We’ve all seen them on websites and on the open-house trail – unloved and loveless properties. They’re the ones with the peeling wallpaper, missing fireplace, torn lino and lime-green carpets.
Your first reaction might be “eeew, who’d buy that?” But many potential buyers, such as Bernadette Janson, who founded The School of Renovating in Sydney’s Surry Hills, prefer to see properties such as these as an opportunity.
“We love them because we know other people just can’t cope with them,” Janson says. “If you can see the bones of the house are OK – the walls are straight and it’s not going to cost you a huge amount in repairs to bring it back up to standard – then there are good possibilities.”
Former nurse Janson not only advises clients on how to renovate, she enjoys doing it herself. She offers five tips on the best way to find the ultimate property “hidden gem”.
Look for functional improvements, not just cosmetic
“Cosmetic improvements can be quite powerful but the minute they’re finished, they date and deteriorate,” Janson says. “If you can find a property where you have the potential to, say, increase the number of bedrooms, then obviously you’re going to take it into a higher price bracket. That’s a big profit gain, and if you can find the floor space in the property, then it’s usually quite a cost-effective way to do it.”
Janson says many people don’t know when they come across a bargain. “It takes a long time to figure out what is a fair price for something,” she says. “If you spend the time researching the market that you’re trying to break into and understand the property values, then if something comes onto the market that is underpriced – and they do come up – you’re in a position to move quickly.”
She says she always prefers to see a property well before anyone else. “Once there are swarms of people looking at it, you’ve missed the boat.”
Janson says those looking for a rough diamond need to be careful – values of run-down properties can often be inflated simply because many buyers just like you are looking for a “renovator’s bargain”.
Bernadette Janson (photo courtesy of The School of Renovating)
Find “hopeless” real estate agents
Sometimes bargains can fall in your lap, which is what happens if you start following bad property agents. They’re everywhere, Janson says. “They’re the ones who don’t recommend that their clients do some styling, the ones who only have a minimal amount of openings or are ‘by appointment only’, the lazy ones, the ones who don’t follow up. They just want to get the property off their books quickly.
“It takes a really committed agent to get the best price for a property.”
Janson says it’s important when looking for a property to not just rely on the big websites, such as realestate.com.au and Domain. That’s because not all properties appear on there, especially those marketed by ineffective agents. “Often bad agents allow their clients to be lousy and not spend the money on marketing right across the board.”
One way to find a great deal is by getting the vendor to fix major problems before you buy. Janson suggests getting quotes either before or after you’ve made an offer. “The owner will know it’s a problem and they’ll be just hoping like hell that it sneaks through,” she says. “If you raise the problem, you can use that as a negotiating tool to get the cost of the repair off the price.
“A good way is to make an offer, but before it goes unconditional in that cooling-off period, get the quotes. Once you’ve made the offer and it’s been accepted, the vendor has sort of mentally committed to selling. They will be more open to negotiating than when you’re just talking prior to making an offer.”
Top tips: – Look for properties where you have the chance to increase value through making functional changes, such as adding a bedroom.
– Research all websites, know local values and follow agents looking to offload properties quickly. When you come across a bargain, try to snap it up quickly.
– Be prepared to use property defects as a way of knocking down a price, even after the vendor has accepted your offer.