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Is interstate investing always a smart move?

For those in expensive east coast cities, looking further afield might be appealing – but investing outside your home state comes with risks.

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Melinda Jennison, president of the Real Estate Buyers Agents Association of Australia, recently warned investors to weigh their options carefully before choosing to invest in another state.

“Having a holistic national view on property investment opportunities can be a smart strategy for investors, but it also requires much more due diligence and experience,” said Jennison.

In 2023, nearly 50 per cent of property investors were considering purchasing outside their home state.

However, Jennison emphasised that a firm understanding of the unique contours of the local market is indispensable when purchasing an investment property. As she noted, a lack of local knowledge can lead to “unknowingly buying an inferior property or overpaying for a second-rate location”.

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“Expert local area knowledge is non-negotiable no matter where you are buying property,” she said.

As well as running the risk of having the wool pulled over your eyes by unscrupulous real estate agents, interstate buyers may not be aware of differences in local processes.

“Buying at auction in Melbourne or Sydney is very different to buying at auction in Brisbane,” said Jennison.

“Price guides are used in Victoria and New South Wales, but they are not permitted in the Sunshine State,” she noted.

“Also, unlike other states, in Queensland a buyer does not hold the first right to negotiate with a seller if a property passes in.”

Private treaty transactions also differ from state to state, putting interstate buyers at a disadvantage.

Jennison stated that “disclosure requirements differ with vendors in some states having an obligation to disclose crucial information about a property to potential buyers prior to a contract being entered into, while in other states that is not the case”.

“Additionally, the contract process also differs between states, so buyers need to gain an understanding of state-based real estate processes to minimise risk,” the REBAA president added.

Jennison did not urge property investors to rule out interstate buying completely; instead, she recommended aspiring interstate buyers to seek out good-quality local advice.

“There is no question that the way we live and work has become much more flexible than ever before, which is part of the reason for the uptick in interstate property investment. But this strategy shouldn’t be attempted without the assistance of expert buyer’s agents,” she said.

“It is also extremely vital that anyone considering working with national buyer’s agents to purchase property interstate ensure they have the relevant real estate licences to operate in the state or territory that they are recommending to you.”

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