How do they arrive at these crazy prices

Freemo

New member
May 26, 2003
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I was just looking through the Century 21 website dreaming of winning the lottery and getting hold of some moster villa when I noticed that a couple of the top-end places have had price cuts of US$200,000 - One had an original asking price of a whopping $1.3 million, ok fair enough, but the other dropped 200K from only $879,000. What sort of price cut this that for heavens sake? How did they arrive at the asking price in the first place? This is from a company which several respected members of DR1 have praised highly in the past for their reliability and all sorts of fine attributes.

200K price cut? I think it's a bit steep, even if the places have been for sale for donkey's years.

It begs the question, how on earth can you expect to know what a property's value really is in the DR ?

Go on then, 'it's worth what someone's willing to pay for it'

True but why are the vendors seemingly happy to see these properties sitting idle for years?

I suppose if you've got enough dough, time doesn't have such an important role in the scheme of things. What do you think?
 

suarezn

Gold
Feb 3, 2002
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Well, you said it. I think it is extremely difficult to know what the real value of a property is in The DR as most neighborhoods are all over the place. They are not as uniform as her in The US. Thus you may have a really nice house surrounded by not so nice ones or even little shacks. So I think what happens is that they put a number up hoping somebody bites and if over a long period of time they don't get any interest then they drop the price significantly.

The other thing is that because normally there aren't any comparable residences around the realtors just ask the owner how much they want to put it up for...Of course the owners always think their properties are worth a lot more than they really are.
 
C

Chip00

Guest
I was just looking through the Century 21 website dreaming of winning the lottery and getting hold of some moster villa when I noticed that a couple of the top-end places have had price cuts of US$200,000 - One had an original asking price of a whopping $1.3 million, ok fair enough, but the other dropped 200K from only $879,000. What sort of price cut this that for heavens sake? How did they arrive at the asking price in the first place? This is from a company which several respected members of DR1 have praised highly in the past for their reliability and all sorts of fine attributes.

200K price cut? I think it's a bit steep, even if the places have been for sale for donkey's years.

It begs the question, how on earth can you expect to know what a property's value really is in the DR ?

Go on then, 'it's worth what someone's willing to pay for it'

True but why are the vendors seemingly happy to see these properties sitting idle for years?

I suppose if you've got enough dough, time doesn't have such an important role in the scheme of things. What do you think?

Welcome to the DR. Prices can vary a great deal in my opinion mainly because of the peculiarities of the DR market. First of all, people who have nice homes in the DR typically don't owe any money on them and therefore can afford to wait. Also, the Domincan understanding of market economics across the board is to sell few at exorbiant prices - maybe that is why so many of them never get rich! Also, with such a poor real estate selling system like they have here in the DR compared to the US prices can be expected to fluctuate greatly depending on the buyers education of the surrounding market. And finally, the influx of unwitting foreigners drive the market prices skyhigh!

I'll tell you what Domicans do when they want to buy a house. They DO not rely on realtors for one and they are not in a hurry. They will check an area well and frequently for sales and when a good deal appears they will jump on it. Yes it is time consuming and not really an option for foreigners who are trying to move here cleanly from their place of origin. The realtors know this and use it to their advantage of course!

If you want to buy here the best thing is to come and rent a place for 6 months and check it out and then hopefully you will find something in that time and learn a little about the area you will be in. Don't assume the realtors will have your best interest in mind - they will NOT be looking for deals for you as it will reduce theri commision - remember they don't deal in volume for the most part - they deal in big deals and you as a gringo will look like a big juicy steak.

In my own case, I believed I saved myself at least US40-80k when I bought my house simply becasue of the way I did it as mentioned above.

Good luck.
 

Freemo

New member
May 26, 2003
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In Santo Domingo things seem more on a even keel

I suppose I was referring to the beach villa type properties in particular. I have bought a couple of Apartments in Santo Domingo over the last 4 or 5 years and here at least the prices seem pretty uniform with regard to similar types of property in the same or a similar area.

However I do think that its strange that with apartments / condos popping up on every square inch of available ground in the Capital that the prices always seem to remain more or less the same.

Any other place thats flooded with vacant property faces big falls in prices - doesn't seem to happen here. Dominicans don't seem to bend to market forces. They simply sit on an empty house and wait for ever it seems.

The last place I bought was in a block of 10 apartments, that was nearly 2 years ago and 5 still haven't been sold. The realtor is actually asking more than I paid for the 2 year old empty ones.

Strange.
 

johne

Silver
Jun 28, 2003
7,090
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Waiting for the cows to come home

I was interested in a property in SD about a year and a half ago. The property had been on the market for more than a year before that. I could not even make an offer as the owner insisted on terms of due deligence that only a fool or someone who would buy the Brooklyn Bridge would be interested in.I would have come close to his asking price but no we never got that far.
Sooooo, what does he do? The property is still for sale and last month he raised the price by $100,000!!!.
john
 

sjh

aka - shadley
Jan 1, 2002
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www.geocities.com
It is an low liquidity market, so there is a large gap between the bid and the asking price. when someone is desperate to buy or sell, they must jump the gap and pay the price.
 
