I’ve recently been toying with the idea of buying a property in another state. Diversification of my portfolio is one reason that I want to look further afield than my home state, and another is that I think there’s good growth to be seen elsewhere.
BY VANESSA DE GROOT
My dilemma, however, is how to go about it. I really don’t feel comfortable buying a property that I haven’t seen, but let’s be honest, I can’t fly to another destination every time I find a property that looks worthwhile to check it out.
That could get very time consuming and expensive. I’ve thought about engaging the services of a buyers agent, but in the area I’m thinking about buying in there doesn’t seem to be many around. So should I just rely on doing my own research and the information I can find on the property listing and perhaps buy sight unseen?
One of my concerns about doing this is that the information on the listing might only portray the positive elements of the property and not the potential drawbacks. But in particular, I also worry about the accuracy of the information in the listing – and I want to hear from all the readers out there about their thoughts on this.
My concern stems from real estate listings I’ve seen of units in a complex that I’m an owner in. Just this week I saw one of the units up for rent and the blurb for the property started with “This two-year old two-bedroom unit…”
I was quite shocked by this, as the unit is actually nearly five years old, more than twice the age that this advertisement is claiming!
And that’s not the first time I’ve seen that sort of thing – I’ve seen it in several ‘for sale’ and ‘for rent’ ads for units in the complex. From these ads it seems that my unit is actually the oldest in the complex by far!
This makes me wonder how often these inaccuracies happen in other advertisements, but I’m not able to identify it because I have no prior knowledge about the property. What else are they claiming to be true that isn’t? Now, to all the real estate agents and property managers out there, please don’t get defensive, because I’m not laying blame on anyone for the inaccuracies in these ads – for all I know, it’s the property owner that’s providing inaccurate (or false) details and the agents are simply using what they’ve been given. But then again, it may be real estate professionals embellishing to attract interest in the property.
I do know, however, that when I first put my unit in that complex up for rent, the property manager sent me the advertisement before it went up on the internet and I went through it carefully to make sure it was all accurate. In fact, I recall that she’d said there were fans in all rooms and I asked her to take that out because it wasn’t the case at all.
And don’t even get me started on the spelling mistakes I find on real estate listings! I know property managers and agents aren’t paid for their spelling skills, but would a quick spell check go astray? I think not. Accurate spelling and grammar makes you look 100 times more professional. I believe it’s very important.
Do these little inaccuracies not really matter, I wonder? Am I just pedantic? Perhaps being a journalist has made me much more sensitive to spelling and grammar mistakes, and inaccuracies? (And yes, for all those thinking journalists don’t care about accuracy, this one at least does!)
What are your thoughts on this matter? Has anyone noticed inaccuracies – big or small – in real estate listings? And if so, do you think it really matters, or is it fairly irrelevant in the grand scheme of things?
Vanessa De Groot is the deputy editor of Australian Property Investor magazine, www.apimagazine.com.au
Vanessa, You pose an interesting dilemma. Let’s say you come across a property that appears to be a great buy but for some reason you can’t inspect it personally. It could be that the property is out of town or that the property is in your town but you’re away on business. Either way, you can’t get to it. But, the numbers stack up. It looks like the deal you’ve been waiting for all these years. What do you do? Do you just drop it and forget about it? Or do you investigate further? What happens if you investigate further and it just keeps coming across as a solid deal? Do you just tell yourself, “I’ve never bought sight unseen, I’m not going to start now?” Can you trust everything written in the ad? I doubt it. But, is that going to stop you from continuing the hunt? Is there anything stopping you from hiring a local building inspection service and having them check out the building from top to bottom, inside out? Have them count the ceiling fans … make sure there’s one in every room like the ad says? I just feel it would be a shame to miss out on a good buy just because you couldn’t physically visit the property. And, remember, many times the window of opportunity for a good purchase only opens for a short time … other investors are out there hunting for the good deals too! Keep in mind, your contract can allow time for you to organize finance and inspections. This gives you a way to retreat if the deal doesn’t stack up as you first thought.
Comment by Dave Ives — January 19, 2012 @ 6:54 pm
Vanessa this is EXACTLY the same situation I’m in! I want to buy in another state (I live in NSW) and chose WA because i’ve been there many times, Perth units are still cheaper than Sydney’s, and I am still hesitant to buy in SA because I’m not an experienced investor to buy in any state, as good as SA’s prospects seem. Anyhow, I came into contact with a fantastic RE agent in Perth, gave her specific notes on what I do and don’t want in purchasing a property, and she’s been fantastic in helping me out, doing all the research for me, keeps in excellent contact, letting me know about all the properties that meet my criteria. I recently bid three times on a property in Perth, but found out the listing agent had told a few porkies about the rental income and the price the buyer wanted. Needless to say I’ve now given up on that property. Still looking in WA though.
Every time I have an urge to take a trip to see a property I’m interested in, I remember reading this by the wise and wonderful Margaret Lomas “Taking a trip to ‘view’ a potential property will only satisfy your emotional needs – and this often results in buying what you like physically, rather than what’s right financially.” Also, I’m not a building inspector or a pest inspector, how will I know if a property will be structurally sound or pest-ridden anyway?
Good luck!
Comment by Emely108 — January 24, 2012 @ 9:24 pm
I’m not so sure I agree with the words “taking a trip to view a potential property will only satisfy your emotional needs’ – checking out the feel, suburb, and general surrounds of a location is something you can only experience physically. You would be foolish not to employ a buyers agent to help you with the process. The market moves at a different pace in Perth, there’s a lot of re-zoning going taking place in the area and this could affect the potential of some properties your inspecting and the future demographic that you will sell/lease to. Real estate laws differ in every state – as do the common real estate practices of that state. For example – the market in the inner suburbs of Melbourne can move at the speed of light. As such placing a contract with any ‘special conditions’ in place is a challenge in itself. However in Perth it’s a common practice to place spacial conditions on the contract. Not only this – you don’t get a cooling off period so due diligence is essential.
Purchasing real estate is fraught with danger unless you’re experienced in the processes. Finally – if you do employ a buyers agent to act on your behalf, don’t hesitate to go and view the property. This is your investment, your money, your future.
Comment by Catherine Cashmore — January 25, 2012 @ 11:42 am
Vanessa, if I was you I would take five steps as buying investment property involves a lot of money!
Step 1: Do your own research (local newspaper, books, internet, magazines (no need to ask which one!), detailed reports from groups that don’t have a vested interest in “pumping up” an area)
Step 2: Visit the area(s) you wish to purchase in (speak to locals, shopkeepers, local council town planners, real estate agents)
Step 3: Seek quality advice (you might have to pay for it)
Step 4: If you feel confident, buy it yourself
Step 5: If you don’t feel confident, find a reputable buyers’ agent
Good Luck!
Comment by Peter Koulizos — January 29, 2012 @ 10:14 am
A lot of infirior agents tend to manipulate listings to generate easy leads. This normally happens by under pricing a property or something like “Offers over $350k” when in reality property asking price is high 3′s to early 4′s.
My advice would be to speak with a few local agents and ask their opinion on what they think your chosen property is worth based on most recent sales.
Comment by Peter Z — July 9, 2012 @ 7:08 pm