Getting to know your apartment/ property before signing any Contract of Sale can save your money and time.
Even if you have a finance and building inspection clause you may have a financial downside if you withdraw from the contract.
These days you can find out a lot about a property and the local areas without ever setting foot outside your front door.
Originally, I started off with my own excel file and captured property addresses, the land area, number of bedrooms and bathrooms, when the property was advertised and revised listing prices. From this information I worked out my own estimated land value, and building value by understanding the different streets and properties I was looking at.
These days it is easier to access indicative property valuations, that are fairly realistic.
Of course, there are always anomalies as a property can be unique, or missed a price review.
But generally, the range indicated is fairly reasonable unless the market is going through a sudden correction.
(At the moment in the Covid 19 environment it is fair to say some bank property valuations are coming in lower than expected)
But it is not just about the listing price versus what you are prepared to pay when considering a property.
There are many gems of information you can find out about the property if you are prepared to put in a little bit of extra effort
My strategy to understanding a property:
Research the price range for the property.
Identify its “land value” compared to total sales price.
Council rate notices and land tax notices can help with this – which are usually included in the Contract of Sale if applicable. So you can see a very conservative land valuation and improved valuation.
This means you can identify:
· Land value
· Building value
· “Other” value.
If the “other value” makes up a significant proportion of the purchase price, you may want to consider other properties. The “other” may not exist in the future, or value less in the future, i.e. it may not contribute to growth.
Search the property address online and look for:
Aerial and street views, this helps you :
see the property from overhead and see what neighbouring properties are like and what is around the property and
identify the type of roof the property has and its state of repair.
gain an understanding if there is anything located nearby that may impact on the future value of the property
see how neighbouring properties are kept. Are they in good repair?
Is there a body of water nearby and uphill from the property
Can you see and “chatter” about the street or nearby streets in facebook or community groups pages.
For example: a development plan nearby. This may impact on parking, or noise later at night
look at recent sales and rental history for that property, or nearby properties
If you are a member of the community facebook page you may get a good insight into the issues in certain streets
Rental History or Sale History
If the property or nearby property has lots of sales or ads for rent, ask yourself is this a pattern with certain units in the complex.
Could it be location and noise, types of building occupants, building issues in general?
There may be simple explanations: It could just be a building that attracts lots of transient types such as oversea or interstate temporary occupants. However, is this the type of property you want to buy in?
Search the Contract of Sale for :
GST and if it applies to the purchase
Some sales have GST, as this is an extra cost to you be mindful and ask early in the process.
Identify the property holding costs
You should be able to identify
· council rates
· water rates
· Strata Fees
· Land Tax - and what is the noted land value. Is it well under the purchase price? Or close to purchase price.
· Utilities Costs Although you usage may not be the same, if provides an indication
Go to the property at different times of the day and evening
If you think this is silly, think about what happens if:
· you move in and find out it is party central and you need your sleep?
· There is a great big street light or bill board aiming into a bedroom window.
· The apartment backs onto main doorways or elevator shafts will you hear the main door slam shut each time. Do you hear the elevator going up and down and the voices as people arrive and depart?
Things to consider:
· Access to transport, shops, childcare, and school etc
· What type of people are around and entering the building?
· What type of cars are in the carpark, are they in good repair?
· What are the neighbours like?
· What businesses are nearby and the type of clientele they attract
· Can you get in and out of the car spaces easily and access the building safely (imagine if you find out afterwards your car does not fit in the garage, or at night you are negotiating dark pathways and corridors)
Get a pest and building reports
If you have a clear report then at least you know what the potential issues are and how much it may cost you in the future.
Building reports can identify leaking showers and basins, termites, or other structural issues that may costs you money in the future
You may still decide to purchase the property, but at least you know all the issues and can perhaps negotiate a lower price due to the information, or have the issues rectified as part of the Contract of Sale conditions.
A little bit of extra time and expense now could save you lots of heartache in the future.
The old saying of “Let the buyer beware” holds very true for property purchases.
Often the reports identify issues the current owner is not even aware of. Examples include
· a slow leak in the linen cupboard behind a shower.
· or over time building regulations have altered and perhaps it is no longer compliant in the areas of pool fencing or balustrade and the height needs to be increased.
Copies of the Minutes for the Strata/ Body Corporate (if applicable)
Most purchasers don’t read theses minutes even though minutes of a recent meeting will be included in the Contract of Sale (if you are really keen you can conduct a body corporate records search your solicitor can assist you with this or google strata repots in your state to find your local service provider this will cover a much longer period of time)
I find the minutes paint a realistic picture of the building and all it entails at that point in time.
If you can find the time to read those extra few pages it could well save you frustration in the future.
· Is there a special levy expected or currently in place to raise funds for repairs?
· What percentage of owners attend the body corporate meetings?
· Are there any common area defects noted, complaints of smells in common hallways, cracks in walkways, leaking bathrooms or roofs?
· Are there issues with owners not keeping up to date with strata levies?
· Are there complaints about noise or behaviour of certain occupants?
· Who is doing the building cleaning contractor, can this be changed in the future? Are there cleaning issues in general?
You may find using a professional to highlight the key strata issues for your money well spent.