Real valuations, reports, assessments, equity analysis, advisory services
Real valuations, reports, assessments, equity analysis, advisory services
Land purchasing is a challenging exercise especially large lots that can be rezoned for residential developments, mixed commercial potential or special zoning. One such lot in Guildford was owned by an investor for decades sitting as vacant. Purchased as a potential retirement fund once sold that would be the gold pay dirt to cash in when the time comes. Upon purchase over 20 years prior it was just a large vacant lot of land. Like a open space area in the residential street behind an commercial shops on a main road.. The site had been vacant for so long some locals thought it was waste land dumping household goods, buried unwanted items, large metal items, rocks, building materials. It also had a stream running to the back of the lot flanked by residential & commercial, industrial either side as neighbors. Given it was private property these items remained for sometime even getting covered or overgrown by vegetation.
During the time of ownership R Codes, zoning of the area had changed with the owners unaware. The land had become more valuable as a mixed residential commercial site. The site had been identified as a quadraplex site or option as a R Code change for 6 units. Alternatively a commercial site with mixed residential opportunity 2 levels.
Initial purchase price was $450k for nearly 4000 sqm of cleared land was a good buy with grand plans for its sale to be the funds wanted in retirement. Hoping for good development potential for new future owner.
When it came time to sell the family owners had not taken any notice of the land for decades driving by maybe once a year. It was then discovered all was not well with the lot. The land area was a flat open space that looked good good from above ground. The owners where indicated that the property could be estimated at over a million dollars by some local agents appraisals at the time of considering to sell.
After further investigations it was not as easy as it first seemed, The site had Feasibility Report done which recommended a drill hole report one meter deep found items below the surface with a need for 1-2 meter cleaned up with new so top soil replacement to get the overall site to property development standards. This would also need to be cleared through council as a safe site. The quote for cleaning up the site to suit the purposes of the development was around $150k at the time of pricing.
Furthermore, the site works for the retaining was under estimated on one side of the site being a 3 meter fall to the creek connecting to the river. This reduced the building envelope along with adding a costs to the potential development that was not in the initial budget. Additionally the council had changed its regulations with open space requirements on the site for development. Plus consideration of the property being near water source of the Swan River trust environmental protection policies. These issues all compounded the potential of the property price point plus exceeding available funds to invest. to present property for sale. The issues with the land needed full disclosure of the items outlined upon sale..
Owners then started running with the idea of developing themselves with a 4 home building project. The selling was put on hold for several years with extensive services in surveying, drafting, drawings, investigation, estimates, but when adding up overall holding costs of land which included taxes, rates, was around $40k in accumulated costs.
Eventually a decision was made not proceed with any development just sell by auction "As Is". Due to agents pricing was over a million dollars the reserve of $800k was set but not achieved. Following the auction an offer was made $900k's to become a commercial lot. This was possibly the best offer considering the site issues. However the owner declined the offer. Over a decade later the lot sold for around $650k which was a smaller return on investment than expected. Property investment of $450k + taxes, holding costs, services, fees exceeded $50k. In this case net costs $500k with $150k outcome.
The land buyer initially should seek third party professional opinion, pre purchase Real Deal Report with advice to assist this investment for a better result in time, effort, costs.
Ask Advice realdeal@iinet.net.au
This is a common pitfall of purchasing property that the buyer is not provided with a Seller Disclosure Statement. This disclosure is a comprehensive list of the property condition which gives an overview that the owner & buyer can acknowledge there are items indicated with the property which may not be obvious but are there for consideration. This protect both parties against any dispute at a future date.
If the purchaser/s do not ask for the details of the property it is another 'Buyer Beware' situation. After an offer has been made, accepted & moving to settlement its too late to discover the property has any significant issues, internally or externally. This maybe maintenance, repairs, restoration required, shire restrictions, retrospective approvals, which all can cost big sums of money. Sellers Disclosure Statement is recommended to avoid any surprises or potential disagreements. All property should be sold in a transparent manner with all information available. Be smart books a Real Deal Pre-Purchase Report, PCR Property Condition Report, Due Diligence Report be protected. Ask Advice realdeal@iinet.net.au
This is one of the forgotten things to consider when buying a property. Ironically buying any real estate involves the land with due consideration is obvious but not done. Rarely does anyone do a land condition report or soil testing or check it is satisfactory for any required future use. upon What is seen o n the surface may not be what is below the ground. Many residential properties are purchased in a blind daze of what the presentation is like on the surface with everything clean, tidy, shining or styled for maximum influence to buy. Existing homes are regularly purchased with the intent to place a pool, sunken fire pit, terraced area, extension to the existing home, games area, granny flat, rear shed. However a pre-purchase property condition report has not been done only to find out later there are major challenges. Many examples of surprises under soil are, coastal properties are built on limestone which can be serveral meters below ground as large stalagmite's or only under the grass. On many occasions the back yard has be misread needing limestone cut from the ground or stone work to achieve the installation of anything requiring siteworks, cutting into land for different level. Either very costly or the idea not feasible. Also lots of properties have had old trees, vegetation that has not been removed only cut off to ground level. Sometimes machine counter sunk 250-500ml below ground level then covered over looking clean vacant sandy lot or big grassed back yard. Then when any future work is done the huge roots systems, major stumps are below ground needing removal. Not to mention its amazing what can be found buried a couple meters down in an old back yard. Building rubble, asbestos, home shed waste in containers, household items, old metal drums, machinery even old cars. In extreme cases drill hole reports would be required for full land analysis. Then understanding there will need a screening of the land to achieve a clean site to prepare for any required use. If there is a need to use the space around any property it is recommended Land & site PCR review Real Deal Report.
