I have read at a number of places, mainly those selling thier ideas, that there is a way of buying houses at a discounted price. Does anyone have a rough explanation of what this method is?
No such thing – its just their marketing. Giving an impression they can get cheaper properties.
Builders use agents or marketing companies to get them their best price on their properties.
Ok, so do you have an idea how anyone can buy discounted real estate that involves more than just trying to negotiate?
No. Unless the vendor is a very motivated Seller. ie. they MUST sell NOW.
From readin Rick Otton’s ‘we buy houses’ site, I gather he is trying to get hold of sellers who need to sell NOW to trade off price with fast timing?
I would say so.
Ok, without sounding like a re-incarnation of Henry Kaye, it can be done and I will give you my example.
Through contacts in REI (inner Melbourne suburbs), a reputable builder had land and plans for a small 5 dwelling development. I did the requisite due diligence on his previous work, the architects that he used (ie previous projects), comparable prices on similar property sales within the area.
He needed to sell one to get finance from his bank to build. Comparables in the area were around $330k’ish and after negotiating and meeting with him a number of times, i was able to purchase at $280k. A month later he decided to sell another (to a client of his accountant for approx $320k).
Yes, before anyone asks it is negatively geared. And you may say that $50k could be just good negotiating, however, before I signed I had a valuation for 1st mortgage purposes completed which came in @ $320k Contract was signed just after New Year (2004). Settlement in Q1 2005.
I’ve just re-read that and it read a bit like the HK’s of this world. However, I don’t have any greater skills than what anyone else has on this site has, so it can be done.
James
Hi Guys,
agree with Georgisj, there are also another number of ways to purchase property below market price, but again these are different strategies like the one mentioned, but ask your self what have potential buyers done to you, in trying to get the selling price, further down..
…actually this reminds me of a very good book, about buying property and getting undervalue… just cant remember the name..
Cheers,
sisFor the builder to aell at a price below valuation – he must have been a motivated seller. ie. really needed the cash flow to proceed with the project. If he had proper finance and capital behind him, then why sell for $50k below valuation.
wasnt that because he needed the money to build?
I know builders, and from what one told me, he can only borrow to a certain amount, in other words so many projects going before the bank says no. So if he sells something like off the plan, then the bank are ok, kinda like a down payment for him as well as the property buyer.
There are rules as to how much they can be working on and it might have something to do with their own equity or their own home!
ANyway thats what I was told so I stand corrected if this is not the case. But its like us …bank says too bad you are at your limit no more properties yet they hold you back!
Elves
” a blind man may see what a sighted man may not”
Yes, he did need the money to build. He had a few projects on the go, but knows that this is one he definitely wanted to do. For similar reasons why I wanted to buy.
My only point was to highlight that you can in fact by below what you might consider fair market value. Maybe I was lucky….who knows. But more to the point, I had made the relevant contacts within the area with real estate agents, knew the prices pretty well and had some credibility so I guess I was lucky enough to be referred onto him…or vice-versa, I can’t re-call now..
James
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