Under market value properties are homes sold for less than their current market worth, often due to urgent sales needs, foreclosures, or motivated sellers. This offers buyers potential for immediate equity and above-average investment returns.

Purchasing Strategies for Under-Market Value Properties

The following strategies can be used to acquire under-market value properties:

Making the same-day offer as the property is listed for sale.
Multiple lots.
Errors in a real estate agent's listing.
Undervalued property value.
(OPM) Other people's money.
Offering above the listed price and cash offer.
Private property listings.
Auctions not advertised.

1. Making the same-day offer as the property is listed for

Early bird catches the worm

You have heard the phrase, "Early bird catches the worm." The REDA Website will provide opportunities for you. The ability to search categories (Newest to Oldest) allows you to pull up new listings daily. This is required if you're after an undervalued property, as they sell very fast.

Properties under market value, distressed, and extremely cheap can be searched daily.

Banks, motivated sellers, and errors in real estate agent listings do exist and occur more frequently than you would expect. Typically, buyer enquiries are extremely high as soon as they hit the market, so you must act quickly if you are to be successful with this investing strategy.

Case example:

Adds: 15 Noogie Street, Macleay Island, QLD 4184

(Mortgagee in possession) listed at $30,000, had 20 phone calls within 1 hour, and sold for $43,000 on 19th May 2020.

So, making the same-day offer is vital to getting the jump on competitive interest, as is keeping in regular contact with the selling agent.

2. Multiple Lots

Multiple lots

Other undervalued properties are in the (double blocks/multiple lots) website category.

Generally speaking, they can be overpriced to a normal consumer but undervalued to the educated property investor, and they can sit on the market for a while. It takes experience/education to see opportunity and take risks to fully realise the maximum property value potential.

Case example:

Adds: 764 Daylesford Malmsbury Rd, Glenlyon VIC

19 lots zoned Township 9.4 hectares sold $2,500,00 12 May 2020, (Deceased estate trustee), had a fully realised resell value of each lot combined at $3,500,000

3. Errors in a Real Estate Agent Listing

Errors in real estate agent property listings are a great way to find under-market value properties. They usually occur because:

1) Agents will go off vendor directions on price even if they know it's well below the market value as this allows for quick turnaround and sale. (*Note: not all agents do this).

2) The agent does not know the land size they are selling or that the property may be in multiple lots that can be easily separated at settlement (legal loophole).

3) Where a trustee or “power of attorney" is acting for the family, a quick sale is often required and priced according to the market.

4) Poor Marketing results in a property not reaching full exposure of buyers and going stale after a few months, thus showing the market it's possibly overpriced and something wrong with it (which is misleading).

5) Off-market: The agent goes straight to their database of buyers and does not utilise full marketing potential, allowing for a quick turnaround.

Case example:

Adds: 149-153 Williams Rd, Dandenong South VIC

Industrial zoned property on the market for 3 years at $370,000, sold May 2020. Advertised as 90 m/2, actual land size was 695 m/2 council rate notice value $580,000.

4. (OPM) Other Peoples Money

(OPM) Other peoples money

When a property listing comes onto the market and the vendor has acquired the property legally and is able to sell it, a quick sale is more imminent because it's not their hard work that paid for the property. There's a saying that goes like this: “Easy come, easy go”

Properties listed as mortgagees, trustees, liquidators, bankruptcy, council unpaid rates, and sheriff sales are the main REDA website categories that will have these opportunities.

Discounts can vary from 10-50% under market value.

Case Example:

1.5 acres 3 allotments (1 Title) old 3BR house, 34 Aitchinson St, Rokewood Vic purchase price $195,000 $35,000 above the initial listed price of $160,000.Deceased estate with Trustees as administrators. Separated lots at settlement and re-sold in 2 parcels as House 2 allotments $210,000, and vacant land $80,000.

5. Offering Above The Listed Price and Cash Offer

price and cash offer

When a property comes to the market that's well under market value, which happens regularly, buyer demand will be very high. It's important to know the suburb of your choice very well.

I.e. (land values, median prices, supplying demand) because when the opportunity appears, you will have the foresight to grasp the deal.

When a mistake or opportunity presents itself, you must have cash and be prepared to offer above market value if you believe you can still make a healthy profit or return on your capital. If the real underlying value to you is higher than that of another buyer, then you will be happier to pay more for the property. When competition is high to secure a good deal, don’t be afraid to offer 10-25% above the listed price.

Case Example:

Adds: 1 Grant St. Newbridge VIC

The listed price is $127,000, 22 acres in 6 titles, and it sold for $160,000. $33,000 above advertised price. Allotments were grouped into three parcels and re-sold as: 1) $80,000 2) $80,000 3) $130,000

6. Private Property Listings

Private property listings

Properties being sold by owners can represent fantastic under-market value properties for many reasons:

1) Vendor does not like real estate agents.

2) Vendor fails to know exactly what the real worth of their property is.

3) No agents in regional towns are available.

4) The vendor assumes they will get more money for the property.

5) Vendors are not professional like sales agents, and cannot market the property as good as a sales agent, with a large database and access to multiple property websites.

6) (Gumtree, local newspapers, even signboards out front) fail to sell the property at its full potential.

Case Examples:

Adds: 67 Taverner St Berriwillock VIC

A 3-bedroom house for sale by the owner was advertised on the Gumtree website. The purchase price was $15,000, and it was re-sold for $20,000 on September 10, 2019.

Adds: 36 Alexander St, Berriwillock VIC

The owner purchased $4,000 vacant land for sale with the board out the front and re-sold for $15,000.

7. Auctions Not Advertised

A lot of Government-owned properties that go to auction don’t always get advertised and marketed correctly. Sale of land unpaid rates, where the council repossesss a property after more than 4 years of overdue rates, sheriff auctions civil matters selling via a supreme court warrant, and state government bodies.

All represent great opportunities for buying well below market value, sometimes as much as 80%.

Poorly advertised auctions attract mainly local interest and less competition. Although you may have to travel around a bit, it can produce great profits for investors who love to (Buy/sell).

Councils will sell at land value if there's a house on it and at a price to recover legal costs and expenses.

Case Example:

Adds: 11 Morrison St Birchip VIC

2017 Buloke Vic Auction sale of land unpaid rates, purchase $10,000. 1-acre residential land, re-sold $40,000.

Under Market Value Properties

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