THE DIAMOND THAT WAS A DUD

Many of you are aware of my insatiable love in hunting down and finding good properties to buy and renovate.

While trudging through the open for inspections 2 weekends ago, I came across a great house in an absolute waterfront street in Balmain (a city fringe suburb in Sydney’s inner west). The house for sale is on the non-waterfront side of the street, but it still has fantastic water views due to the two houses in front of this house positioned below street level. Houses on the absolute waterfront side typically range in price from $3 to $5 million. Houses on the other side of the street, range in price from $1 to $2.5 million depending on the size of the property and the extent of water views they capture.

This particular house for sale has great water views - extremely rare being on the wrong side of the street – and offers a renovator scope to improve the property and build additional value. So when I asked what the asking price was and the agent replied $1.85 Million, I immediately knew it was a steal and put an offer in (within two hours) at $1.75 million. The agent knocked back my initial offer citing that he wants to get his vendor the full price (good agent, not just after a quick sale). I was prepared to offer $1.85 million if I had to but thought I’d play the negotiation game a little and keep the price low for now. I also realised I'd have to exchange very quickly, if I did submit my higher offer at the full purchase price.

So I quickly started my due diligence, researching the positive and negative aspects of the property and the neighbourhood so I can exchange legal contracts with confidence and still be able to sleep at night.

First point of call: find out if the owners of the two waterfront properties in front of this property will ever be knocking down their houses and building up... because, if they do, it will potentially take away my water views and significantly devalue the property I’m considering purchasing ... And so I knocked on the first neighbours door…...

What I discovered: one of the two properties starts major construction in two months time. It will be a one year build and yes, the new dwelling to be constructed will take away some of my water views. The owner also told me that the little old lady next door who has owned and lived in her cottage for the last 50 years, won’t be there much longer as she is getting too old and frail to climb the stairs up to the street level. The neighbour wants to buy her house, too. No doubt, if she is ever successful in doing that, she will build another similar house to the one she is about to start building in eight weeks’ time. There goes another chunk of more precious water views...

Suddenly the $1.85 million bargain house is not so much of an enticing buy anymore. My diamond has turned into a dud…..  

It’s a smart move on the vendor’s part to sell the property for the best price possible before a big chunk of the views get wiped out. After all, once those views are gone, their property will be worth $300,000 to $500,000 less in my opinion.

Will all buyers do this level of basic due diligence or will they merely be swept up in the emotion of being able to sit on the verandah, reading the paper and enjoying those  wonderful water views each day? The reality is anyone who buys this house right now, will still enjoy some of those water views. Though only amongst the not-so-sweet sounds of sandstone rock being chipped out with industrial grade jackhammers, trucks pumping concrete into slabs and delivery trucks tooting right at your front door. Doesn’t sound like the serene bliss I imagined it would be.

The moral of this story? Do thorough research - before you buy! It’s easy to buy a property, hard to get out.

Cherie x