Old properties that where titled mid last century can be very interesting when it comes to fence lines. It s common that the fences can be out of line with the title deed. When sold this can create an issue of assumed ownership by the land owner of the lot with the fence on the other neighboring property. In the suburbs larger lots that are deemed multiple development lots can come into a disagreement with old fence lines being out but a small amount but over 100 meters this becomes an issue. If in the case farmland which sometimes has a track included long the fence line it can become a large area of land. Usually this is discovered when a recent survey or engineers report is done discovering the fence placement mistake. One case a 10 unit site actual built beside the large lot of land with the immediate next door neighbor selling a few years later finding the builder had incorporated a meter of lane for 50 meters along a fence line that was incorrect. Real Deal Report in association with Landgate.
The idea of a property being checked for maintenance issues prior to purchase or a condition of sale is actually rare. In fact most properties in WA are purchased without any idea of maintenance required to private property. Its like buying a $100k pre owned / used car without service history, no mechanical check up, just believing the car yard, dealers, representing seller, then driving into the sunset oblivious to any possible future breakdowns.
It is a metaphor or example of how flippant the buying process for over half a million or millions of dollars spent on a house, land, new build. Real estate services have been made to be thought of as free, free appraisals, free advice, making it low value, low priority. Its common knowledge that the average buyer does not believe the agent/broker anyway but continues to buy without any third party professional checks. Yet if anything mechanical, needing a tradesman is required a $100 call out fee is normal, quote is provided, or in a professional consultation on any financial or legal matter a few hundred dollars is parted with no problem. So it should be an absolute automatic to get a property checked, reviewed to save tens of thousands in future maintenance e costs with potential losses in resale value. Recommended Real Deal PCR & Real Rating Report. Ask Advice realdeal@iinet.net.au
Nobody is talking about WATER QUALITY but Real Deal is checking this important issue for clients. There is an ongoing question about the quality of water supply to residential properties all around the metropolitan area. This is on multiple levels with home water direct to the glass for drinking from the main supply. Water supply in WA is one of the highest quality in the world. However no matter how good it is coming from the huge reservoirs, water treatment plants, pumping stations that are internationally acclaimed with excellence. producing absolutely pure water for the community, By the time is gets to the destination of a household it has travelled many kilometers in piping systems then when entering the property many old original houses have not upgrades pipes since first built over 50 years or more.
Then the consumption from the tap direct to source quality could be compromised. A basic water purifier is helpful but many cases is unsatisfactory. Water use in showers, washing areas, cleaning teeth, washing face, for occupants of the dwelling could be causing some health conditions without the individuals knowledge. When you think about water use & consumption in a household it becomes apparent the implications. Its not something that will be immediate but over the weeks, months, years there will be a cause & effect. With children or elderly we are more heightened to the want for awareness of these things but its become very common to expect direct from the tap automatic quality without question or checking.
Its an essential service needed to any home which we are very lucky to have compared to other countries. However it is taken for granted or assumed all water is pure water. This water supply is amazing to any third world visitor for drinking, bathing, washing, gardening, toilet is pumped straight to the home. But one has to be careful with drinking water to have up to date purifier installed or used prior to consumption.
We check everything our babies drink or eat with absolute diligence. So a simple yearly check of the water is a healthy thing to do. The taps, shower connections, roses, hoses should be changed every several years. Water purifying, home filtration is important along with maintaining these with fresh filters changed when required. Kind of like a service on the car with your home 100 point check. Recommend a Real Deal House Health Check at least once every 5 years. A HOME HEALTH JOURNAL for ongoing services updates to keep it on a clean track.
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