What to consider when buying sight unseen?

Discussion in 'The Buying/Selling Process' started by MarkA, 17th Aug, 2014.

  1. MarkA

    MarkA Member

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    I'm looking to put an offer on 2 bed unit in Brisbane but can't physically get there to see it. I know the area well and it looks to be a good buy.

    What do I need to consider before making an offer? If there are any structural damage this would come up in the building inspection yes?
     
  2. Terry_w

    Terry_w Member

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    what could be next door..
     
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  3. Peter_Tersteeg

    Peter_Tersteeg Finance broker/strategist

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    Consider contacting a buyers agent to perform a simple pre-purchase inspection report for you. It's nowhere near their full service but it will give you a very good opinion on the property and its value.
     
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  4. danwatto

    danwatto and TT

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    Hi Mark,

    I've been going through the process of buying interstate, and initially flew there for a busy weekend of 11 open houses.

    After a long time of negotiating I got two but first one fell through due to bad building inspection (termites), and second one fell through due to vendor changing his mind.

    So I continued sight unseen to secure something to buy - which I think is ok but I'm using these methods to mitigate the risk:
    1. A property manager who will inspect properties for me;
    2. A building inspector I get in there once the offer is accepted, either before signing or during cooling off period
    3. Solicitor to review contracts and advise on searches and other due diligence since I'm not familiar with the area.

    Before spending money on #2 and #3, I get the offer accepted first to make sure I can get my rental yield and good price.

    What I have found most useful is #1 - property manager. I was very lucky to find a PM who is very knowledgeable about investment strategy, what is a good buy, which areas have good yield, and which properties can be improved down the line. He even drove me to all the opens on the weekend I went!

    I suggest seek out a good PM using the forum searches, and talk to a few on the phone find one that is happen to attend open inspections for you and recommend areas of high rental demand that you can source tenants easily.

    While some say to buy next door, next door is not always ripe for buying and for me is a sellers market, so it can be worthwhile to go further afield.

    ps it seems you have a focus on a single property.
    It might be worth thinking about considering several, and make low offers subject to building inspection and finance. That way if you miss out, it's ok as there are others you are looking at.
    Don't be afraid to put in an offer sight unseen with conditions, you can always pull out if the inspection comes back bad or you don't get finance. Just make sure the price is right!
     
  5. D.T.

    D.T. Property Lookerafterer

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    3 of my places were bought unseen. Ive since driven past but am still yet to go inside.

    What do you actually need to see? How would that alter your buy decision? IMO they had tenants in them so that makes then habitable by default. And building inspection didn't point out anything structurally wrong. So pull the trigger, dont be a sissy :)
     
  6. Jacque

    Jacque Buyers Agent and Bookworm

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    I'd buy sight unseen but then I know the information to seek, the questions to ask and I subscribe and have access to the right databases. If a novice, be very careful and ideally seek professional assistance or fly to see it before going unconditional.
     
  7. Spades

    Spades Banned

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    Hi MarkA,

    You also take into the consideration the ratio of owners to tenants.

    Also 1 bad tenant can upset the apple cart,yeah been there-fun & games.
     
  8. knightm

    knightm Member

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    Like if the local bike gang has moved in and set up a meth lab. Google earth never does that justice.
     
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  9. zimby

    zimby Member

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    Maybe Depends on what you are spending on the property, minor issues with properties on the low end of the scale can add up.
    Seen some shocking ones that would pass building/pest, but require work to keep them habitable.
     
  10. Eagleman

    Eagleman Member

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    Long time reader, first time poster.
    I have only ever seen 1 over the years.
    DD - numbers, photos, opinion of separate property agent, standard building and pest, check with council just to name a few

    Eagleman
     
  11. Neptune

    Neptune Member

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    I bought sight unseen in Brisbane earlier this year but had been up there earlier to check out some suburbs first so I had an idea of what things were like. I used a buyer's agent to do a pre-purchase inspection which was well worth the money and got a great report as part of the service and also relied on the building inspection report. I'll PM you the agents details.
     
  12. ToGetProperty

    ToGetProperty Member

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    Cannot comment on unit/apartment as I only have one apartment with very limited knowledge on this.

    For buying house, I did those things:

    1. Research on google map, onthehouse, RE website to get information about this property and suburb's history.

    For me, by checking the google map, I can have about 80% confidence of being good or bad buy. Every often, it is not much to see inside the house and can spend a little bit money to make it over. This apples to all my local purchases as well.

    2. Engage a quality management agent to have an inspection for me after the offer is accepted. Make sure to ask if they would like to buy for themselves. Ask about the local information and make sure it is far away from commission houses.

    3. Move to next deal if it desn't work out.
     
  13. darrelj

    darrelj Member

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    Property Management Authority Form

    Since I see you online- would you be able to assist me on this please.

    What is meant by "Security Deposit" that's mentioned in a Property Management Authority form? The form I am looking at says one calendar months rent.