C

Chip00

Guest
I was interested in a property in SD about a year and a half ago. The property had been on the market for more than a year before that. I could not even make an offer as the owner insisted on terms of due deligence that only a fool or someone who would buy the Brooklyn Bridge would be interested in.I would have come close to his asking price but no we never got that far.
Sooooo, what does he do? The property is still for sale and last month he raised the price by $100,000!!!.
john

Like I said before, most of these people don't own anything on these houses nor pay property taxes so why not wait 10 years for the "big" one?
 

globalmike295

On Vacation
Jul 11, 2006
216
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This is not a liquid market, that's for sure. I have been looking dilegently for 2 years and see the same places for sale with a higher asking prices . I would only offer 50% of the asking price.
 

johne

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Jun 28, 2003
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Like I said before, most of these people don't own anything on these houses nor pay property taxes so why not wait 10 years for the "big" one?
Well because it cuts agaainst the grain of the principles of real estate investing. I don't disaagree with what you say other than one that practices real estate as a biz would not do well investing like this. Dont want to get into this since it is not the subject of thread but I am sure you get my point without a lengthy discourse on the subject.
john
 

BlueLodge

New member
Dec 28, 2005
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Interesting that you've been here much less than a year and you're an expert? Were you researching DR for over A year before you left Costa Rica? Did you ever find an acceptable porkchop? Are you ready to get on a plane and leave here?

This is not a liquid market, that's for sure. I have been looking dilegently for 2 years and see the same places for sale with a higher asking prices . I would only offer 50% of the asking price.
 

globalmike295

On Vacation
Jul 11, 2006
216
2
0
In response to blue lodge. Actually i have been researching DR for about 4 years and do believe DR is a good investment opportunity. However owners have unrealistic expectations as to value due to supply and demand

Combine that with un regulated realtors ( no license required ), And there is plenty of room to OVERPAY for property.

I have read other posts concerning foreclosures and buying distressed properties for pennies on the dollar.

The Pork here in the DR is superior to any pork in North America and I have no immediate plans on leaving

I plan on buying distressed property as I have done in the past
 

is mikehunt there

*** Sin Bin ***
Jan 18, 2007
117
2
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I'll tell you what Domicans do when they want to buy a house. They DO not rely on realtors for one and they are not in a hurry. They will check an area well and frequently for sales and when a good deal appears they will jump on it. Yes it is time consuming and not really an option for foreigners who are trying to move here cleanly from their place of origin. The realtors know this and use it to their advantage of course!




good point; ill tell you something; ive bought and sold many homes over the last 10 years...and ive learnt to rely on a couple of principles!

  • never listen to a real estate agent
  • do your own research and understand the market
  • buyer beware!

infact ive said on occasion to the R/E agent as soon as we arrive at the place/land for sale; 'leave me alone now!' as i wander the home!
They are biased and will say anything they can to line their pockets!!!!! This is also understandable!. when someone is biased they will never have my interests at heart!
So my advice to buyers with intentions to buy in the DR please be careful! The main risks i have found with real estate guys in the DR is that they are relying on your ignorance of current property prices and that they will charge you as much as they can for a property (their margins are between 6-10%....mainly 10%). So you see its very lucrative for them now that many properties are rising into the $200k+ pricing zone
 

is mikehunt there

*** Sin Bin ***
Jan 18, 2007
117
2
18
Like I said before, most of these people don't own anything on these houses nor pay property taxes so why not wait 10 years for the "big" one?

i agree...i owe nothing on my properties in the DR! That was my first thought when considering pricing...i can wait!!!!!
i dont need to sell as i owe nothing....i can wait!!!!!!
if i drop the price 30,40, or 70k what will this achieve (I had to keep in mind that these amounts are infact a great deal of money) And that for many people they will never save these quoted amounts in their life.
im in a good position to hang on for the big one.........fingers crossed

......i'm still waiting!!!!!!!!!!!!!!!!!!!!

...........................................................waiting!!!!!!!!!!!!!



....................................................................................waiting!!!!!!!
 

british bulldog

New member
Jan 21, 2006
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globalmike295,you will be looking for another 200 years if your only going to offer 50% of any asking price!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!11
 

Don Juan

Living Brain Donor
Dec 5, 2003
856
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I have an uncle who's functionally illiterate but has a knack for buying/selling RE, This is what he does:
First, He looks in a map for areas that are desirable ("good" neighbourhoods), then he "scouts" the area for properties by walking around such for days on end 'till he finds one that's distressed in any way, (unfinished, falling apart, etc.).
Then, He'll contact the owner and put in a bid--always much lower than the asking price-- and sit back and wait.
If there's no response and the house is still unsold, he'll talk to the owner and explain all the reasons why the house will never be sold for the asking price. Wait some more.
If still no response, he'll up his bid by 10%.
Eventually, someone caves in and sells.
Of course one must have lots of patience and enough money to accomplish this. This what he does and has made him wealthy. The moron.
 

johne

Silver
Jun 28, 2003
7,090
2,963
113
You might try

i agree...i owe nothing on my properties in the DR! That was my first thought when considering pricing...i can wait!!!!!
i dont need to sell as i owe nothing....i can wait!!!!!!
if i drop the price 30,40, or 70k what will this achieve (I had to keep in mind that these amounts are infact a great deal of money) And that for many people they will never save these quoted amounts in their life.
im in a good position to hang on for the big one.........fingers crossed

......i'm still waiting!!!!!!!!!!!!!!!!!!!!

...........................................................waiting!!!!!!!!!!!!!



....................................................................................waiting!!!!!!!

crossing your toes also. Sometimes this works when you are waiting too long.
As you stated-you have nothing to lose.
Reminder ---- 0+0=0 :>
 

leehall

New member
Oct 24, 2006
195
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I'll tell you what Domicans do when they want to buy a house. They DO not rely on realtors for one and they are not in a hurry.

Mikehunt - Do you know that Century 21, Coldwell and Remax all operate in a market that is predominantly Dominican i.e. Santo Domingo. Checking their sites, the Remax agencies has 73 agents alone. The ex-pat market in the city is not that big......