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Put down the fancy brochure and get your facts straight before signing on the dotted line.
Blogger: Julie Cumming, director, Hatch Property
Have you gone into a display suite to look at an exciting new release of an owner occupier focused development and been swept away by the energy and excitement generated by the staff and other present buyers?
A client, let’s calls him Joe, recently recounted his experience, reminding me how important it is to know to ask the right questions and then drill down until you get the real answers.
This boutique development was strata titled, comprising 34 one, two & three bed villas and town homes. 85 per cent sold the previous week at the initial launch, and only a limited number remained. This generates a feeling of urgency and also a sense of power in the sales people. Experience has shown me that agents selling something that is not as easy to find buyers for, are often far more accommodating as they try to engage your interest. When something has had a better than anticipated take-up in a very short space of time, the focus often shifts.
Joe was keen on a 3 bed for the family to live in and also considered a 2 bed as an investment option.
In discussions with the marketing agent, he asked about the body corporate fees. He was aware, while there was no lift, swimming pool or community facilities other than community gardens, it was important to understand the ongoing holding costs as this affected the family lifestyle.
He was told “about $2,800” and shown the plans and the display suite which featured a bathroom and kitchen fit out.
Joe was told there would be city views from the rooftop area, an area which would be on the title of the 3 bed town home. He questioned if it was possible to have some type of roof on that area for protection from the sun, and the agent said “as it would be on his title she did not see why not.”
I would expect that if you do anything structurally to the exterior of the building you will need body corporate approval. Roof top shade could be a significant factor that made the roof top area either usable or not usable for a big part of the year, so very relevant to know exactly what processors would be required to go through to establish that.
It’s always difficult to get a true understanding of the views available at the end of a construction and I prefer to take the position that you generally never own a view, just enjoy it while you have it. When making your purchasing decision, consider if the view was not there as promised, how would you feel about the purchase?
Joe enquired if they had some flexibility about the configuration of the kitchen, and was assured that once the $2,000 deposit was made to take the property off the market, they could certainly have discussions. While there was an upgrade to Miele available they preferred a 900mm wide oven to the 600mm wide option included. These are all important details, particularly on high price property. Knowing the detail including the costs for any variations, which can be extreme, and having it detailed in the contract is essential, as a verbal promise means nothing.
Joe then asked the body corporate fees be written on the plans they could take home. On consulting the schedule, the sales agent apologised as they were in fact $3,800. Joe then asked the rates and water charges be noted and the end tally for the 3 bed came to just under $8,000. Significantly more than the $2,800 originally indicated. Holding costs can make or break a purchase for many. Body corporate fees, rates, land tax all need to be considered when you are considering any purchase, investment or otherwise.
Joe also requested a copy of the body corporate budget to see why the fees were high, and was told there would not be one yet. It would be produced at the first meeting. Interesting to know how they calculated the fees if there was no budget!
The budget can identify where the major expenses in a complex are anticipated to occur and give insight and info that is valuable. I once learnt through reading a BC budget that there was an onsite manager, something that the sales agent had never been aware of. I always recommend buyers understand what makes up the body corporate fees, so they better appreciate what impact any changes may have.
I have mentioned a few areas that if not followed through, drilled down and clarified, could lead to buying decisions being made on incorrect facts, and the buyers living with the consequences that follow.
Buying property is seemingly simple yet fraught with traps and risk. It is often hard to know where to get advice you can trust. Generally agents are not regarded as trustworthy and until we lift the industry tolerance of substandard behaviours and provide relevant valuable training, things are unlikely to improve.
Stay alert, look through the spin and illusion and surround yourself with trusted professionals to assist you on your property journey.