14 Apr What makes a property a lemon?
What makes a property a lemon? What turns buyers off might be a clue so Jennifer Duke lists the top 10.
Kevin: When you’re looking to buy a home there are probably many reasons why you would and many reasons why you wouldn’t buy a particular property, but what are some of the red flags that agents have seen in the past that have turned buyers off? A very interesting article written following some research by Jennifer Duke from Domain.com.au who joins me.
Jennifer: Hey, how are you going?
Kevin: Good. Thank you very much for your time. I would imagine that structural issues would be right up there at the top, would they?
Jennifer: Yes, definitely. I think one of the top warning signs was wooden retaining walls, because it’s one of those things that can be sort of tricky. With most warning signs, it’s things that you see that look a little bit dodgy that should have you asking more questions. It’s not necessarily a turn-off straight away, but you should definitely be researching into it a little bit more and maybe getting that building and pest inspection.
Kevin: Yes. As well as wooden retaining walls, I think retaining walls generally are a bit of a warning sign, especially if they’re on the boundary because quite often sometimes, they could be either one side of the boundary or the other. The other thing I’ve found too, Jennifer, with these retaining walls is who maintains it? Is it the person on the top side or is it the person on the bottom side?
Jennifer: Definitely. You don’t want to be in a neighborhood dispute when you’ve only just moved in.
Kevin: No, you don’t. That’s right. One of the other important things we talk about or tell sellers is to make sure you de-clutter. I can imagine buyers walking through a very cluttered home and not being able to get a feel for the home.
Jennifer: Definitely. I think that’s one of those things that buyers need to be wary of, that they aren’t distracted by the clutter that’s in there, maybe the old-looking furniture, and that they give the property a proper chance. I think that for sellers, it is important that they maybe consider staging, taking out their really, really, personal items. But at the same time, it could be a good opportunity for a buyer to get in ahead of other purchasers who might not be able to keep their mind off the rubbish that’s there and focus on their own furniture in the place.
Kevin: Yes. That’s a very good point that you make. It could give you a buying opportunity or a buying advantage if you can look past that. I think any good agent’s going to tell someone to make sure they de-clutter, but I’ve seen many houses that aren’t. And you’re right; it can be a very big turn-off for buyers, as well.
Jennifer: Definitely. And it’s hard, as well, because especially with functional rooms where you could get in quite a lot of furniture, some people over-cram them in to show that you can get in that furniture, and it does them a disservice.
Kevin: Yes, exactly. Let’s have a look at units for a moment. I know that sinking funds and levies and so on are always a somewhat contentious issue. You have to ask a lot of questions when you’re buying a unit, don’t you?
Jennifer: Absolutely. One of the main questions you should be asking is whether there’s any money in the sinking fund. If there’s no money in the sinking fund, that’s definitely a warning sign. It means you need to be asking a few more questions. You basically want to know whether or not there’s been any damage that they’ve had to use the sinking fund for, or perhaps it’s been mismanaged and there hasn’t been any money collected in the first place. These are important things to look out for.
Kevin: Yes. While you can get these strata searches done, sometimes it doesn’t hurt to roll your sleeves up and read through them yourself, because they’ll only go back maybe one or two meetings. I’ve had an experience particularly with rain inundation where it might not occur for even several years. We’ve seen this in the Sydney market where houses that were flooded in some really bad rain that didn’t reoccur for quite some years later and therefore it didn’t come up in the minutes, so you really have to go back a fair way to have a look at these minutes.
Jennifer: Definitely. Most of them should be completely available to you. I think that if there aren’t very good minutes in there, it’s a sign that there is potentially some mismanagement happening.
A lot of people get concerned about things that they don’t need to be concerned about. There’s that one point where you’re doing thorough research and there’s another point where you’re doing so much and getting hung up on the tiny details.
Kevin: Yes. One of the other things, I guess, as you’re looking back through those minutes of the meetings, is not to get too hung up on any high strata levies.
Jennifer: Definitely. The interesting thing is that “high” is a relative term, and it depends how much you’re willing to pay and what there is in each building. You might be looking at two different apartments and one of them might have a swimming pool and a gym and all of those sorts of amenities, and if you’re not willing to pay for them, which is [4:09 inaudible] that has fewer amenities, and you should be willing to pay for what’s coming with that building.
At the same time, some high strata levies aren’t necessarily comparable and you should be knowing exactly what you’re paying for, where that money is going, and you should feel free to ask those questions.
Kevin: One of the other things to watch out for, as well, is the history. How focused should we be on that, Jennifer?
Jennifer: One thing that’s very interesting with sales history is whether or not it’s different to the local area. Once you’ve done your research and perhaps you’re looking in a tightly held enclave, if the one property you’re considering is the one that hasn’t been tightly held, you have to be asking why. Is it because the neighbor is a little bit dodgy? Maybe it’s because there are other developments happening that people find out about or there’s something wrong with that particular property. It’s worth knowing whether or not it’s common for that area, or if it’s a red flag.
Kevin: A bad ad, of course, is something I always watch out for. Being in the industry I look for bad ads, bad photos. That shouldn’t be a turn-off, though. It might actually be an opportunity.
Jennifer: Definitely. Everyone says that a bad advertisement doesn’t do any favors for a property, but it does do favors for a buyer because it might turn off other people who think, “Oh, that looks like a dodgy front photo of the house,” and the house might actually not look that bad. If you just do a drive past it might actually be perfect for you and you might get it at a discount.
Kevin: What about that vacant block next door? Goodness only knows what’s going to happen there. You should really find out what can be done to the vacant block so that you don’t run the risk of losing your view or even being overshadowed.
Jennifer: Definitely. A quick call to council does wonders. Sometimes you want to know why that block has been left vacant. Perhaps it’s just a residential home that’s going up next door, but it could be a huge apartment block, and you just need to find out whether or not that’s happening and whether or not it’s possible. Zoning is pretty crucial.
Kevin: Yes. A lot of things around a property can be rectified, of course, but bad street appeal does actually tell you a lot about a property, I think, doesn’t it?
Jennifer: There’s only so much you can really do about the front of a house. You can render, fix up the lawn, and stuff like that, but if it’s just in a bad part of the street, if it just looks a certain way at a certain angle on the block, that’s something you can’t fix. And if it’s something you can’t fix, it’s not something you can make money on later on and it’s going to be a turn-off for future buyers.
Kevin: Yes. I’ve actually seen people make a decision about a property from the car. In other words, if the street appeal is so bad, they won’t even get out of the car to go and have a look at it. That could be holding back a lot of buyers.
Jennifer: Definitely. At the same time, while it’s important to try and get an advantage over those other purchasers, they’re the people who are going to be buying it off you in the future.
Kevin: Yes. Exactly. A bad feel: you can feel it when you walk into a place, can’t you? You can get a vibe about it. We’ve talked about de-cluttering and some, but this is a real thing. How real is it? Should we be concerned?
Jennifer: I think the buying sixth sense and the goosebumps you get when you walk into the place that you think is yours; a part of that is important. Obviously when you walk in, you want to have a feeling like “This is my home,” but at the same time most of that is going to be made when you’ve moved in, when you’ve repainted, when you’ve refurnished. Those things are fixable, and I think being turned off by a bad feel that isn’t really based on anything concrete isn’t necessarily a great idea.
Kevin: I think we have to remember here, Jennifer, that we bring the personality to the house. If it does have a bad feel about it, just think about what you can do to change the feel of that particular property.
Kevin: Jennifer Duke from Domain.com.au and some of the reasons why buyers might be turned off from a property.
Jennifer, thanks for your time.
Jennifer: Thank you so much for having me.