Buying sight unseen screams out ‘danger’. Despite the advent of many research tools online, it’s still considered a risky strategy. So why do some successfully use and advocate it? You’ve probably heard that investing in property is mostly a numbers game. You crunch the numbers. If they look good, then you should take a closer look. You make your decision based on why you are investing and how this property fits with your investment goals.
Investors are commonly told that emotion has nothing to do with the investment potential of an asset. Even so, when you’re buying a property worth several hundred thousand dollars, would you risk not seeing before buying?
Buying sight unseen reduces the emotional tie that might otherwise cloud your judgment and allows you to focus on whether the numbers stack up or not.
This means you make decisions based purely on facts and figures, rather than being swayed by insignificant aesthetics such as the colour of the paint.
Seeing the property could influence your judgment and you may end up paying more or rejecting a perfectly good investment.
Not having to go and inspect every property you’re interested in also saves you time that you could use to focus on doing the necessary due diligence.
A big risk when buying sight unseen is that you might not get what you thought you were paying for.
The photos may not necessarily show potential problems such as the view you were promised – which ends up overlooking a car park. Beyond the lush green backyard may lurk a high voltage power line which is going to impact the value of the property.
The good news is that these days, you have access to a lot more data and information to help you make your investment decision. Google maps and street views, among other things, are now available so you can take a closer look at the property you’re interested in.
The best way to reduce your risk is to enlist the help of professionals and people you trust to check the place out for you.
- Get an independent building inspection done prior to the auction or as a condition of your offer.
- Obtain a list of recent sales in the area to give you an idea as to whether the vendor’s price expectations are in line with current market activity. This can either be obtained via a real estate salesperson or through an independent organisation like QV.
- Call the local council to see what developments have been approved in the area, in particular in the street and neighbourhood you’re interested in.
- Send someone you trust to inspect the property on your behalf. It doesn’t matter how much research you do on the property remotely, there are just certain things you can never find out without physically inspecting or at least taking a drive by the property.
Yes, it may cost you a few hundred dollars and your time. However, if you’re going to hold the property for a number of years, don’t you want to make sure you could live with your decision in peace?