- ericyan wrote:daniellee wrote:With that said, it is always possible to find bargains relative to any market. My wife and I recently purchased an IP at council valuation in early May 09 after 7 mths of searching
guys, excuse my newbie comments, what is meant by council valuation? thanks in advance
Hi, Eric
When you look at a Sec 32 for a property, the council valuation is made up of the Site value, the capital improved value, and the Net Annual Value. For my first IP, the land component was $268K and the Capital improved value was $375K. That $375K is the Council valuation.
Most RE investors would say that the maximum price to pay for an IP is the council valuation, unless the property has some unique feature that makes it acceptable to pay more for even greater profits later.
Regards
Daniel Leepropertunity wrote:ericyan wrote:daniellee wrote:With that said, it is always possible to find bargains relative to any market. My wife and I recently purchased an IP at council valuation in early May 09 after 7 mths of searchingwhat is meant by council valuation?
A council land valuation (or Valuer General's) is in no way shape or form an indication of likely sale price. It is calculated very conservatively, only refers to the land component and is very often out of date by some years. D did very well to buy at that price.
Hi, Propertunity
Thanks. Wife and I were beginning to wonder if we would be able to find a suitable property in the midst of a bubbling RE market. During May 09, similar property in the suburb were going for at least 10% above what we paid for, with unrenovated properties selling for almost the same price as renovated ones.
Still, when I read of stories of other RE investors who have made successful purchase of properties 15-25% below asking price, it motivates me to work harder and smarter on our next purchase; which will not be for a while to come.
Regards
Daniel LeeDoes anyone know if Neil Jenman has propertunity as a character in his next book?
At least the man is honest:
"Our fees represent an investment. We can often save our clients many times* our fees through our knowledge of the local property market and our negotiating abilities. (*Please note that at various stages of the property market and more specifically during periods of a “seller’s” market, that this is not always possible. However, you will still benefit from all the other skills we bring to the transaction) [emphasis added]
I just realised….
a buyer's agent from County NSW offering advice on the Melbourne market… he must be an expert Australia wide…
Rhys_Roberts wrote:… he must be an expert Australia wide…Well kinda. I buy in Melbourne for myself and a couple of close friends. I have a couple of relos there and visit quite often. I keep my finger in the pie, so to speak.
Rhys_Roberts wrote:Does anyone know if Neil Jenman has propertunity as a character in his next book?I don't have anyhting to do with Neil Jenman one way or the other, but he seems to like the idea of Buyers Agents.
http://www.jenman.com.au/news_story.php?id=89Quote:In many ways, I wish there were more Buyers' Agents. Most agents act for the sellers – and, while they should never mislead or deceive you, it is naïve to expect them to act in your best interests. Indeed, at law, they must act in the interests of the sellers.If there were more good Buyers' Agents, then more buyers would be looked after.
Thanks Daniel + Propertunity for your replies. This is very much clearer now.
Propertunity, the Council will divulge such information readily? I would've imagined them to ask a bit more questions on why i would want it etc. etc..
ericyan wrote:Propertunity, the Council will divulge such information readily? I would've imagined them to ask a bit more questions on why i would want it etc. etc..Look, if you call council and ask how many bedrooms or bathrooms there are in a property then you will get the conversation closed down pretty quickly on the basis of privacy legislation. However, if you tell them you are interested because you are an intending purchaser of the property and you'd also like to know what the annual rates are – I've never had a problem. Its on the public record so to speak.
propertunity took my indirect criticism well…. he can't be all bad.
It depends on what sphere of the market you will are looking to buy in. The lower end probably isn't the best place to be buying right now. There is a definite bubble there. There are a lot of buyers who are rushing in for FREE money. If you are looking to buy in the mid to high end of the market you may want to enter. Then again over the next 6 to 18 months if unemployment reaches the levels that have been predicted value could drop further than what they have already done.
If the FHOG/BG has created a detrimental bubble then we may see property values for dramatically.
one should be wary and take the story from the link above – "http://www.jenman.com.au/news_story.php?id=89" – very serious. this is just 1 of the many nightmare when dealing with a wrong Buyer Agent – no offense to anybody here.
jenman is also critical of Buyer Agent's fee structure, they want you to pay a premium fee based on the value of your purchase price. this is ridiculous, since you pay the mega fee once you agreed to buy the property how can you be certain that they are doing it in your interest but not their? they want to get paid asap too.
i think it only fair IF they can show and proof how much they saved you with their bargain skill and earn a % from that saving;
Quote:As for paying a Buyers' Agent, it makes no sense to pay a fee based on the purchase price if it means that the higher the purchase price, the more you pay.You should pay the agent a percentage of what they save you. For example, if you are prepared to pay $800,000 and the agent negotiates a price of $700,000, then you could pay 25 per cent of the amount saved. In this case (assuming the agent had been responsible for the $100,000 saving) you would have paid $25,000. And everyone would have been happy.
propertunity wrote:Rhys_Roberts wrote:… he must be an expert Australia wide…Well kinda. I buy in Melbourne for myself and a couple of close friends. I have a couple of relos there and visit quite often. I keep my finger in the pie, so to speak.
well just because one is a car salesman and own a few cars doesn't make one an expert in car
I think it is always a good time to buy the "right " property. People want to wait for the market to "reach the bottom" but history teaches us that by the time statistics catch up, we have already passed the bottom and missed it! More people buy in a rapidly rising market (for fear of missing out) than in a falling or stable market! Crazy eh?
Why not just offer 20 percent less than the asking price now if you are ready to buy and have lots of choice, rather than waiting for a possible10% further fall? Then you buy at the "bottom" without having to actually try to pick the bottom.
Another strategy is to agree to buy at current written valuation prices. My experience is that many if not most valuations done by bank valuers on existing and newer properties currently are coming in very low, (actually making it quite hard for people to borrow-but thats another topic) but Vendors are more likely to "accept' this official valuation.
Or just contact the banks and get their list of defaulting properties, and take one of those of their hands. This is a once in generation opportunity where banks need to clear out their toxic debt, and will take any offer and write off their bad loans. And THIS will not last!
Best of luck,
L.K. Tan.
For a first time poster you offer some very good advice LK – or at least you are supporting my confirmation bias.
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