O'meara Property

It is often said that spending a lot of money on a garden can over capitalise a home and that money is better spent indoors than out. Is this the case?

It is true that many home owners get carried away with garden fever and don’t ask themselves if the money spent on landscaping will be realised down the track when they come to sell. The amount allocated to landscape design and planting must be  in proportion to the overall value of the home or it can easily add cost that doesn’t  add enough re-sale  value. Home owners need to be aware of the percentage cost of the overall value of the home that landscaping represents; obviously there is a big difference in the amount that should be allocated to landscaping in a house worth $300,000 and a house worth $3,000,000!  

Astute home owners soon work out that a drab and unimaginative garden will detract from the value of a home because it will not give buyers the feeling they want to live there. Even buyers who don’t think they care about gardens and gardening are attracted to the overall picture of a property where house and garden complement each other so that the whole is more harmonious. 

Driving around any town or city, it’s not hard to come across square front gardens with rectangular lawns, borders and straight driveways leading to a garage. Naturally the houses wrapped by such gardens look equally ordinary and uninteresting. Unimaginative landscaping such as this still costs money but rarely adds that ‘wow’ factor when buyers start coming through.

What is often lacking in such gardens is a sense of mystery – one of the main elements of good design that makes even a small garden more appealing to buyers. It’s not a good idea to design the garden yourself – unless you have appropriate skills. A keen gardener with a green thumb is not the same as someone who understands how to use plants in an architectural way to design and furnish a space with a sense of harmony and mystery.

If you are already lucky enough to  have a beautifully designed garden, the thing to remember  when presenting it for sale, is to make it look as if it requires no effort. Paradoxically, this effect is often achieved with a considerable amount of effort. Unkempt and weed-filled gardens draw attention to how much work may be involved in looking after them and therefore look the opposite of low maintenance. After all, if a garden is too hard for the current owner to present well at an important time like when it is being marketed then buyers will concentrate on how much work  is involved and perhaps move on to a property that looks easy just because the work has already been done and the seams are not showing.

Many inexperienced  residential property investors start talking about selling their investment property when the market slows down. After all, the market is bad, therefore it’s time to get out of the market – right?

Wrong!  Is the investor going to realise a good return on their investment by selling when the market is slow? Of course not!  Shrewd investors – whether they invest in the stock market, antiques, art or property – have a more fruitful strategy. When the market is low is the time to borrow more money and buy a second property. Selling now will be a poor return on their investment, but buying now means greater rewards when the market does improve. After all, experienced investors know that the market is cyclical They know that when the market is hot is the worst time to buy as buyers tend to outnumber sellers and they end up competing for stock that is snapped up at alarmingly  increasing prices.  In fact they may well profit from the faulty logic of the inexperienced property investor by buying the very investments being dropped onto the slow  market by the less experienced who think property is no longer the go.

When the market slows down, the smart investors speed up, so that they are expanding their property portfolios when the market is in their favour inorder to be sitting pretty when the next boom comes along.

There is a lot of misunderstanding in many sections of the community about the use of Public Auction as a mop-up marketing strategy. Many home owners think that Auction is a great ‘last resort’ selling strategy – the ultimate eraser of past marketing mistakes and righter of all poor decisions made in their earlier Private Treaty marketing.  While it is true that many vendors go to Auction after failing to sell by Private Treaty, it is not hard to work out the flaw in this argument.

Vendors often think they will try to market their property by Private Treaty at an  inflated price just to see what happens. When asked for an explanation, many say ‘Oh, if I don’t get my price I can always auction it.’ But what happens at Auction when months of marketing at an inflated price haven’t secured the dream price the vendor was looking for?  

Sadly, by the time the vendor has given up on Private Treaty, the property is likely to be over-exposed and it will attract bargain hunters, no matter what method of sale is used.  Valuable time has been lost, and unless the market is trending up, the sale price is likely to be lower than if it had sold more quickly.

Once a property has been on the market for a long time, buyer interest falls.  Auctioning at this point rarely creates the competition needed for a high price.  Buyers know the vendor is unrealistic and often stay away from the auction – a death knell to hot bidding. The best case scenario is that the auction will attract bargain hunters – another great way of keeping the price down.  

In reality, no method, used as a last resort, will deliver optimum results. Holding out for an inflated price, no matter which marketing method a vendor starts with, will usually end  badly – no matter how good the ‘last resort’ selling technique of choice is. There is no safety net fix-it strategy for selling over-exposed properties.

Whichever method a vendor chooses to sell their property, it is important they do proper research into the market in their location and set the reserve (auction) or the asking price (Private Treaty) so that the property sells within the first month or so of marketing. ‘Last resort’  options shouldn’t be in the vocabulary of a home seller who wants to get the highest price for their property and they certainly don’t replace realistic response to market conditions and a firm hold on the reality of price expectations.

