19 May Is it wise to buy a property sight unseen? Michael Yardney
Some people say that you can actually buy property sight unseen. Of course, with things like the Internet, it’s made it very, very easy for us to get a lot of information right at our feet, so we can actually do as much due diligence as we need to do. But really, is it wise to buy sight unseen? In today’s show we talk with Michael Yardney, from Metropole Property Strategists.
Kevin: From time to time, I have heard some people say that you can actually buy property sight unseen. Of course, with things like the Internet, it’s made it very, very easy for us to get a lot of information right at our feet, so we can actually do as much due diligence as we need to do. But really, is it wise to buy sight unseen? You can have people on the ground for you, but I sometimes really like to see it myself.
Michael Yardney is from Metropole Property Strategists. Michael, I’d just like your opinion on this. Is it something you would do?
Michael: Kevin, I would never do that. Now, that doesn’t mean that I would not buy something if I had somebody I trust looking after it for me. But I guess what I’m saying is a bit different to what some people recommend.
I think buying a property sight unseen – which is touted as good advice because you take the emotions out – is really a recipe for disaster. Advocates of this strategy say, “It opens up your investment search to locations out of your backyard,” and I accept the fact that you should be doing that, and as they say, “It takes the emotions out.”
The trouble is that properties vary so much. It’s not like buying shares. Even from one side of the street to the other, prices can vary and properties can vary, so no, I wouldn’t be buying sight unseen.
Kevin: Michael, You alerted to something there about having a trusted advisor on the ground. Is that a solution if it’s just not practical for me to get there?
Michael: Yes, it is, Kevin. Let me give you an example. I remember looking, a couple of years ago, at a property. I did my virtual tours on the Internet and I downloaded all the statistics to the area. I did the Street View because that’s so easy now, and I looked at all the photos. But then when I actually got out to look at the property itself, right next door was an electrical substation – right physically next door. If you actually could look up in the air, which you couldn’t on the virtual tours, there were high-tension power cables there, so definitely this devalued the property I was looking at.
Similarly, I know properties in Sydney where if you’re on the north side of the street, you have magnificent views of the city water, the harbor, and the bridge. If you’re on the south side of the street, you have magnificent views of the houses on the north side of the street that have views of the harbor and the bridge. There’s a 25% difference in price from one side of the street to the other, and that’s why you need somebody with a level of perspective on the ground.
Kevin: What always troubles me, Michael, is that you and I talk all the time about the amount of education we put into selection of a property and educating ourselves, but I just don’t know that I’d be all that confident that the person I’m trusting is as educated as me. Maybe I’m a bit of a control freak. I don’t know.
Michael: So am I, Kevin. It is important to work out who you trust. That’s why at Metropole, for example, we have our own team of area experts, and even in Melbourne, we have four buyer’s agents – in Sydney, four, and in Brisbane, three – because they don’t even know the whole of Melbourne.
You need somebody who has a level of perspective, and, Kevin, that’s something that you can’t put in a spreadsheet and you can’t download from the Internet. Somebody who can walk down that street and know what the history has been, know what the school zonings are, understand what else is coming up in the market in the future years, and why one property is more attractive to owner occupiers and tenants from the other.
Kevin: Would that apply also if I’m working with a buyer’s agent, Michael, that I shouldn’t just blindly follow what the buyer’s agent says?
Michael: The buyer’s agent has to be an area expert and most of them are. Many of them are experienced estate agents who’ve now gone to help buyers, and that’s fine. What I’m finding uncomfortable at the moment is Melbourne buyer’s agents flying up to Brisbane, seeing 25 properties in a day, putting an offer on three and thinking they know the market.
Sure. I think there are a lot of very proficient, very experienced buyer’s agents, but get somebody who has on-the-ground knowledge, and in my mind, somebody who’s a property investor themselves, Kevin.
Kevin: Always good talking to you. Michael Yardney from Metropole Property Strategists.
Thanks for your time, mate.
Michael: My pleasure, Kevin.