4 Things To Check When Buying A Property
So you’ve found the property of your dreams. Congrats! But that's only half of it. Now you need to dot your i’s, cross your t’s and make sure you have done your due diligence.
To ensure your investment is going to be as safe as… houses!
There are many important points to cover when running due diligence on a property pre purchase, all of which we go through in detail with our clients of course.
Here are a few keys points to get you started:
Planning Applications and Zoning
Understanding this can save a lot of money and frustration in the long run and is often overlooked by buyers. Whilst your conveyancer may flag unusual zoning on the property you’re looking to purchase, they will not look into or give advice on zoning in the surrounding area, and particularly not in terms of current or past planning applications, which can dramatically affect the liveability of the property moving forward.
Check out https://www.planningalerts.org.au/ to look into nearby planning applications and then call the local council to ask about property you have concern for and further details on any plans or permits that may be sitting with them.
Then check the zoning in the surrounding area. Understanding the implications of different zoning is key to avoiding a life living in the shadow of a neighbouring skyscraper! It may look like a quiet residential street to you.. But unsuspecting houses can be in a ‘growth zone’ which means they may be able to develop the area in ways that could negatively impact the value of your property let alone your quiet enjoyment and liveability! Check zoning here - https://mapshare.vic.gov.au/vicplan/
2. The Contract
Have a professional review the contract of sale and section 32. You’d be shocked at the number of times we’ve seen apartments sold to buyers that haven’t had the contract checked, only to find out it’s not on a standard title structure but instead ‘company share’ - which dramatically affects what the bank will lend!!
There may be covenants on the land which restrict what you can do with the property, for example you may not be allowed to build a fence, or perhaps it has a single dwelling covenant meaning you cannot subdivide the land.
There can be easements on the property, or caveats or restrictive overlays… and these can all impact the value of the property.
If you purchase a townhouse or unit which is part of a body corporate, it is important you get the AGM minutes checked.
Lastly a professional conveyancer/property lawyer or solicitor will run their eyes over the ‘special conditions’ at the front of the contract. Mostly these are relatively standard, but sometimes the vendor's conveyancer will have inserted conditions which amends the general conditions! Contract reviews, always and forever ever.
3. Building & Pest Inspection
This should be a non negotiable irrespective of how old the property is. We’ve seen new properties come back with more issues than the old ones! And yes, you may have the builders' warranty insurance if it's less than 7 years old, but it's good to be aware of the amount of ‘defects’ before even entering into a contract of sale.
It's important to note these reports don't check electrical works as they are not electricians, and if they can't get access under the house, they won't be able to flag any restumping or subfloor issues with 100% confidence.. But they have a range of tools which can flag things the naked eye can't see.
Be warned. These reports usually come back with a range of major and minor defects. Some will be deal breakers, but most of it simply gives you a maintenance plan for the first few years of ownership.
You will see words such as, ‘asbestos’, ‘leaking’, ‘moisture’, ‘drainage issues’ and many more which may scare you. Make sure you take the time to talk to the inspector and understand if these are out of the norm for a property of that age. It's good to have some context around these often lengthy reports.
4. Recent Sales
Lastly, work out how much the property is worth - by doing your own research!
The statement of information on the advertising can be a starting point, but you need to work out the market value to the best of your ability.
The best way to do this is to jump on the sold section of realestate.com.au or domain.com.au and look up comparable properties and see what they sold for. Can't see a sold price? Call the agent and ask them, tell them you are doing some preliminary research on values in the area. You can go one step further and ask them if they have anything similar coming up and you might just snag yourself an off market property!
As we mentioned, these 4 points are really the tip of the iceberg.. So if you want to make sure you're covering all bases when buying your next piece of Melbourne real estate.. You know who to call!