Post to Facebook on 27/7/2018 at 12:22 AM AM
Commenting on “Why you should resist peer pressure and focus on fundamentals when buying a home in a quiet market”
https://www.domain.com.au/advice/why-you-should-resist-peer-pressure-and-focus-on-fundamentals-when-buying-a-home-in-a-quiet-market-20180724-h12qfr-753745/
Think with your head, buy with your heart, pay with your bank loan. Do not follow the pack and bid in an auction or make offer impulsively.
My conservative philosophy seems to pay off my property investment portfolio.
My wife did make a final bid once, and I did not even know even though I was standing just metres away. She did not make a mistake, because she did follow the basic principles I mentioned earlier.
Let me take you through from the start to the signing the contract.
I used to work at Chisholm TAFE in Dandenong. Sometimes my wife would come with me to the library and then went for a ride.
One day, after we left the college, I drove to the street in the northern end. We saw an auction sign board in front of a neat wire-cut house. It was used as a student accommodation house. It was about 4;30 pm. I called the agent, whose agency was not far away, hoping that he could let us into the property to check it out. The agent was quite far away and was unable to obliged.
We never gave it another thought of buying the property.
The following week, my wife decided to go to Dandenong market, which was not our usual routine to do our marketing. As the car was about to pass the street where the auction property was situated, my wife remembered that the property would be auctioning in about 30 minutes time. She wanted just to be a busy body to find out how much the properties in the street worth.
Many people were already inside and outside the house. We left with only 20 minutes to inspect the house. It was really a quick zip through. It had 6 bedrooms, a lounge, a kitchen, two bathrooms and two toilets. The backyard was of reasonable size, and there was a gate that opened to the border of Chisholm.
As we were walking in the backyard, my wife asked me how much it would go for. I did a very quick mental calculation, not about the price of the house, but what the breakeven was if the rooms were rented out individually. What is the difference between the house price and breakeven price?
The former is a lower figure, because the full potential was not realised. The latter was the allowable price one could offer above the normal market value.
No, I was not a genius. It so happened I did a similar analysis for a property in Glen Waverley, and I could apply similar assumptions in the calculation.
We stood separately in the nature strip. There was a tree in the nature strip, and I had no idea where my wife stood. I was more interested in observing the auctioneer's performance and the bidders' responses.
The bidding went well, but it came to a halt. The auctioneer went inside the house to consult the vendors. The property was not in the market yet. The auctioneer asked for more. Then the auctioneer called out the next amount - an increase of another $250. There was no further bid. To my surprises, that was the final and winning bid.
I did not hear any bidder called out the final bid, because I was not paying much attention then. The auctioneer walked towards the final bidder, who was standing not in sight where I was standing.
I walked towards the bidder's direction. My jaw dropped, and I nearly fell onto the ground. My wife bought the property!
At an auction, the buyer is supposed to pay 10% deposit. You can never guess how much I had in my pocket. I had only $50 in my wallet, and my wife had not much more. I told the auction and the vendors about this, and what else could they do, except to take our words that we would bring the cheque on money.
Obviously we had enough credit from the bank to bid in an auction, I had done similar preliminary calculation to work out what the maximum price we would pay for the house, and my wife's heart was not just to buy a house, but a property that could be use to run a business - student accommodation.
We did not follow the pack, neither would anyone pay any attention to us and paid extra $29,750 to purchase the property. We were prepare to pay that extra, but we did not need to.
From my estimation, we paid $29,750 less than the breakeven price!
Thank you for reading.
Commenting on “Why you should resist peer pressure and focus on fundamentals when buying a home in a quiet market”
https://www.domain.com.au/advice/why-you-should-resist-peer-pressure-and-focus-on-fundamentals-when-buying-a-home-in-a-quiet-market-20180724-h12qfr-753745/
Think with your head, buy with your heart, pay with your bank loan. Do not follow the pack and bid in an auction or make offer impulsively.
My conservative philosophy seems to pay off my property investment portfolio.
My wife did make a final bid once, and I did not even know even though I was standing just metres away. She did not make a mistake, because she did follow the basic principles I mentioned earlier.
Let me take you through from the start to the signing the contract.
I used to work at Chisholm TAFE in Dandenong. Sometimes my wife would come with me to the library and then went for a ride.
One day, after we left the college, I drove to the street in the northern end. We saw an auction sign board in front of a neat wire-cut house. It was used as a student accommodation house. It was about 4;30 pm. I called the agent, whose agency was not far away, hoping that he could let us into the property to check it out. The agent was quite far away and was unable to obliged.
We never gave it another thought of buying the property.
The following week, my wife decided to go to Dandenong market, which was not our usual routine to do our marketing. As the car was about to pass the street where the auction property was situated, my wife remembered that the property would be auctioning in about 30 minutes time. She wanted just to be a busy body to find out how much the properties in the street worth.
Many people were already inside and outside the house. We left with only 20 minutes to inspect the house. It was really a quick zip through. It had 6 bedrooms, a lounge, a kitchen, two bathrooms and two toilets. The backyard was of reasonable size, and there was a gate that opened to the border of Chisholm.
As we were walking in the backyard, my wife asked me how much it would go for. I did a very quick mental calculation, not about the price of the house, but what the breakeven was if the rooms were rented out individually. What is the difference between the house price and breakeven price?
The former is a lower figure, because the full potential was not realised. The latter was the allowable price one could offer above the normal market value.
No, I was not a genius. It so happened I did a similar analysis for a property in Glen Waverley, and I could apply similar assumptions in the calculation.
We stood separately in the nature strip. There was a tree in the nature strip, and I had no idea where my wife stood. I was more interested in observing the auctioneer's performance and the bidders' responses.
The bidding went well, but it came to a halt. The auctioneer went inside the house to consult the vendors. The property was not in the market yet. The auctioneer asked for more. Then the auctioneer called out the next amount - an increase of another $250. There was no further bid. To my surprises, that was the final and winning bid.
I did not hear any bidder called out the final bid, because I was not paying much attention then. The auctioneer walked towards the final bidder, who was standing not in sight where I was standing.
I walked towards the bidder's direction. My jaw dropped, and I nearly fell onto the ground. My wife bought the property!
At an auction, the buyer is supposed to pay 10% deposit. You can never guess how much I had in my pocket. I had only $50 in my wallet, and my wife had not much more. I told the auction and the vendors about this, and what else could they do, except to take our words that we would bring the cheque on money.
Obviously we had enough credit from the bank to bid in an auction, I had done similar preliminary calculation to work out what the maximum price we would pay for the house, and my wife's heart was not just to buy a house, but a property that could be use to run a business - student accommodation.
We did not follow the pack, neither would anyone pay any attention to us and paid extra $29,750 to purchase the property. We were prepare to pay that extra, but we did not need to.
From my estimation, we paid $29,750 less than the breakeven price!
Thank you for reading.
