Borderless investing may the new “property black” but the strategy is not without its unique challenges and potential risks, according to the Real Estate Buyers Agents Association of Australia (REBAA).
As property investors become more educated, many more are purchasing in a different state than the one they live in, REBAA President Melinda Jennison said.
“Having a holistic national view on property investment opportunities can be a smart strategy for investors, but it is also requires much more due diligence and experience,” Ms Jennison said.
“REBAA members have reported increasing levels of interest from property investors keen to adopt a ‘borderless’ approach over the years, which is a trend that is likely to continue.
“However, buying property in an unfamiliar area without expert assistance is not advised, because of the plethora of unique challenges and potential risks that it can represent.”
Ms Jennison said it was vital for investors to understand that real estate legislation is state based, which means that buying property involves a different process in most states and territories.
“For example, buying at auction in Melbourne or Sydney is very different to buying at auction in Brisbane,” she said.
“Price guides are used in Victoria and New South Wales, but they are not permitted in the Sunshine State. Also, unlike other states, in Queensland a buyer does not hold the first right to negotiate with a seller if a property passes in.”
Likewise, the process of buying via a private treaty sale also differs between states, Ms Jennison said.
“Disclosure requirements differ with vendors in some states having an obligation to disclose crucial information about a property to potential buyers prior to a contract being entered into, whilst in other states that is not the case,” she said.
“Additionally, the contract process also differs between states, so, buyers need to gain an understanding of state-based real estate processes to minimise risk.”
Ms Jennison said buying in an unfamiliar area – or purchasing sight unseen without an appropriately licensed person inspecting the property for you – also means that investors may not necessarily understand the nuances of local market conditions or specific locations.
“Expert local area knowledge is non-negotiable no matter where you are buying property as it can prevent you unknowingly buying an inferior property or overpaying for a second-rate location,” she said.
“It is also extremely vital that anyone considering working with national buyer’s agents to purchase property interstate ensure they have the relevant real estate licences to operate in the state or territory that they are recommending to you.”
Working with a REBAA accredited buyer’s agent will ensure this is the case, but some other operators fail to work within the required legislation, Ms Jennison said.
“There is no question that the way we live and work has become much more flexible than ever before, which is part of the reason for the uptick in interstate property investment, but this strategy shouldn’t be attempted without the assistance of expert buyer’s agents,” she said.
According to the 2023 Annual PIPA Investor Sentiment Survey, nearly 50 per cent of investors were looking to purchase outside they state they lived in – up from 43.5 per cent the year before.
The post The rise and rise of borderless investing appeared first on REBAA.