Trust the last selling price

Last sold price is one of the factors I consider while making an offer on a property. How trustworthy these figures are in your opinion. I am asking this because a potential buy I am looking into is for sale for much less than the last sold price. The owner is willing to negotiate further down and apparently will sell approx. $100K less than he bought it for. Which is quite astonishing for me. It is unbelievable he paid that much for the property, is there a chance the last sold price may be rigged?

 

It could be incorrect but you could take a look at comparable properties that were sold around the same time to get an idea if that was the correct market price.

 

It might have been subdivided since it was last sold and he's selling less of it.

 

No, no chance

 

I believe it varies by state as to where the data comes from, but typically its from a state government register, so its fairly reliable.

Keep in mind though that there are situations where a person may want to be selling an asset between parties or structures (trust, smsf, etc) at an artificial price. Typically its below market value (stuff like $1 sales in most states do typically trigger a review for stamp duty, but not for capital gains.. good way of transferring wealth) I can't think of a tidy scenario why someone would want to shift an asset above market val / incur stamp duty above market val, but I'm sure there are scenarios where it could make sense.

 

I can think of builders transferring to themselves to create a market for their stock.

I know a builder selling their stock at above market prices but not able to do that due to unavailability of existing sales in the complex. They are now reaching some BAs to get them to sell their homes after two agents failed to sell any of their stock.

 

The scenario I'm imagining is is person A sells property to person B at above market rate.

• Person A claims the 6 year CGT exemption on it, so the above market rate $$ has minimal impact to them
• Person B pays slightly more on stamp duty (but a fairly negligible difference)
  
• Person B sells asset at market rate, generating a loss on the asset versus the purchase price and deducts loss from income/other profit.

I'm not sure if this would actually work or not or whether its legal but I can't think why it wouldn't be.

 

Could be a myriad of reasons - desperate to sell, non-disclosed defects, over paid, no capital growth, bought site unseen in hot market/timing, otp purchase prior to market turning sour, inflated sales price (with rent guarantee or other benefit to purchaser), related party sale etc.

 

is it Perth? market has been falling...

 

So is the sky

 

No. Queensland

 

Over paying is quite common. Do not let it influence you or your offer. Markets change and even though it is 100k less than previous sale price does not make it necessarily a bargain. What is selling now and how does it compare?

 

Hey @hash_investor,

When was the last purchase price date?
What source are you getting the last sold price from?
Also, what does $100K equate as a % of purchase price?