A lovely lady called Clara came to me a few weeks ago. She’d been looking for property for a few months. Clara had sold her Randwick home in December last year and was looking for a pad by the sea. By the time we chatted again she was moving closer to purchasing a property in Dover Heights. Clara had been through that apartment several times and was mesmerised by the view. She had done what most buyers do, get a contract, give an offer to the agent (especially if they fall in love), get the contract to their solicitor and request a strata search.
Clara loved the apartment so much that she had even given the agent an offer based on a previous sale last year. This offer was not accepted however the price guide was changed to reflect her offer. The agent had disclosed that there were some outstanding special levies that had to be paid and this is why one buyer paid more than the other. What got me though was that she had no clarity about the likely hood of special levies due in the future. Nor, whether or not she would be liable to pay for the one that had been struck, which was close to $30,000.
The original quote price on the property was about $1.2m, however Clara had put in an offer in of $1.3m, single handily increasing the price quote of the property up by $100k. When I spoke with Clara she advised the auction was the next day. Clara had been using a conveyancer that had not given her any clarity before going into bid. She did not know whether or not she would have to pay for the special levy or not. By 5pm on the Friday night the conveyancer had gone home.
The other outstanding issue was that there were two recent sales that were very similar in property but $100,000 apart. When we discussed this I asked some key questions like, ‘when was the Annual General Meeting or AGM?’. It turns out the discussion at the AGM was about these two sales with one sale being $100K higher before the AGM. So, there were records that reflected why the sale in January was so much lower and this next sale should have been the same.
Clara decided not to attend the auction after our conversations. It appeared that the building was a real mess and there was every chance that hundreds of thousands of dollars would be spent in the next few years.
I had an opportunity to discuss things in finer detail with Clara and from the discussion we had I felt that there were some key things that she should not have done.
Here they are:
- Don’t put a verbal offer in on a property without doing your due diligence and thorough pricing analysis
- Don’t use a conveyancer when you don’t have a lot of experience buying property
- Don’t put an offer forward without being able to exchange very shortly
- Don’t use agents to gather your intelligence or pricing research
- Never go to auction without having absolute clarity on the contract you are bidding on as this is final and you will exchange unconditionally -meaning there is no cooling off period.
If you are thinking of entering the market or upgrading please call Brooke Flint 0425 221 226.