Many sophisticated investors purchase properties without ever having visited them, but a lot can go wrong with this buying strategy.
Blogger: Paul Glossop, director, Pure Property Investment
Let me set the record straight. I have bought properties “site unseen”. Meaning, I have not physically seen the properties myself.
BUT... this is not to say that I have not thoroughly researched sales and vacancy data and spoken to local experts about the property, the street and the town I am buying in, along with using a strong support network of local professionals to vet the individual property I am looking to buy.
With the ever-growing interest in interstate property investing, there is a heightened trend towards investors sourcing properties online and taking the agent's word as gospel that the property presents as it looks in the photos. This is an enormous gamble that can have very costly consequences. Remember that a selling agent only represents the interest of the seller!
If you're buying “site unseen” without any support, you're taking a huge punt.
Let me outline a recent case study to demonstrate the potential downfalls of site unseen properties.
I inspected a property recently in southeast Queensland. I had already negotiated a sale price $17,000 under asking price and had a contract sitting in my inbox ready to go before I physically viewed the property. A new tenant had moved in a month before and the online photos had been taken when the property was vacant. Online, the property looked to be neat and tidy with no work needing to be done. So, upon inspection I was very disappointed to be met with a property that had two old cars on the front lawn, a shipping container, four large dogs on chains and enough junk to fill three houses sitting in the backyard. Not to mention a very embarrassed selling agent.
Needless to say, I did not buy the property for the price I had negotiated, given that it needed quite a bit of money, effort and time to get it to a point that I could find an appropriate tenant. It was not a complete disaster as I am now renegotiating a much lower price on the property and may be able to grab an even greater discount.
The moral of the story is that if I had not inspected the property in person, I would have been potentially bought a property that would have cost me in excess of $10,000 to bring it back to a habitable state, not to mention the issues of kicking out the problematic tenant and having the property vacant for a considerable amount of time while fixing the issues.
My advice? If you are buying “site unseen”, you must have trusted eyes look through the property. Using an accredited buyer's agent who has a strong network of agents, tradies, property managers and building and pest inspectors in the area will ensure you avoid buying a lemon.