    Is this referring to the rental bond that a tenant has to make or something different?
     
  14. tpepper

    tpepper Member

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    Great thread - I recently signed up to investar and it has definitely increased the amount of deals that I have found, I was just looking on the forum for some encouragement (and it was worded more honestly above "to stop being a sissy") to buy sight unseen.

    there is definitely more and more online tools you can use coming online
    I recently came across "atlas id" I was going to post the link here but for some reason the link isn't working,But this website tells you income levels, unemployment levels, mortgage stress at a street level and heaps of other info.

    I understand the value of buyers agents but I feel like I can find good deals on the internet myself and a few buyers agents fees at the the end of the day is another property deposit.

    Are property managers (PMs) willing to go out and look at a property for you? How do you get PMs to do this for you?

    Neptune I would also be interested in the details of the Brisbane pre purchase inspection buyers agent

    Any other buying sight unseen tips would be greatly appreciated =)

    With the multiple low ball offers what happens if more than one get accepted? In qld is an initial deposit due?

    wouldnt these deposits be forfeited if you dont go ahead, in NSW I rescinded on a purchase during the cooling off period and had to forfeit the 0.25% which was about 900 dollars but in the end i bought a better property so i guess I regained the 900
     
    Last edited: 11th Sep, 2014
  15. spludgey

    spludgey Member

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    Been there, done it, regret it.
     
  16. tpepper

    tpepper Member

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    can you elaborate why you regret it?


    if you buy at a discount ?surely that would likely negate anything you happen to miss?
     
  17. danwatto

    danwatto and TT

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    I'm not sure about QLD, but in most states generally you don't need a deposit to make an offer, the deposit is only payable after the offer is accepted and you go to contract.

    So many vendors sit on your offer, there's still one from 6 weeks ago I made that is still "thinking about it", i.e. they want to see if they can get any higher before accepting. So you don't want your money tied up with that sort of thing when you can be making more offers in the meantime. If you're offering below market value, it could take 20 or 30 offers before you get an acceptance, you can't wait on each one individually or it would take forever.

    Make sure you state that your offer is subject to due diligence, and consider putting a deadline on it too, but generally agents know you may buy something else if they don't come back fairly quick.

    In terms of pulling out and forfeiting some deposit - that is after the contract, which is totally different. If your offer is accepted, try and get your building inspections & due diligence done the next day before you sign the contract. I also like the contract to be subject to finance.

    Interesting some states have no penalty for cooling off, in SA where I was buying recently it's quite in favour of the buyer you can pull out with 0 cost during cooling off, and cooling off doesn't even start until the searches/form1 comes back.
     
  18. see_change

    see_change Apprentice Timing Lord

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    We've bought and sold one IP , Held it for some years without seeing it .

    Key thing is having someone you trust having a look at it whether it's a buyers agent , PM or in our case , another agent who we got on very well with .

    We've bought several subject to inspection. One fell through when we walked in to the lower Level and found out that the " large family room" occupied the most of the same space as the " double garage " ........:confused:

    In q'land we signed contracts and included a clause " subject to purchasers satisfaction with inspection " .

    Cliff
     
  19. Alex1

    Alex1 Member

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    I made an offer recently on a property, sight unseen, but
    -I know the area and have used Investar to give me a good idea of what the rest of the street has sold for
    -it's definitely a buyers market, and the vendor wants a fast sale and is in some form of distress.

    I faxed a copy of the contract with my offer, reminded the agent this was sight unseen but I was willing help the vendor with a quick sale.

    If offer is accepted you have (nsw) .25% committed, that allows 7 days to view property myself and have a pest and building done.

    I was willing to lose the .25% if the property was a dud, but the potential to have a low offer accepted due to vendors circumstances was worth the risk.

    On the other hand, if I am a seller and have an offer with conditions that allow the buyer to pull out due finance, or pest and building, or inspection, a lower offer without those conditions would be taken more seriously. I wouldn't bother with conditions myself, but it obviously depends on individual circumstance surrounding the sale.

    Danwatto, would your offer subject to "due diligence" be much different to my approach?
     
  20. danwatto

    danwatto and TT

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    Yes, I would never sign the contract until they've indicated my offer is accepted.

    He could sit on the contract for ages, in the meantime you can't make other offers..

    My offers were only offers, no contract. I was buying 4 properties but I had about 20 offers out there at the time, most wanted more money.

    When one was accepted, I would give the contract to my solicitor to review which takes 24 to 48 hours and my property manager and building inspector goes in during that period too.

    So by the time I sign the due diligence is done.
    Contract I get a finance clause added so I can pull out if for some reason finance doesn't come through. Never happened to me yet but seen it happen for others.

    Note that I haven't purchased in NSW for several years so I forget the state rules here. These recent purchase were in SA. But I think the general principle is don't sign the contract until they accept, although I know it's hard when the market is a sellers market.