Is it possible to buy at 70% of market value?

[elguapo]

You could argue and say market value (specific definition) is what someone is prepared to buy/sell for. That may be true, however what Invester is talking about I assume is what would be fair market value, buying at 70% of that.

Market value is what is it buyers/sellers are prepared to transact at on the day given a reasonable depth of market. 'Fair market value' a meaningless concept.

[Damap]

If it's typical, then you can't be buying at 70% of market value by definition.

Not true, the US has a wholesale and retail housing market unlike NZ. You can make money in your sleep there once you understand the system.

[orion]

Market value is what is it buyers/sellers are prepared to transact at on the day given a reasonable depth of market. 'Fair market value' a meaningless concept.

Okay, will give you an example elguapo and you tell me what the market value is here, and a I assume you would also mean a registered valuation would be the same?

Property A is a tidy 3 brm home with a single garage, has a heatpump, and fully insulated but owners must sell, buyer negotiates well and pays $300,000. GV is $400,000

Property B is next door, same interior, same section size, also has a single garage but needs new carpet, exterior needs painting, has no heating or insulation. Would take $40,000 to bring up to the same standard as Property A next door.
Another buyer not concerned about any work that needs doing to this one, used to live in the home as a kid. So it has sentimental value to her and she ends up paying $420,000 as the owner didn't really want to sell, but couldn't refuse her seemingly very high offer. GV is $400,000.

What is the market value for both places?
And if you were a valuer, how would you justify your valuation to any new buyers looking at either property in a months time when both are wanting to sell again, using comparative sales?

[spaceman]

Market value is definitely an interesting subject.

...... Two different valuers did a registered valuation on it, on was $400,000 and the other was $900,000. .........

Sooooo...... I buy for $630K ....did I pay 70% of market value or 157.5% of market value.

This illustrates my point.....two people who should know ,after all it's their profession, come up with widely varying values
So whats the real market value in this case??????... $630k....the price it sold for....everything else is just a guess.

Sure you can buy well and get a great deal, but if it was on the open market, then by definition you've paid market value.

Off-market/private/backdoor deals, you can never know for sure what the market value is/was, only the price you paid.....lets say I bought the above property for $630k and was shown the $400k valuation after the fact .....would I be happy???? Would I feel differently if I was shown the $900k one?????

Since houses aren't identical in the same way that gold ingots are you can't have the same type of market value.

Cheers
SPaceman

[elguapo]

Not true, the US has a wholesale and retail housing market unlike NZ. You can make money in your sleep there once you understand the system.

If you can make money in your sleep there, why do so many US property 'gurus' go bankrupt?

[Leftette]

Because they're awake, elguapo, obviously.

[Wayne]

They're not sleeping enough?

edit - Leftette beat me to it - darn!

[elguapo]

Okay, will give you an example elguapo and you tell me what the market value is here, and a I assume you would also mean a registered valuation would be the same?

You know what they say about assumptions.....

Market value and a registered valuation are two different things. One is an actual, the later is, at best, an educated guess of the former.

[Damap]

Well firstly very few of them do go bankrupt. There are not many investors in the USA % wise and they do pretty well. But the real answer, and it is scary, is that bankruptcy is a wealth creation strategy in the USA. I sh*t you not.
2 examples from friends of mine.
Investor with 26 homes leveraged to the hilt. Files chapter (whatever the correct number is). Filing stops the bank from foreclosing and investor keeps collecting rents and stops paying all mortgages.
FOUR YEARS later finally gets into bankruptcy court. Judge orders bank to reduce interest % and write of enough of the mortgages and all arrears to make sure homes are cash positive. Investor keeps all houses now has 2% loans and low gearing. (This is a true story)

2. Developer goes under owing bank north of a hundred mil.
Bank can;t move the subdivision so after 2 years contacts developer and asks if he would take the land back as they can't sell it. They sell it to him for TWO CENTS on the dollar AND 100% finance him back into it.

Bankruptcy is a wealth creation strategy in the USA. Thats why Trump and Kiyosaki and all these guys file. You never lose your assets if you do it right you just lose the debt!

[Damap]

Oh and Orion you are wasting your time buddy convincing these guys about market value. They just like to debate. Any serious investor knows you can buy under market and sell the next day at market and make money. It just takes being well enough connected and making enough offers.

[Davo36]

You have a very rosy view of the world Damap! I wish I shared your optimism.

Bankruptcy is a wealth creation strategy in the USA

Tell that to the millions who lost their homes to the banks!

There are always cases like you mention, but they're hardly typical.

[Damap]

We are talking about investors not Joe Public. You can even do a course on it believe it or not. It is so common you would be amazed. (I have lived in the USA so have seen it first hand hundreds of times).

[spaceman]

^ but but but what was the market value in this example Damap?????

Originally Posted by orion
Market value is definitely an interesting subject.

...... Two different valuers did a registered valuation on it, on was $400,000 and the other was $900,000. .........



Sooooo...... I buy for $630K ....did I pay 70% of market value or 157.5% of market value.

Cheers
Spaceman

[Damap]

That was posted by Graeme not me Spacey. I don't care what the answer is as I wasn't the one flipping it :-)

[spaceman]

^ LOVE the cat!!!!!!!!!....love love love.

Don't care because you didn't post it?????....then why are you here responding to stuff you didn't post????

Orion's example shows clearly that the value of a property without a sale is just a guess.....sometimes an educated guess to be sure....but even paid professionals can vary by substantial amounts.

Don't care???....really ??? or just can't figure out an answer to my question???

Cheers
Spaceman