Buying at a discount

[Damap]

Just a recent experience to encourage those who don't believe you can buy under value in Auckland.

saw a property advertised on Trademe. Negotiated a conditional agreement at what I knew was about 50K under current value. Contract at 625K for a 3 beddie in Howick.

Decided on unconditional date to drop property as it wasn't one we "needed" to buy.
Seller came back asking what we would pay for it as they wanted to go unconditional on another property. We advised them to not sell to us but said we would pay 590K.

It is IMPOSSIBLE to buy a 3 bed home in Howick for under 650K anymore so at under 600K how could we say no.

Half hour later they said yes.
Reg val 675K

So always remember there are a thousand reasons why a seller will sometimes sell for less than market.

[OneStepCloser]

Wow, that's great! Is it a crosslease or freehold? What condition did you use to drop the property?

[nicsa122]

Ouch. Sucks for the vendor. Note to self: don't put an offer on a property subject to sale of house. They probably put an offer on thinking the sale was a done deal...nice work though.

[Damap]

Is it a crosslease or freehold? What condition did you use to drop the property?

Cross lease. I just use standard due diligence these days.

Ouch. Sucks for the vendor. Note to self: don't put an offer on a property subject to sale of house. They probably put an offer on thinking the sale was a done deal...nice work though.

Yes that was why we dropped the contract. I thought she could get more money so we deliberately didn't low ball them on the day we cancelled instead.
They are retiring and moving out of Auckland so obviously what we offered was enough for them to get on with their lives.

[Kbkiwi]

Well this anecdotal tale could just as easily be seen as a note of caution that the Auckland market could be stuttering.

If if the vendor was struggling to find buyers at a 10% discount, then that raises some serious red flags.

[Shalodge]

Exactly .. I am also confused .. I thought the AK market was going up not down? Are sellers cutting and running or was this just an isolated incident where the seller got themselves in a bind and had to take the lower offer.

Down here in Whakatane we are seeing an upsurge in buyers from AK cashing up and relocating to the beach and our RE people are screaming for listings. I think some people, particularly retired folk, sense its time to take their capital gains and head for the sun and sand, buy a nice house near the beach for $500k and have a nest egg for their retirement.

I pity those that are stuck in AK who are going to go underwater when the market turns (and obviously it will).

Russell

[Damap]

I pity those that are stuck in AK who are going to go underwater when the market turns (and obviously it will).

Now that's funny :-). Fortunately things like this: http://www.nzherald.co.nz/nz/news/ar...ectid=11569008
continue to put pressure on Auckland. Whether it's good or bad I do observe it has become it's own market. No big falls any time soon.

[Nick G]

Yes that was why we dropped the contract. I thought she could get more money so we deliberately didn't low ball them on the day we cancelled instead.
They are retiring and moving out of Auckland so obviously what we offered was enough for them to get on with their lives.

That's a nice thing to read. So many expert investors preach that a win for themselves should always come at a loss for others.

[OneStepCloser]

What is scary is even if you have got such a bargain, the yield is still pretty low (I would think you get about $500 or $520 max for 3 beddie in howick?) How can us newbies get into the market?

[orion]

Just a recent experience to encourage those who don't believe you can buy under value in Auckland.

saw a property advertised on Trademe. Negotiated a conditional agreement at what I knew was about 50K under current value. Contract at 625K for a 3 beddie in Howick.

Decided on unconditional date to drop property as it wasn't one we "needed" to buy.
Seller came back asking what we would pay for it as they wanted to go unconditional on another property. We advised them to not sell to us but said we would pay 590K.

It is IMPOSSIBLE to buy a 3 bed home in Howick for under 650K anymore so at under 600K how could we say no.

Half hour later they said yes.
Reg val 675K

So always remember there are a thousand reasons why a seller will sometimes sell for less than market.

You say here 'how could we say no' but then you say you dropped the property.
So did you buy it or not?

I don't really buy the whole feel sad for the vendor thing.
If they really wanted the other property and it meant you buying their one was what they wanted, then why would you not?
By not buying it because you may feel sorry for them or assuming they are making a mistake in selling it low, how is that helping?
They may have been able to negotiate a bit lower on the one they wanted to buy, or they may have got it under contract for what they think is an exceptional buy and so therefore willing to take less on their own home.

It can be easy to assume things at times when the actuality of the situation could be completely different.

[Cpt707]

....property dealing just an "undercover " Forex/Commodities" activity....the Property Casino has arrived...!!!

[OneStepCloser]

BTW, was the property listed with an agent or private sale? Did you jump onto it very quickly when it appears on trademe? Did you get any building inspection/LIM report etc?

[Damap]

Listed with an agent. We will flip it so the yield not an issue.

[Frezzinghot]

Listed with an agent. We will flip it so the yield not an issue.

As is or with renovation?

FH

[Damap]

I never do reno's on trades :-).