviously the vendor is in no hurry and not feeling any pressure to sell.

“Comparable” properties are not “identical”. Maybe this one is just that bit better to justify a higher asking price.

That is up to you to decide. If it is for a PPOR, then maybe worth it to you. So long as you plan to be there at least 7-10 years or longer.

We bought our PPOR around 40 years ago. A stretch at $50K. If it had been 10% dearer at $55K we would not have been able to afford it. Now worth $800K-$900K.

In your case, you are looking at less than 7% over valuation......
Marg

 

How do you even know the seller won't sell for less than 755k? Surely that's just a guess and its worth trying for less if you want it that bad.

 

They said $755 was as low as they would go.
Getting a second val and then seeing how we go.

 

All these are great comments and i really appreciate them.

 

If you can - I would sign an unconditional contract for $700K with a 48 hour expiry.

Indicate you will walk after the 48 hours.

Good chance they have been messed around by real estate agents and wannabe buyers over the last couple of years.

You will get a response of some kind in that 48 hour period.

 

I would not do anything unconditional....for multiple reasons....

I ...been on the market for a while and makes you look desperate to buy it
2.... They seem to want the money they are asking, but prob need to be shown why it is wrong if you want them to budge, I can think of a few non offensive ways to show this
3...can you afford to buy unconditional ? What if the house needs 50, 100, 150k of work ? What if the bank or valuer finds other reasons to write down the loan amount, they can do this at any time....
4...if they say no, you knock yourself out by burning the bridge.....if you changed your stance on walking away, you now look like a desperado or someone who will say anything.

I would suggest being fairly honest if you do not have the extra 50k at this point, I would also say the lender does not agree to loan more, and ask if they will meet you somewhere in between if your prepared to get the extra funds another way or try some other lenders who hopefully use different valuers (this does not always work, I have had lenders use exactly the same valuer ).

 

50k on a 700k property isn't outrageous

 

We've been looking at acreage in the Greenfields and Nambeelup area, so possibly similar.
Clearly you have a vendor with an unrealistic price expectation, who thinks they can outwait the market.
So yes, walk away. You may well feel that this is the perfect property, but there are others. Especially in that price bracket.