Most people get a pest inspection and building inspection before purchase which is fine and always recommended, but the most important thing, once the above are taken care of is the price, and does that price represent market value.
If you’ve finally found the property, house or unit you are really interested in, its in your best interest to get a fully independent pre-purchase valuation. Any asking price is just that, an asking price, vendors and agents often set asking prices to factor in offers. The vendor and agent know they can always lower the asking price, but its much harder to increase it. Real Estate Agents are advocates for the vendor and have a vested interest, as commission based basis toward their client the vendor, their goal should be to achieve the highest possible price.
Many believe, including vendors and agents, that price is market value, this is not the case, unless you are happy to believe that no one every pays to much for a property or no one ever gets a great deal or pays under market value. (If a property was really worth, what someone was willing to pay in the market place at any time, it would be a very different place, where no one would lose, finance would not be an issue and far less transactions would take place).
The main issues surrounding the fluctuations between fair market value, above market value or below market value, which can be extreme at times, relate to many factors such as the old ‘Supply and demand’, a purchasers ‘Specific circumstances or needs, ‘Financial factors and competition just to name a few.
The reality is, for everyone who sells a property at a price above market value, there is a person who has purchased that property above market value. As expected, for everyone who sells a property at a price below market value, there is a person who has purchased that property below market value.
Of course there is a third component, those who buy or sell at market value within a range considered fair market value by all, that’s the range most people assume they have purchased along with that assume they purchased or sold in favour of their interest, very few will assume or accept the view, that they have purchased well above or sold well below market value, why would they want to?
Don’t let anyone tell you the price is in this range or below market value.
A Bank or Financial institution may conduct a compliance report. This is not an independent valuation, Courts, the Office of State Revenue and the ATO will not except or recognise these reports, nor should you. These compliance reports are often contracted and the vested interest/advocate component is evident.
A pre-purchase valuation can inform you as the client, the property is well under market value or well above market value, to which the report can still be used as a great negotiation tool.
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