Relocation Relocation host, Veronica Morgan, talks about buying next to a development site and more property advice.
The timing dilemma
It is difficult when you have found two properties that you like and they are both on different timelines. Claire and Colin looked interested in two properties, one was for sale by private treaty and the other by auction.
The temptation is to think that the private treaty property will be more straightforward since there is an asking price. However in this scenario there had been 8 offers on the property, sending the price way above its advertised "$648K+". Also, if Colin and Claire wanted to make an offer on this property they had to move like lightening as it was expected to sell within 24 hours.
While auctions may appear scary due to the unknown factor of where the final bid will end up, the great benefit of this method for the buyer is that you know exactly what your competition is prepared to pay. In a blind auction, as can transpire with a private treaty sale, a buyer has to decide whether to believe what the agent is telling them regarding other offers - assuming the agent even discloses what they are!
Back to the timing dilemma. It comes down to a toss up between letting the first property go in the hope of getting the second one, or grabbing the first one and losing the opportunity of buying the second. Or you could simultaneously make an offer on the first and also make a pre-auction bid on the second. There is no right answer. It comes down to which property suits you better, the affordability of each, being honest about the probability of securing the second property and, finally how risk averse you are.
Perils of off-market sales
Often buyers get excited when they get an opportunity to view a property that has not yet been listed with an agent. Sometimes these can be gems but the vendors often want a higher price in return for the privilege of a private sale. They rarely factor in the savings they will make on agent commissions and advertising. In my experience, an unmotivated vendor typically wants at least 20% over market value. Now, if this turns out to be the home of your dreams, you may decide that it is worth paying the price.
The beautifully presented Art Deco apartment that we showed Claire and Colin is a perfect example of an off-market property. The vendor readily admitted to us that her price expectations were high and she followed this by saying she did not need to sell. Our buyers loved the home, but not enough to pay over the odds, especially as it had a vacant lot next door which might one day be turned into an apartment block or even a car wash.
Buying next to a development site
That vacant block next door might mean no neighbors and loads of natural light for the moment, but how do you work out what might be built there and how long it could take?
The first step is to call the local council and ask the duty planner whether there have been any development applications (DAs) lodged. Some councils have this information readily available on their websites and by talking to a town planner you can get a greater understanding of what is likely to be approved.
If there have been any DAs lodged, you can check what has been approved and what has been rejected. You may need to order the files from archives, depending on how old the application is. You can also see whether a construction certificate (CC) has been issued, as this can indicate that commencement of building works is imminent.
By looking in the file you can see what sort of objections have already been raised by council staff and also the neighbors.
But many vacant lots remain just that for years on end. While there will always be a question mark over what could or will be built there, you may have years of peaceful living before the start of jackhammers at 6am. In this particular case, there have been no DAs lodged but there have been workmen seen testing the soil for contamination, which would have to be the first stage in the development process, particularly as there is a service station on the other side.
Of course, there are no guarantees, so make sure you factor in some sort of discount if you go ahead and buy next door. After all, risk equals cost.