Spotting the undervalued properties 🔍

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Undervalued properties 🔍- Buyers who were able to find properties at bargain prices - without a catch.

Snippets - Empty homes in Japan, and ordering houses on Amazon.

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Photo credit: Kostiantyn Li

Undervalued Properties

How do you spot them? And separate them from the red flagged, too good to be true, what’s the catch? properties?

Although it’s always good to err on the side of caution when it comes to bargain properties, occasionally there can be valid reasons for a property going for less than expected - and that hopefully won’t cost you down the track.

Was the property overpriced when first advertised, and then sat on the market for a while?

Do the owners need to sell quickly for a range of reasons - financial, relationship circumstances, purchasing another property?

Was the property listed with agent’s who don’t normally cover that area? And perhaps aren’t unfamiliar with pricing and market conditions for that suburb, right down to the best streets?

Agent’s and photographers will often try to highlight the property’s best features. Occasionally though, the marketing and photos may not do a property justice, which may result in poor interest and viewings.

Read on to hear how these readers secured a good deal.

James and Lauren….  had been renting for several years. They’d experienced some of the rocky experiences that tenants can face - and were very ready for their own space. 

A property came up that looked too good to be true. 

The property seemed perfect. Great suburb, spacious property with good orientation and light.

The price however was well below comparable properties. Red flag?

From their research and comparable sales in that market, it should have been around 30% more than the asking price. 

So what was the catch? Was this low price to attract more buyers and more competition? (see underquoting) 

Or was there something wrong with the property?

They carried out building and pest checks without any major issues found. There were no concerning developments, and even without the house, the land value at that price was very reasonable.

So the catch?

For this purchase, no catch arrived thankfully. No red flags. Just a vendor who had already found another property - was relocating and upsizing - and needed to sell the property quickly and securely.

Living local was an advantage for this purchase. Lauren and James saw the property before it was advertised online - they saw a sales board go up and enquired immediately. Lauren and James were able to secure the property before any other viewings took place.

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“We just couldn’t believe it.

We were finally in our own home.”

Adam

Adam managed to find an undervalued property in an already cooling market.  

The property had been on the market for months. Adam initially dismissed this property, mostly based on the photographs. His experience had often been that the photos tend to oversell a property.

So when he saw these photos - without too many positives being highlighted - he thought it might not be worth his time. 

The asking price was initially high. Possibly too high for the cooling market and increasing interest rates at the time. 

There was limited stock on the market. He decided to go and have a look, even just for researching comparables.  

The agent selling the property was not a regular in the area, and the vendor was an investor who needed to sell the property quickly.

Those factors may have influenced the initial higher price it was listed for. The subsequent hanging around on the market likely led people to think there were red flags. 

Adding to this, the property had not been represented well in the photographs.

Adam was satisfied with the checks, and was able to seal the deal and secure the property.

The end result:

Stay sceptical and cautious and carry out thorough checks - but also stay open to fact that undervalued properties can make their way to market.

Snippets:

  • House purchases on Amazon have recently gone viral, highlighting a new experience for online shopping.

    Read more, here and here

    Although convenient, it may come at higher carbon footprint and transport costs. Local regulations would also need to be checked to ensure compliance.

    Prior to online shopping for houses, Sears catalogs provided another ordering avenue,

    “Sears sold tens of thousands of houses via a mail-order catalog from 1908 to 1942” (Chris Morris)

  • Akiya (empty or unoccupied) homes in Japan are on the rise, due to a range of factors including an aging population, high taxes and costs to rebuild. Some of these homes are now being refurbished and repurposed, and there has been a growing interest with tourism.

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“There is a lot of hype now, particularly among foreigners, about these gigantic farmhouses in Japan being available very cheaply or free. But it’s a huge commitment and there aren’t many contractors that can fix them up – the traditional carpentry skills are dying out,” she says. “In 10 years we could see a lot of foreign-owned akiya.”

Hana Sakata, The Guardian
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The Nomura Research Institute estimates there are nearly 11m akiya and that they could account for more than 30% of houses within a decade.”

Gavin Blair, The Guardian

Read more here 

Quote for the week:

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"Well done is better than well said”

Benjamin Franklin

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Sam & Jane

The Property Hack Team

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Information in this newsletter is general in nature. Undertake independent research and seek trusted professionals. Names are changed for privacy.