Many home buyers get all excited when they find a property they like, make an offer and get it accepted all in a short time frame. They think all their Christmases have come at once. Or do they?

After the initial exultation, many buyers spend sleepless nights wondering if they have made the right choice. After all, it was a bit too easy wasn’t it? Maybe they have paid too much? Surely they must have missed something. Something must be wrong with the property.

Buyers’ remorse is not uncommon, and is based on self-doubt stemming from the stress involved in spending so much money on a transaction home owners undertake (usually) only a few times in a lifetime.

Buyers should always put in place the necessary checks (building and pest reports for example) but those who get their longed-for property purchase wrapped up quickly should think themselves lucky that they struck a motivated and realistic vendor when so many have an inflated sense of what their property is worth.

There are many variables that affect the sale price of a property. Not all homes that look the same sell for the same price. Even when they seem to be equal (size, condition, features), some homes just seem to sell for more. What is the difference?

A young recent arrival from France rented an apartment in Sydney. She complained that the property had no light and was dull all day and of course, never got any sun. She said she had made sure to choose a property that faced south so why was this happening? The look of consternation on her face when she realized that southern hemisphere rules regarding aspect are different from northern hemisphere ones was the best demonstration anyone could hope to see of the importance of that elusive variable that has a demonstrable impact on the sale price of homes – aspect.

Unfortunately, many people whose homes are not ideal in terms of aspect overlook this when setting the asking price of their homes. There aren’t many buyers who come from overseas bringing with them northern desirability criteria for aspect. Most buyers have northerly aspect on their wish list, and will only drop it from the list if the price is right.

While many investors still own every investment property they ever bought as part of a self-funded retirement portfolio, there are others who want or need to sell a property because their circumstances – personal or financial – have changed. Is it better to give the tenant notice to quit before putting the property on the market or should they sell it while the tenants are still in place?

The obvious answer is to keep the tenants in residence. This incurs the least loss of income and unless the house is really dirty and untidy, a house usually presents better with furniture and household items making it look lived in.

However, there are times when a tenant in residence could be a financially less rewarding scenario. Tenants who do not want to move can put a lot of obstacles in the way of a sale. They can limit and postpone inspection access almost at whim in spite of legally having to provide ‘reasonable access’ (what is ‘reasonable’ to one person may not be ‘reasonable’ to another). By the time this sort of obstacle is sorted out, valuable time has been lost and many purchasers have moved on. If the market is not trending up, this can result in a lower sale price as the market drops before the property can be sold. Furthermore, if the seller is using the money for another financial project, delays in having the money available could cost them the project or render it more expensive if bridging loans are required.

Disgruntled tenants can also highlight the property’s faults in order to put off prospective purchasers and while many owners are happy to absent themselves from the property to allow the agent to show the purchasers around at their leisure and improve their selling prospects, tenants have no such motivation to leave the property and many reasons to stay watchfully present.

Sometimes property owners have no inkling that tenants will behave badly in the event of a sale, but there is a bit of basic research investors can do to try and determine whether their tenants will play ball. Ask your agent how easy it has been for the agent to get access for periodic maintenance inspections or for tradespeople who have been contracted to carry out work on the property. Tenants who have been slow to concede access for activities such as repairs that will benefit them are highly unlikely to come to the party when they think they will ultimately lose their home to a successful purchaser.

29 Government, Nelson Bay, Nsw
Land For Sale – $1,600,000

Stepped back into the slope of the hillside, this proposed North facing development site has been approved for 9 two storey townhouses. 8 x 3 bedroom, 2 bathroom, rumpus with DLUG 1 x 2 bedroom, 2 bathroom, rumpus with SLUG. The higher levels expect some distant waterviews once completed.

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1/16 Thurlow, Nelson Bay, Nsw
Unit For Lease

Immaculate three bedroom apartment with views over the waterway between Nelson Bay and Dutchies beach. Featuring spacious open plan living with a second living area downstairs, three bathrooms, dishwasher, double garage and two enclosed balconies. Available for $600 furnished or $650 furnished.

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29/1 Trafalgar, Nelson Bay, Nsw
Unit For Sale – $230,000

New to the market in the popular Bay Breeze Resort Nelson Bay. This loft style apartment would make the perfect investment that you can also enjoy. The light filled kitchen and living area is air-conditioned for comfort after a day at the beach. There is also a powder room on this level. Upstairs consists of two large bedrooms both with ceiling fans and the main bathroom has a corner spa. Laze around the lagoon style pool or dine at the resort restaurant. With approximately 100 mtr to the beach a short walk to town and showing a strong return, what more could you want.

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