Caveat Emptor, Buyer Beware
GOING, GOING, NOT GONE, (Buyer Beware)
Auction statistics for last weekend from the REIV (Real Estate Institute of Victoria) declared a Clearance rate of 80% with 775 auctions reported and total sales volume of $810 million – that’s a lot of Stamp Duty into the State Government coffers.
152 of auctions reported were passed in, 434 sold at auction, 186 sold prior to auction, 3 were withdrawn and 22 postponed. These stats may change before the end of the week as agents report their results.
As I venture around the suburbs in the hunt for the perfect home for a client, I am seeing houses passed in and other homes sold in excess of the price range.
This seems contrary however, those passed in (that I saw) require repair, not updating necessarily but repair. Leaking roofs leaving mould in a bedroom ceiling, unkempt gardens that spike a buyer as they walk into the home, dodgy steps without handrails, and loose decking boards. First home buyers are reluctant to take on repair or renovation work one agent tells me.
I have clients that are first home buyers and they are definitely prepared to take on renovations and repairs, in fact, that’s what they are seeking. They understand that a good, solid home, even if it’s covered in 1960s or 1970s wallpaper will give them a good base to add value to. Visible repairs such as the step and handrail, and the wonky deck are okay too. They don’t like cheap renovations or poorly done renovations because this usually means that a qualified Tradie hasn’t done the work and it’s uncertain what they will uncover.
The auction that I attended was contested with 5 bidders. 3 dropped out before the Reserve was reached and 2 only began when the home was declared on the market. The home ended up selling $55,000 over the Reserve which was $30,000 over the top of the quoted range. It was a great house, nicely renovated, appealed to a number of buyers.
A much loved home in original condition vs fully renovated vs poorly and unfinished renovation. Which would you take on?
Personally, I want to do my own renovation. I like homes that have been around for some decades with all their flaws visible. I can handle a new kitchen and bathrooms, painting and new carpet – in fact, I prefer it. Would I take on the home in original condition with an excess of wallpaper so dated it has achieved legend status? Probably. The owners haven’t mucked around with self extensions and renovations.
Caveat Emptor, Buyer Beware, Think Safety, Think of your Budget too
Another home viewed on the weekend, had a few different floor levels, and rooms that had been opened up to make one huge room. It had interesting padded wardrobe exteriors too. This one I would run away from unless it was super cheap and my building inspector checked it out thoroughly.
Walls that have been removed are scary – there were no support beams at all and it looked as though it was not a recent thing. The big step done to the kitchen was also a worry. A dated renovation like this one often is owner done. Owner done, without permits or building know how = scary. Buying a home like this one requires a great deal of caution, think of your safety first – what is behind those walls or what was behind those walls and consider the possible cost to fix.
Some homes are worthy of an update and some are not, some are move in ready and some are demolition ready. Buyers need to consider their options and budgets carefully. A major renovation requiring beams and floor levels could be expensive, and that’s before you update anything. Kitchens, bathrooms, paint and carpet look simple in comparison.
Caveat Emptor, Buyer beware, buyer caution is required and full knowledge of your budget, tenure in the home and what needs to be done to give you a solid base to work from.
Discussing firmly and at length with clients is vital, not an emotional buy but a buy with a well thought out strategy, budget and knowing when to walk (or run) away. Having experience with real estate, with houses and having the right experts to consult with is important which is why inexperienced buyers love working with me.
Buying the wrong home, the one you really should have run away from screaming, can be financially crippling (see The Money Pit, a 1980s movie), Buyer Beware, the benefit of hindsight!
