16 Jun 2021

Buy in haste, repent at leisure

With competition for real estate still strong in most parts of Australia, buyers are being warned not to buy an inferior property just to get a foot on the property ladder.

REBAA president Cate Bakos said in a competitive market like this one, many buyers chose to go for the ‘lowest hanging fruit’ to avoid the competition.

“This is a terrible strategy and often their desperation can give way to impetuousness,” said Ms Bakos.

“Many buyers turn to ‘off-markets’ under the misguided expectation that secret sales are all good but in a seller’s market they’re often just masking bad sins.

“Buyer fatigue can make buyers lazy with their due diligence and in some cases drop the due diligence altogether to cut down on costs if they have lost money on building inspection fees in the past.”

Ms Bakos said she was alarmed by the number of problem properties on the market with inflated prices attracting buyer attention.

She said it was more important now than ever to be cautious and alert to the danger signs.

“In any other market, these properties would either not sell or sell at a seriously discounted rate,” said Ms Bakos.

“Buyers need to remember that a property that’s difficult to sell in a seller’s market will be even more difficult to sell in a buyer’s market.

“Always consider the potential resale value of the property you’re buying and ask yourself if it was a buyer’s market, could I sell this property easily?

“Location is one feature that will never change so if a property is situated in a flight path, is flood affected or located on a main road, then the pool of potential buyers is likely to be limited.”

Ms Bakos warned buyers not to compromise on saleable features and be prepared that if you buy a bargain be prepared to sell for a discount at the other end.

She recommended that properties with significant building issues including subsidence, plumbing issues and presence of asbestos be avoided.

“The cost of removing and repairing these issues can outweigh the ‘bargain’ nature of the deal when the problem is struck and the invoice needs to be paid,” she said.

“Invisible issues such as zoning, restrictive covenants and problem property titles should also be avoided along with unusual or ‘weird’ properties. Anything located on a main road, near train lines or high voltage powerlines and cemeteries should also be carefully considered.

“When capital growth, low-stress and long-term tenure matters, buyers should identify properties with strong mainstream appeal and no lender ‘deal-breakers’ such as unusual zoning or compromised locales.”

So what do you do if you think you’ve bought a lemon?

“Seek legal advice in case there is a way out of the contract,” recommends Ms Bakos. “Alternatively speak to a professional buyer’s agent about remediation or making the best out of the property.”