It is becoming a trend for many property investors to feel confident in making an "on-the-spot" decision with their purchase, with some investors even choosing to make a purchase without physically attending a property. But what are you risking with this high-stakes strategy?
It is becoming a trend for many property buyers to feel confident in making an "on-the-spot" decision with their purchase. We can see this now with on-line purchases where everything is one click away, downloaded instantly or couriered the next day.
Well, is it the same with buying a property?
When a buyer finds the property they want, many feel happy to commit instantly, contract signed, deposit paid, deal done. And why shouldn't they? The finance is arranged, the deposit is ready and if they don't make a decision now they may miss out, right?
In short, YES they could miss out, but at what cost?
Hundreds of properties are bought every week with more and more of them selling to purchasers who haven't completed the basic due diligence.
Agents have an interest in selling the property for the seller and it's in the interest of their client to have a quick trouble free sale. Having a purchaser wanting to seek a second opinion or insist on a pre-purchase building and pest inspection prior to entering into a contract can slow down the sale process or if a problem is identified could jeopardise the sale.
To avoid this delay, purchasers are encouraged to sign the contract for sale, pay 0.25 per cent and take the five-day cooling-off option.
The reality, once you have paid a deposit?
In the heat of the moment, and without realising it, you more likely than not suddenly feel emotionally and financially committed to go through with the purchase of the property, without considering what can go wrong.
The cost of feeling emotionally committed!
You discover a problem – poor or misleading contract wording, a building defect, timber pest damage or live termites. Any of which can change your view of the value of the purchase leaving you to be faced with a costly decision:
• withdraw from the sale and lose the 0.25 per cent deposit already paid (median property price in Sydney can be upwards of $2,200); or
• continue with the sale and accept the issues that have been uncovered.
Most of the purchasers, we have experienced, proceed with the sale only to discover that what they thought were minor issues at the time were the tip of an ever-growing "iceberg".
Costs mount up in the tens of thousands spoiling what was to be their dream purchase into a disappointment.
What the should the smart property buyer do?
Simply complete your due diligence upfront, before signing the contract and before paying a deposit or feeling emotionally committed to a property.
The professionals in this industry, solicitors, conveyancers and building consultants understand the urgency of their purchaser’s deadline.
A professional solicitor or conveyancer, who specialises in property conveyance can accept a contract via email and review it the same day.
A reputable building consultant has the ability to provide fast turnaround and can arrange a building and pest inspection same day or next with reports delivered directly to the buyer’s email.
Don’t let yourself be talked out of it.
In summary: when you find that dream property and are making one of the biggest financial commitments of your life, STOP, don't sign or pay anything and immediately commence your due diligence to protect your investment:
1. Contact your solicitor or conveyancer and send them a copy of the contract.
2. Inform your financier of your intention.
3. Commission a building and pest inspection of the property giving you the peace of mind to move forward with your purchase (or not) by helping identify hidden and costly issues.
Dale Kennedy is the founder of Inspect It servicing NSW and a Tradebusters Connect Top 3 Local Business Pick. With over 35 years in the building industry and current President of the Australian Society of Building Consultants, Dale is committed to helping property buyers make the right educated decisions when purchasing a property.