The Truth About Off-Market Properties and Valuation Shortfalls

The Truth About Off-Market Properties and Valuation Shortfalls

Welcome back to another episode of Talk Property To Me! I'm your host, Brad East, alongside my co-host, Aaron Downie. In today's episode, we dive deep into the intricate world of property valuations, a crucial aspect for anyone looking to buy, sell, or invest in real estate.

We kick off the discussion by introducing the various types of property valuations that lenders utilize. From Automated Valuation Models (AVMs) to desktop and curbside valuations, we break down how each method works and the implications they have on property value assessments. We highlight the importance of understanding these methodologies, especially when it comes to pulling equity for investment purposes.

One of the key points we address is the difference between a property's market value and its purchase price. We emphasize that lenders often rely on third-party valuers to mitigate the emotional biases that can lead buyers to overspend. This leads us into a discussion about the subjective nature of property value, where we explore how personal circumstances can justify higher prices for certain buyers.

As we navigate through the episode, we touch on the common pitfalls in property valuations, particularly when it comes to off-the-plan purchases. We share insights on how relying solely on real estate agents' guide prices and median prices can lead to overvaluation and disappointment. We stress the importance of conducting thorough research and performing a comparative market analysis to arrive at a realistic property value.

We also delve into the role of buyer's agents and the concept of off-market properties. While off-market opportunities can be appealing, we discuss the nuances of the current market, particularly in Newcastle, and whether these properties truly offer better value or simply serve as a sales tactic.

Throughout the episode, we provide practical tips for listeners on how to approach property valuations. We encourage them to attend open homes, observe market trends, and understand the significance of inventory rates and days on the market.

In closing, we reiterate the importance of being well-informed and cautious when it comes to property valuations. We remind our audience that while market value is often what someone is willing to pay, it’s essential to justify any significant deviations from the median price in the area.

Join us for this insightful discussion, and don't forget to check out our website at talkpropertytome.com.au for more episodes and resources. Thank you for tuning in, and we look forward to having you with us next time!

• 00:00:00 - Introduction to Property Valuations
• 00:01:06 - Types of Valuations Used by Banks
• 00:02:22 - Understanding Automated Valuation Models (AVMs)
• 00:03:55 - Different Valuation Methods Explained
• 00:04:40 - Valuation vs. Purchase Price
• 00:05:30 - Subjective vs. Market Value
• 00:07:30 - Key Elements Influencing Property Valuation
• 00:09:18 - Comparative Market Analysis
• 00:10:20 - The Role of Real Estate Agents in Valuation
• 00:11:03 - Shortfalls in Valuations
• 00:12:30 - Common Pitfalls in Property Valuation
• 00:13:41 - Guide Prices and Anchoring Techniques
• 00:15:21 - Limitations of Online Valuation Tools
• 00:16:50 - Future of Property Valuation with AI
• 00:18:09 - Challenges in Unique Property Valuations
• 00:19:29 - Off-Market Properties: Pros and Cons
• 00:21:14 - The Role of Buyer’s Agents in Off-Market Deals
• 00:23:40 - Accessing Off-Market Opportunities
• 00:25:46 - Recap on Property Valuation Considerations
• 00:28:00 - Manipulating Valuations: Ethical Considerations
• 00:29:27 - Conclusion and Final Thoughts

ABOUT THE HOSTS

BRAD EAST

Brad East is the Managing Director of Wisebuy Home Loans. Brad is an award-winning mortgage broker and has helped thousands of clients gain finance to purchase properties. Wisebuy Home Loans is the go-to mortgage brokerage for clients wanting out-of-the-box applications approved.

Website → https://wisebuygroup.com.au 

LinkedIn → https://www.linkedin.com/in/newcastlemortgagebroker/ 

Instagram → https://www.instagram.com/bradeast_mortgagebroker/ 

Facebook → https://www.facebook.com/bradeastofficial

AARON DOWNIE

Joining the podcast in 2024, Aaron Downie is a seasoned property investor and director of Mackenzie Buyers Agency. Aaron’s deep understanding of the property market and investment strategies provides listeners with invaluable insights.

Website: https://www.mackenziepropertygroup.com.au/

Linkedin: https://www.linkedin.com/in/aaron-downie-1b2749134/