The importance of getting your brief right
29/04/2016
My property search diary from Location Location Location Australia Season 3 | Episode 6 – Search for vegan retreats in Bryon Hinterland
The importance of getting your brief right. And researching before making a tree change.
Wow, there were a lot of issues with this search. As is often the with tree and sea changers, I was concerned that Suzie’s decision to set up a vegan B&B and animal retreat in the Byron Bay hinterland was both romantic and naive in equal measure.
It concerned me that she had not invested any time or resources into developing a plan, local connections or gaining relevant experience, let alone spent any significant time in the area. There were many things that Suzie simply didn’t know anything about:
- Gardening
- Running a B&B
- Suitable animals for different climates (hoofs and wet soil, for instance)
- Composting toilets
- Illegal dwellings
Originally we had a budget of up to $900K to work with. Acreage is a slow moving property sector in this area, so there was quite a bit to choose from, much of which had been on the market for some time. In the end she decided to go for a property that was much cheaper. She was no doubt looking at these regional properties with a Sydney price mentality and so the $399k price tag was especially tempting. In fact, tempting enough for her to overlook issues that were previously very important such as within an easy commute to Mullumbimby.
City slickers need to take extra care in the country!
Suzie took one look at this property and fell for a classic real estate trick. The agent had organised for a few people to look at the property at the same time and one of these other buyers looked like they were interested, which of course the agent took advantage of. Fear of missing out then led her to make an offer on the spot without first considering value. Of course it was accepted straight away! She threw away her right to negotiate and I believe there is a good chance she gave away money unnecessarily.
I get that Susie liked the idea of minimizing risk by buying a cheaper property (whether she was consciously aware of this or not), however she dived in head first and didn’t take the time to question whether this property actually carried more risks than a more expensive option. And in my view she made her offer too hastily (after her first and only inspection and before doing any due diligence) and she will never know if she paid too much.
I had a conversation with the agent after she made the offer and it transpired that the property had been on the market for some years, originally targeting a price in the mid $400Ks. It had an aborted auction campaign where the one and only interested person made an offer that was accepted but failed to secure finance. Given the price point, this property was likely to appeal to first home buyers, however these are precisely the buyers with minimal deposits and the banks are very wary of lending to hem to buy acreage.
This information suggests to me that the was definitely an opportunity to negotiate hard on this property. Such a shame that we will never know what could have been achieved!
There are three lessons to learn from this experience.
Firstly when a buyer has a dream to make such a major life change, it’s folly not to have a plan and invest in research. I couldn’t help wondering whether Suzie was a bit scared of testing the viability of her dream.
Secondly, it is crucial that you learn local market dynamics and pricing so that you don’t overpay through having a city mentality. The same rules simply do not apply.
Thirdly, never buy a property after only one inspection! It doesn’t matter where it is.
