Closed another Below Market Deal at Park View at Harbour Place

It has been a while since I last wrote on which deal I closed recently. I have been bogged down by huge commitment of new work assignments.

Even though, I still keep look out for any good deals around anytime if time permit. The good thing is, with the help of team work and wide network of real estate negotiators that I have met, from time to time, they will just send me a message and asking opinion etc.

On 17 July night time, while browsing for listing on the website, 1 listing caught my eye. Park view at Harbour place selling at $280,000. Spontaneuosly, I send the message to arrange viewing the next day.

During the viewing, I was shocked that, there is still original unit in the building. Park View has been established about 10 years by now. The condition is not bad, just like original state. Details photo can be found here. After viewing, the negotiation started.

Location of the surrounding near Park View can view Here, which I did last year. The latest development near Park View is Woodsbury Suite, which is selling at $500 psqft to $600 psqft depending on the size.

Here is the past “Park View transacted price trend” by our group members. All are real transacted data.

Guess how much will be my offering price (based on the above trend and condition of the house) and closing price?

I give my initial offer price to the agent and waited for 2 weeks only the seller come back with his counter offer price. My agent also help me to do some due diligence on the seller, I got to know that the owner did not pay his management fees for the past 10 years. the amount is as high as $24,000. The reason the owner took so long to come back is not agreed with my offer price. The owner did not give his wish selling price as well. The owner felt too low and want to call off the deal.

After 2 weeks passed, the agent call me again and want to start to renegotiate the deal. The owner finally counter offer his priced. After another 2 weeks of negotiation, the deal is closed!

So below is the negotiation details:

1st Asking Price = $280,000

1st offer Price =  $240,000

2nd Asking Price = $260,000

Closing price = $255,000

I am pretty happy that the deal closed at $255,000 versus the market price $340,000 with full renovation. Officially signed the Sales and Purchased agreement on 18 Sept 2015. This is the longest duration of negotiation I ever encountered. However, it is worthwhile with all the grueling negotiation and time spent.

On top of that, requested to hand over the key earlier to start the renovation work. Currently is in progress of finalizing the renovation work and quotation. Below are some of the estimated cost of renovation.

  1. Painting & Cleaning work = $ 1300.00
  2. Aircond (wiring +Piping + Installation) + all lightings installation + fans x 4 (with all conceal) = $3,300.00
  3. Kitchen (Bottom & Top) = Pending
  4. Main Grill + Drying yard casement window = Pending
  5. Full furniture = $5900.00

Compounded annual growth rate for Park View at Harbour Place

Let analyze how is the Seller gain from his property after 12 years of holding it. Seller bought this unit in year 2013 with the price of $138,000. He sold this unit at $255,000 at 2015.

In term of property price appreciation, CAGR = 5.25%. This 5.25% is quite normal and in line with our inflation rate. Which mean, if you buy and hold, the property price will be double in 20 years. However, assuming the initial cost outlay with only 10% down payment required and plus some miscellaneous cost incurred say $15,000.

Profit = $255,000 – $138,000

            = $117,000

Assuming that his net profit is $100,000, his initial capital of $15,000 has grew to $100,000. The CAGR is 17.13% which is exceptionally good!

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