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Ben Kingsley Blog post by Ben Kingsley

The Effect of Imperfections on Property Values and Saleability

Now, more than ever since the last property run, buyers are looking for clever ways to buy property at a bargain price. Gone are the days of the buyer’s market where a buyer could simply be swift and decisive to pick up a great buy. Now we need to be well connected with the agents, fast to make a decision after the first inspection, and willing to turn over every single stone out there… particularly the ones which aren’t advertised very well.

Recently I saw a listing in Flemington (Melbourne’s inner north west, just 5km from the city). The listing photograph was a solo exterior picture and the description was quite lacking. Being the eternal optimist, I thought to myself “I HAVE to see this one. It could be a gem.” So I called the agent twice, left messages and persisted until I got through. The property was a shocker. It was everything I was trying to avoid internally….bad floorplan, terrible outlook, ugly communal entryway, poor renovation quality… but I wouldn’t have known if I didn’t bother to see through this badly advertised option. For all the disappointments, there are exciting surprises too. Take one I recently purchased in Essendon. The photos looked OK, the map looked promising and the floorplan seemed fine – but on close inspection of the Section 32, the property had a bad clause which completely disadvantaged the buyer. I decided to pursue it anyway and went through the property with my eternal optimist hat on. “After all” I thought to myself, “It might be a gem, and I MIGHT be able to negotiate out that clause.” It WAS a gem, and I DID negotiate out the clause. The property was newly renovated, had a massive living area, a beautiful outlook off the balcony and a great enclosed carspace on title right by the downstairs door. What’s more, the existing tenant was fantastic and was paying a fair premium. Because of this horrid clause, the vendor had potentially struggled to find a buyer at the right price and as such, the price had been decreased and the vendor was reasonably open to offers.

We secured the property at a great price – a very pleasing result for my investors and all thanks to a bit of strategic thinking and a proactive solicitor on our side.

Only last week, a property sold which I was hoping to bid on for two lovely young first home buyer clients. They had set their hearts on a property which was located directly above Eastlink’s Mullum Mullum tunnel. Not that being ABOVE a tunnel would necessarily be noisy or problematic from a lifestyle point of view, but some of the zoning and overlay conditions did adversely affect the property because the buyers would have been restricted from certain future activity such as earthworks, subdivision and potentially some future building/renovating. They were keen though, in spite of all of these little issues because the discounted price meant that they could buy a house in an otherwise priced-out market at their affordability range. I had to explain that when you buy a bargain based on unmovable attributes, one day you will sell it as a bargain.

Interestingly I had clients who sold their property last year and the same rang true for them. When they purchased eighteen years ago, they bought a gorgeous period deco era bargain which backed onto the eastern freeway on a deep, elevated allotment. When they ultimately went to sell, they suffered the same fate and had to sell a bargain….and it took them many months to find the right, forgiving buyer.

Buying bargains based on imperfections is fine – but do so when you are comforted by one or both of the following;

  • the imperfection is MOVEABLE, (ie. clauses, conditions, or attributes you can CHANGE or eliminate), or
  • buy it as a HOME which you will LOVE if you can easily live with it’s imperfection(s). When it’s yours and you love it – the rest is irrelevant. Who cares what the other buyers think? But remember – one day you will face the same challenges when you go to sell.
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