How I Bought A House In Four Hours (Warning: do not try this at home.)

Bernadette Janson
renovating
renovating
I have been looking for a renovation project for several months and the fast market was making it difficult to achieve Rule # 1 of profitable renovation: buy at or below market value.

Last week I missed out on a property I'd had valued at $1.3m, it sold for $1.42. I left that auction thinking, I needed to be more creative. What creative looked like, I wasn't really sure.

I had spent a lot of time with the selling agent the week before and he had been great; opening the place up at all hours for inspections and valuation so on Monday I decided to drop him a quick note to thank him for his help. An extra sign of appreciation never goes astray.

The following Thursday I was up to midnight scouring the Internet for new properties …still nothing.

I believe that anything is possible if you are willing to do what it takes but this was really testing my resolve. I decided to attack my problem on a different level and take some steps to adjust my mindset. So when I finally got to bed I lay there, eyes closed meditating on being open to opportunity. I think it is safe to say I am a bit of a cynic but what happened the very next day blew my mind.

Just before lunch I had a phone call from that same agent to say he’d seen the perfect property for me being sold by a solicitor (not his own agency) and the first open was Saturday. If this opportunity was half as good as it looked then it was the break I had been hoping for.

I needed to act before the first open as the auction guide was very low which would bring buyers out of the woodwork .

I was in the middle of doing the BAS at the time but when opportunity turns up, you have to make room in your schedule for action. I can’t say I minded putting it down!!

I rang to request to view the property as soon as possible and there I hit a roadblock. There was no hope of getting a contract or an inspection before the first open on the Saturday. I wasn't giving up but first I would do some preparation.

I spent some time on due diligence, calling council to get details of the zoning, the floor space ratio and confirmed that I could increase the building size by about 60%. I also investigated the heritage restrictions, which are not uncommon in this area so I had a good understanding of what is possible for this property.

I had been doing due diligence on the area consistently over the past few months preparing for auctions on other properties so I was well covered on that score. As far as the house itself was concerned, I was definitely not going to get inside before I made an offer so I had to allow for the worst i.e. walls of solid asbestos, rampant termites, rising damp and anything else that might befall a house over a century old that had been severely neglected. While I would always advise against buying a property site unseen, I decided this was a calculated risk; one I was prepared to take.

In the current market, the condition of a renovator property has very little bearing on the price, I have seen a tiny timber cottage beyond economic repair and on a block of land the size of a postage stamp sell at auction for over $1,000,000. This property,while in a poor state of repair, is substantial and is on a substantial block of land. I committed to getting a contract on the property before the day was out.

I headed off to the solicitor's office with cheque book in hand.

His wife was holding the fort while he was in court and his receptionist was away. A conversation with her revealed that the property was owned by an elderly man who wanted to go to see his family in Europe for a holiday as soon as possible. The house is filled with his years of hoarding which he planned to walk away from and move into a smaller unit. By agreeing to take responsibility for the cleaning out of the house, the early release of deposit to pay for his flights to Europe and the deposit on his new home we were able to reach a mutually acceptable outcome.

By the end of that conversation, a contract had been emailed to my solicitor for review and I had submitted my offer and deposit to be presented to the vendor. I offered $180,000 above the advertised guide. You may be asking yourself why so much? Two reasons. Firstly I like to sleep at night, I felt that I offered a fair price given the level of risk and the conditions of the sale. Secondly you don't get very far being mean. If you are going to try to get a property taken off the market in this climate, you have to make your offer decent. Skimping on your offer can cost you the opportunity. My offer was much higher than the guide but it was still well below land value.

By four o’clock the offer had been accepted, contracts had been exchanged and the top was off the champagne bottle!! (Renovators Rule # 8: All victories must be celebrated with bubbles.)

I have since inspected the property and it is better than I expected, with many of its original features still intact and the potential to be the perfect renovation project.

If you would have told me I was going to buy a house in 4 hours on Friday, I would have laughed (given the past few months) but you really can do anything if you are willing to do what it takes.

Another word of warning: There are significant risks associated with the early release of deposit and you do need to weigh up the pros and cons with your solicitor particularly if the vendor has finance secured against the property.

Lastly...

Look out for one GIANT garage sale happening in Surry Hills some time soon!!