Buying during lockdown: Should I, or shouldn’t I?
Last night, the ACT Government eased the lockdown restrictions a little for the real estate industry here in Canberra. It’s now allowing access for:
✓ Pest and building inspectors
✓ Photographers and videographers
✓ Energy Efficiency report (EER) providers (part of pest and building, really)
As a result, over the next few days I expect we’ll see a rush of properties brought to market as previously, these couldn’t be launched due a range of compliance issues (which I won’t go into here). Amidst the incredible level of buyer demand, some will undoubtedly purchase. Some out of need or urgency to have a place to live, but many from an emotional place of FOMO; having seen prices skyrocket this year it’s understandable they’re feeling trigger-happy on a commitment to buy.
What still isn’t permitted though, is the ability to inspect in person. Or to allow a representative (such as a buyer’s agent) who isn’t representing the seller to inspect. Now before you think this is just a self-serving piece, where I rant about wanting to inspect, it’s not. I’m more than happy to sit tight while COVID is active throughout our community, to follow the clear directive to avoid movement as much as possible as it’s a sensible one. As agents, we see many homes in our daily lives and the risk of spreading such a transmissible virus is a real threat. It’s unimaginable to put profit ahead of safety at this time.
Naturally, the seller is keen to present the best side of their property to elicit the highest possible price. As a buyer, to make a significant buying decision based on a glossy marketing video, prepared by the seller and unable to refilm it (as it can only be filmed once), it leaves buyers with gaping holes in their due diligence. Did they film all of the property, where the lights are turned off and the window furnishings are fully drawn back? Of course they want to showcase the best aspects in the most flattering way. They’re doing their job to entice the most money from buyers. In the absence of unbiased footage, capturing the downsides as well as the positives it’s a risky proposition. You’ll have no idea if there’s any bad odours, what the noise and natural lighting are like, check the room dimensions (many differ when you factor in wardrobes), see whether any renovations are done to a high standard or are ‘quick and cheap’ ones that simply photograph well. Buyers are unable to verify any of these details for themselves, and until this lockdown passes I would suggest that the cost outweighs the benefits. Gambling with such a large financial purchase isn’t for the faint hearted.
With personal inspections banned, I’m loathe to think of the buyers who are seriously considering buying sight-unseen. I ran a survey this week on social media, and once I took out those respondents who were sales agents and said Yes they would, the results were clear: 81% said they’d not buy sight-unseen. Interestingly enough, the few sales agents who did say ‘no’ were some of the longest-standing, most experienced agents in town, those who’ve seen many property cycles come and go. Curious, don’t you think?
Anyway, back to you.
As a buyer, to transact right now you’d be reliant on vendor-paid, professionally filmed footage and photos (wide-angle lens, anyone?) to make your decision. And then, you’d likely participate in the most common sales methods right now; the dreaded ‘best and finals’ - the ultimate ‘closed door’ blind bidding war, or the online auction – an auction setting devoid of transparency for an unwitting buyer. As you can tell, I’m not a fan. And I’ll explain why.
In person auctions, despite most people hating them, can actually be a great way to buy property. You can clearly see who you’re bidding against and if you know the rules of engagement, have some degree of control to play the game with skill. However, with an online auction that can all change. Some agencies assign a sales agent over the phone to ‘help you bid’. Now there’s a conflict of interest if ever I saw one. I’ve seen online auctions where I can hear a sales agent massaging hesitant buyers into placing another bid, and at times steer the buyer to actually bid against themselves. Meaning, they’ve placed the highest bid, they’re already in the lead, but then place another on top of their own bid. In other jurisdictions across the country, Zoom auctions have taken off and to me, that presents a far more transparent way to allow fair play during an auction rather than holding buyers to ransom over the phone.
The current Government restrictions mean that buyers are forced to shoulder the risk right now to buy sight-unseen. Those who do transact may find themselves regretting their haste; during the last lockdown, there were horror stories of buyers moving in only to find themselves very unhappy with their new home and/or their new neighbourhood. Agents were abused for not showing them every single aspect of the home, which I find to be the worst sort of blame-shifting. No one forced these buyers to purchase the home; they had limited, unverifiable information available yet went ahead and did it anyway. The agent is required by law to act in the best interest of their client. They do not, and cannot, work for the buyer. Agencies have carefully worded disclaimers in place to protect themselves against legal action.
Buyer beware.
Well, that’s all a bit heavy. So what’s a buyer to do?
You can roll the dice and participate, blindfolded but allowed a sneak peek.
Or…
Wait.
Be patient.
We’re in the midst of a pandemic.
Get ready for when the opportunities to buy with peace of mind return. Ignore homes for sale that you can’t independently inspect or verify; there’s always another property for sale just about to be listed. The three certainties in life? Death, taxes, and property sales. You can bet many vendors aren’t keen to jump into a sale right now either until the risk of transmission for them passes too; once restrictions ease further, supply will return to the market and with it, some great-quality, A-grade properties will follow.