There has been a plethora of media stories of late about the increasing numbers of people buying property sight unseen.
In many of the stories, the buyer said they were prepared to take a “gamble” on a property because they were frustrated by lockdowns or missing out one too many times.
Now, let me get something off my chest, real estate should never be akin to gambling or speculation.
If anyone wants to do that there are plenty of places to roll the dice with your finances if you so wish.
The reason why I say this is because investing in property, whether you’re a homeowner or an investor, is an expensive thing to do.
Obviously, you have the purchase price of the property to start off with, which usually necessitates a sizeable deposit that can, and often does, exceed the average annual salary.
Just think of it this way – would you be prepared to work for free for a year because you “threw your hat in the ring” on a property that you never even inspected?
Likewise, there are property-related expenses on the way in and on the way out, too.
What I mean by that is that we all have to pay stamp duty, which is usually tens of thousands of dollars or more depending on the purchase price.
And, when you decide to sell, you have to pay for the selling agent’s commission which, again, is not chump change by any measure.
Now, I’m not going to disparage our selling agent friends too much in this next bit, because we work well with them to secure properties for our clients.
However, in many of the aforementioned media stories, the buyers said that having a video walk-through of the property, facilitated by the agent who is being paid to sell it remember, helped to convince them to purchase it.
I don’t know about you but – just as it is with real estate photography – it’s unlikely that any sales agent who was any good at their job would point out any “warty” bits during that walk-through, would they?
On top of perhaps only seeing the property’s favourable attributes and not any of its issues, buying sight unseen also prevents the potential buyer from understanding a myriad of other important factors, such as its orientation and whether it will be impacted by traffic noise, including trains and planes, to name just a few.
One part of one of the stories that really bugged me was when it was suggested that one way to buy sight unseen was to engage a buyer’s agent.
Indeed, the story suggested that the property purchase would still seemingly be classed as “sight unseen”, even if a buyer had engaged us to act on their behalf.
Of course, that sentiment is ridiculous because when we purchase a property on behalf of our client, we are their eyes and ears.
Not only that, the property undergoes rigorous investigation, including a thorough inspection even before we organise the professional building and pest inspectors to pick it apart, metaphorically speaking.
We also have highlighted the locations that are primed for superior capital growth before we even get to the property selection part.
Sight unseen stats
According to Canstar, a whopping 11 per cent of Australians would be willing to purchase a property without viewing it in person – and we hope that percentage includes people who are working with qualified property investment advisers and buyer’s agents.
However, if millions of people are prepared to take a gamble on real estate, believing in perpetual capital growth regardless of whether they blindly buy a dump, then that is very concerning indeed.
The research also found that only eight per cent of people are prepared to buy, or adopt, a pet without meeting it in person, and 10 per cent wouldn’t buy a car without viewing it either.
While pets and cars are both important in our lives and deserve due consideration, the fact that people are prepared to potentially gamble hundreds of thousands of dollars on a sight unseen property makes me a little nervous to tell the truth.