Buying a property is one of the biggest purchases you'll ever make. As such, it's perfectly reasonable that you want to dot all the I's and cross all the T's so that you'll get the best place you possibly can. The last thing you need is buyer's remorse after realising that the property you've bought is a bit of a dud.
As such, we're going to take a look into ways on how to minimise the risk of buying a dud property, such as things to keep an eye on when inspecting property and steps you can take to make sure you do your due diligence.
Just remember that if you need support or someone to talk to, our Sonder support team is available 24/7 to chat whenever you need it.
What makes a property a 'dud'?
There are a number of characteristics that can make a property a 'dud', but the two biggest factors are location and condition. These two aspects have arguably the largest impact on a property's value.
The two types of 'dud' properties
Generally speaking, 'dud' properties are one of two types: Defect or mistyped.
Defect 'dud' property
This generally means that the property has a specific structural, legal or positional problem. Sometimes it can be a combination of all three.
Examples of structural problems include material faults like a leaky roof, poor maintenance of the property (like cracked brickwork), and poor drainage.
Material faults have the potential to turn a property into a proper problem, whereas non-material faults are easily repairable things that won't affect the property or its condition.
Examples of legal problems include an excessively restrictive covenant on renovations and non-exhaustive disclosure obligations that leave out important information about the property.
An example of a positional problem are hellish neighbours who are awful to live next to.
Mistyped 'dud' property
This means that while the property is structurally sound, well maintained, and doesn't have any defects, the property may not appreciate much and won't deliver a sufficient financial return.
Mistyped 'dud' properties are harder to detect than defected ones, and it's important to do your due diligence.
This means stuff like gathering evidence on the property's history, property data and statistics, and the supply and demand of that property type in that location.
Rule of thumb is that properties with a track record will eventually reveal its secrets over time if you keep digging - for example, a property that's had a history of being sold cheaply indicates that many have rejected it and it's a sign to dig deeper.
Recently built properties are far harder to assess in terms of value, so it's important to look over everything with a fine-tooth comb.
Essential things to look out for when inspecting a property
When inspecting a property, it's super important to know what you're looking for and to make sure you are triple-checking everything to ensure that nothing is wrong.
To maximise the minimal window of time available during property inspections, make sure you keep an eye out for:
Major structural faults such as cracked brickwork
Drainage, dampness, and moisture - Poor drainage means if the property has ever been wet then it'll last forever, so make sure there's enough drainage to ensure water dissipates properly
Mould - this can indicate a ventilation problem
Aging bathrooms - Look for broken/cracked
General wear and tear, such as gaps in the floors and windows, poorly maintained flooring (making sure to check under rugs to ensure nothing is being hidden), paintwork that may be hiding something, and guttering and roofing (if this is in poor condition then it may be indicative of structural issues)
Any pest control issues
Electrical and wiring - Old switches and power points are a big giveaway for old, problematic wiring
Heating and cooling - Look into the age of the property's climate control systems in order to gauge its reliability
Any new renovations that look odd, such as roofs being joined together the wrong way.
For apartment properties, it is essential that you obtain a strata report and pick through it with a fine-tooth comb. A strata report will have important information about the building, how the strata scheme is managed, its history of issues and how they were addressed, insurance cover and the capital works fund. But don't just rely on the strata report alone as sometimes there may be things missing or you may miss some important information.
To really do your due diligence, enlisting a building inspector can really help as they have permission to access areas of the property that you can't (such as the roof and under the property) and can spot things the average homebuyer will miss, such as water leakages, dropped floors, asbestos, bathrooms that aren't waterproofed, and helping to assess strata reports.
If you have any questions or need extra support, we're here to help you anytime in any language. Simply start a chat with us via the home screen of the Sonder app.
Information sourced from: Australian Financial Review, ActonAdvice, The New Daily, and Smart Property Investment
Image credit: The Simpsons
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