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Hear the latest weekly insights into the property market via podcast by Rich Harvey, CEO and founder of Propertybuyer.

 
Mon 12 Feb '24 with Rich Harvey Decoding Sydney’s North Shore Market – Outlook and Opportunities.
 
 
Sat 27 Jan '24 with Rich Harvey Home Buying in the Eastern Suburbs – A personal journey
 
 
Sun 7 Jan '24 with Rich Harvey Economic and Property Market Outlook 2024
 
 
Thu 21 Dec '23 with Rich Harvey Sydney’s Luxury Property Market Insights
 
 
Mon 11 Dec '23 with Rich Harvey Economic Recession or Recovery - What’s next?
 
 
Wed 22 Nov '23 with Rich Harvey Using Data & AI for Better Property Decisions
 

 

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Invisible real estate risks that really bite! - February 2024

February 4, 2024 / Written by Rich Harvey

 

By Rich Harvey, CEO & Founder, propertybuyer.com.au

You’ve found a place you want to buy and the building and pest inspection you’ve ordered looks pretty good, so… job done, right?
While it’s true that every buyer should engage reputable and qualified building experts to check a house or unit for any identifiable issues, that’s not where your due diligence should begin and end. There are plenty other potential nasties lurking that could bring even a seasoned buyer undone.
As a buyer’s agent, I’ve assisted in the purchase of thousands of properties over the years. As such, I’ve come to learn about the risks that aren’t always visible, and which many working on their own might not see.

Seeing red

Let’s say you’ve bought a charming home with plenty of character, but it needs a bit of work to restore it to its former glory.
Did you check any heritage restrictions that might apply? Are there ordinances in place that govern what you can and can’t do to your own home? These policies exist for good reasons – to maintain the character and history of beloved neighbourhoods and prevent the mistakes of the past, when we’d knock down beautiful buildings willy nilly, from being repeated.
But they can be a headache for even homeowners with the best intentions. Depending on the area and the rules that apply, you could be hamstrung by some seriously tough limitations.
I’ve heard about one homeowner of a terrace covered in badly peeling paint who spent a year going back-and-forth with heritage advisors about what colour was permissible. All they wanted was a simple white, but the shade they’d picked wasn’t allowed. Trouble was… there was nothing written down about what colours were permissible. It was all based on the opinion of the ‘heritage expert’.
Similarly, extensions – even at the rear out of view – can require jumping through a few hoops when it comes to heritage properties.
Planning restrictions can also impact what you do with your property regardless of its age. For example, buying a house on a big block with the hopes of someday soon splitting it in two, or knocking down the old pile of bricks to build a duplex, is a popular aspiration lately.
But it’s not always allowed, with individual councils having their own specific guidelines on everything from minimum setbacks to block sizes and density. If you intend to change anything significant, be sure you actually can.

Land that’s yours – with a catch

A small-time developer I met a few years back told me a horror story of buying his first site – a huge block with a crumbling old house on it.
He knocked it down with plans of throwing up a few units, which would’ve delivered him a tidy profit. But he hadn’t done his proper checks and balances, being new to the game and not knowing what to look for.
Towards the back of the block was a services conduit providing access to wastewater infrastructure and he wasn’t allowed to build near it, let alone over it, as he’d hoped.
It proved to be a costly headache.
These kinds of situations are rare but not uncommon. If you’ve bought and sold enough, chances are you’ve come across a prospective property with some kind of services conduit or that limits what you can and can’t do.
Similarly, any easements are also worth knowing about. Think of an easement as a ‘right of way’ – the owner doesn’t lose their land covered by one, but they’re obligated to allow access to certain people under certain circumstances.
In a residential scenario in a metropolitan setting, often an easement is a driveway or a walkway from the street to the rear of a block where perhaps a duplex or granny flat has been constructed. There can very likely be disputes and restrictions if you endeavour to do anything that will impact the easement and its beneficiaries access or enjoyment of that easement.
You might have bought a lovely house with a big backyard and had dreams of installing a 10m pool for the family. However, you have to check the position of the mains sewer line. You have to build at least 2m away from the sewer. And then there’s rock. That extremely hard material and costly to excavate. I know this from experience as we had an extra seven semi-trailer loads of rock taken out when we built our pool. 
Again, it pays to know what to look for so you’re fully informed.

Units aren’t immune

Buying an apartment means not having to worry about a lot of the risks I’ve mentioned above, but that doesn’t mean there aren’t pitfalls to be aware of.
The biggest one relates to the body corporate. An especially old building might require big repairs, from a new roof to major plumbing or remediation works. The cost of these can easily run into the six figures, and if a sinking fund doesn’t have adequate capital, owners are stung with a hefty special levy.
The minutes of committee meetings often make for interesting reading, but there are some other hints about the state of a complex that a keen eye can spot. A big spend on plumbers for the building, not confined to individual properties? I’d watch for issues with blockages, likely caused by old pipes and even older tree roots. Be very careful of apartment blocks near the beach which experience salt spray and likely that concrete cancer will appear sometime in the future.
Even if the building is in decent shape, some old complexes – and often ones with older residents – don’t have overly proactive committees. I’ve seen situations where a lack of care meant strata contributions were shockingly low, and so there was little to show in terms of saving for a rainy day.
New buildings also come with their own share of risks. Just look at the countless news articles over recent years about quality issues in apartment buildings, which can cost a pretty penny.
Similarly, a recent build will have a pretty shallow sinking fund, so levies may need to be hiked. And those complexes with all the bells and whistles, like lifts, pools and gyms, cost a fortune to maintain, so strata levies in the order of several thousand dollars a quarter aren’t uncommon.
Finally, some committees can be… shall we say, precious. I’ve heard about new owners being shocked to discover the curtains they’ve hung, the back of which are seen from outside, are in breach of strict bylaws. Some places even dictate the type of furniture you can have on a balcony.
And on the flipside, some committees are too lax, so you can buy into a beautiful complex hoping to get to know your neighbours, only to discover that everyone rents their ‘home’ out as an Airbnb, and you’re suddenly living in a glorified hotel.

Don’t fly blind

A buyer’s agent will help you source potential properties that fit your needs and wants, as well as your long-term goals. They take the stress and hard work out of searching for your next home or investment, and then do the heavy lifting when it comes time to negotiate the purchase.
But more than that, they’ve developed finely tuned senses that can detect these hidden risks – and many others and will recommend a local building inspector you can use. They’re often things that the untrained eye can’t spot, so having someone who can see them can save you a packet.

 

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call us on 1300 655 615 today.

The Propertybuyer
Podcast

 
Mon 12 Feb '24
with Rich Harvey
Decoding Sydney’s North Shore Market – Outlook and Opportunities.
 
 
Sat 27 Jan '24
with Rich Harvey
Home Buying in the Eastern Suburbs – A personal journey
 
 
Sun 7 Jan '24
with Rich Harvey
Economic and Property Market Outlook 2024
 
 
Thu 21 Dec '23
with Rich Harvey
Sydney’s Luxury Property Market Insights
 
 
Mon 11 Dec '23
with Rich Harvey
Economic Recession or Recovery - What’s next?
 
 
Wed 22 Nov '23
with Rich Harvey
Using Data & AI for Better Property Decisions
 

 

Listen to many more
podcasts on our
Podcasts page.