Few questions get housing honchos hotter under the collar than ‘should I buy sight unseen?’
Some experts warn it is financial ruin waiting to happen. Others slam that view as irrational, stressing sensible property investment should only be based only on hard, cold numbers.
Here are some key points on the perks and pitfalls, of buying real estate without laying eyes on it. Unquestionably, the best way to make any decision is by educating yourself – read widely, consult professionals – then make an informed decision based on your individual circumstances and goals.
Top reasons to buy sight unseen
• Emotion is unlikely to drive the buying decision – ‘falling in love’ with bricks and mortar and getting emotionally attached can be fraught if buying an investment property because buyers are more likely to ignore or miss the property’s shortcomings (IE limited rental pool, structural faults, weak capital value growth figures etc).
• Figures, figures, and nothing but the figures – as a remote buyer you can only judge shortlisted properties based on their raw data – previous capital value growth, expected rental return per week, yield, land size and a virtual location on a map. If the numbers stack up, they cannot lie to you.
• Save money by doing initial inspections online – thanks to a feast of digital tools a buyer on one side of Australia can walk through a sale property on its other side without having to physically walk through it! This means monster savings of money, time and energy and can help buyers compile a shortlist, or even find ‘the one’, without even leaving their sofas.
Top reasons not to buy sight unseen
• It is high risk if you do not know the area – spending hundreds of thousands of dollars can make (or break) new investors. Get it wrong and you may never recover. In my experience, the only way to buy smart without actually seeing the property is if the purchaser has past history in the area of the purchase and can visualise the suburb, the ‘good streets’, even the good sides of the good streets.
• You cannot see what’s next door – those clever online marketing videos and glossy still photos make the property look amazing, don’t they? Bet they don’t reveal the sewerage plant on the boundary, or power lines cutting your ‘water view’? Buying sight unseen should not be viewed as ‘the easy option’. To sleep at night, make sure you do additional due diligence to double check who lives/trades next to you and how it impacts on your property.
What else can you do if buying remotely?
• Ask a local agent to tell you more about the street/suburb you are considering buying in;
• Scrutinise the figures and your personal buying criteria;
• Contact local council in the area to find out what developments are approved nearby in case they will impact your prospective investment;
• Do you have a trust friend or relative who can inspect on your behalf?
• Get a building and/or pest inspection report as part of your pre-purchase due diligence.