I'm looking into investing into a specific apartment. It hasn't been publicly listed as for sale yet, I just happen to know the current owner. The owner asked me to do my own research and make him an offer. The owner has a number in mind, but for now he wishes to keep that to himself.
I got two different local realtors to look the apartment up and visit it on-sight with me, to tell me how much they'd value the apartment at, so that I could look into making an offer if it would make sense as a function of loan-payments, maintenance, bills, rental income and so fourth.
I made it clear that I wanted to know the market-value, not how low I should necessarily offer if I were buying or how high I should sell if I were selling. Both ended up knowing that I were considering buying but I focused on getting to know the market value of the apartment. They happened to give me offer suggestions as-well which were in their recommended market-value ranges anyway.
Realtor A said the apartment should be valued at $162k - 170.6k and that I should make an offer for the lower amount and not accept anything above the upper limit of this range.
Realtor B said the apartment should be valued at $203k - 211.3k.
Both realtors are used to buying and selling houses and apartments in the area. Neither one has any connection to the seller. After the evaluation I told realtor B about Realtor's A evaluation and while he didn't exactly agree with it he did say that I could attempt to make initial offers at Realtor's A range (upper-limit) and see how the seller responds.
The (obvious?) problem
I'm not used to purchasing apartments or evaluating them. How do you go around this situation when two realtors come down to such a vastly different outcome, and they were both evaluating from the same perspective? Is this perhaps not that big of a gap as I'm seeing it being?
I understand that I can use some real estate investing formulas (such as the 1% rule) to estimate which price I should be looking for, knowing that the monthly rent from a tenant(s) would be in the range of $1381 - $1585 but that doesn't quite tell me how to address this situation. Although I could perhaps use it as a third range and then just take the median value and determine it as the market price.
How do I (and real-estate investors and people considering buying in general) proceed in coming down to a conclusion without attempting to low-ball the seller or aim to high, with such different ranges in hand? Should one look at the medians, start at the bottom, or get a third opinion? I understand you would not start offering at the exact market-price, but at the bottom, but that bottom (or the ceiling for that matter) is not very clear to me.
I'm from Iceland and I'm quite sure that Realtors take care of all price evaluations and decide the recommended listings.