Buying property is such an exciting time in anyone’s life. Going to inspections, planning out the layouts of your future rooms and picturing yourself in the garden are all fantasies we have when it comes to house hunting. Unfortunately, a lot of these dreams have been thrown into disarray as sporadic lockdowns have shut down the real estate industry in parts of the country.
With restrictions on real estate in parts of the country like Sydney and Melbourne, some may be forced to put their house hunting on the back burner until they can start inspecting again. However, other buyers may see this as an opportunity to get ahead while everyone else is pressing pause.
Although there are still opportunities to get into the market during lockdown, there are important things to keep in mind before purchasing. We’ve put together your go-to guide to purchasing property in lockdown.
Buying property in lockdown: Do your research
If you’re in a city with restrictions because of COVID-19, do some research into what you can and can’t do. Depending on levels of restrictions, some places can offer private inspections while others have been completely shut down until restrictions ease. Auctions are mostly going ahead online, however, some properties may have pushed their auction date back, or cancelled it altogether, so it’s important to double-check.
If you decide not to put your property hunt on hold while restrictions are in place, it’s important to explore what buying in lockdown might look like. Reach out to professionals to help you make the most informed decision possible, whether that be your real estate agent, broker or conveyancer.
Real estate agents will be able to talk you through the current restrictions in your area, what is and isn’t possible, and help you manage your expectations.
They may be able to set up virtual tours for you to get a better look at a property if restrictions mean you can’t go in and will be able to answer property-specific questions you may have or ask the vendor for you if they’re unsure.
Talking to your broker will help you to deal with the money side of things when it comes to buying in lockdown. If you had preapproval, they’ll let you know whether it can be extended or if you’ll have to reapply. They can also give you general advice on other questions you might have.
Inovayt Finance Broker, Holly Crowe, cautions those who are searching for a property during lockdown.
“It’s important to proceed with caution when purchasing a place you haven’t seen,” Holly says. “You’re spending a lot of money, not only on the property but on things like stamp duty too which is non-refundable.” For the legal side of things, you’ll need to speak to your conveyancer.
Your conveyancer will be able to assist you with the legal side of purchasing a house during lockdown and any risks involved with doing so. If you do decide to purchase during lockdown, they can talk you through adding in any extra clauses into your contract which may protect you if you want to back out of the sale. Standard building and pest inspection clauses should be added; however, you may be able to add in extra clauses around viewing the property first. Your conveyancer will be able to provide you with direction as to what you can and can’t put into your contract of sale.
Pros and cons of entering the property market during lockdown
Before you decide whether to continue with your house hunt or put it on hold, there are some benefits and challenges to consider.
- Many people may have paused their property search, so by continuing yours, your competition may be less than usual which will give you a better chance at securing something. Inovayt customers and first home buyers Lauren and Tim* took advantage of the recent lockdown to purchase their first home.
“As first home buyers, we saw lockdown as an opportunity, as the market growth was slowing down,” they said.
- If you wait until restrictions ease, you’ll find yourself with a lot more competition than before as everyone resumes their property search.
- You may be able to snap up a good deal if someone needs to sell and can’t wait to put their house on the market.
“If someone is in a position where they have to sell and can’t wait until lockdown is over, you might have the opportunity to get a really good deal in today’s market,” Holly says.
- Interest rates have never been as low in Australia as they are right now. With low-interest rates in Australia, it’s a good time to purchase property and take advantage of these before they rise again.
- One of the main challenges that may come with buying a house during lockdown is potentially being unable to inspect the property depending on the current restrictions. If you’re planning on still purchasing, ask the real estate agent whether you can do a video tour of the place. Photos can be deceiving, and real estate photographers are especially skilled at making rooms look bigger than what they are or covering up flaws. Keep in mind that what you’re seeing in the picture may not be an accurate representation of what you’re getting.
- Even with video tours, it can be difficult to spot small faults and details you would otherwise notice during an inspection. Things like rough paint jobs, door handles that may need replacing, and even cupboard space can all appear distorted or unclear through video.
“A challenge of purchasing without seeing is you just don’t know what you’re getting,” says Holly. “You can still get a builder to go in as part of your contract, but you may find some issues later on.”
- FOMO (Fear of Missing Out) is a major part of why some may choose to purchase in lockdown. Deciding whether to buy or wait can be a challenge.
“There’s certainly more property coming onto the market as restrictions begin to ease,” Lauren and Tim said. “However, prices have also gone up with the release of these properties, so if we had waited, we probably wouldn’t have had the chance to get the house we purchased.”
- Buying in lockdown can limit you to the houses on offer. Many homeowners are waiting for restrictions to ease to put their homes on the market so there isn’t a wide range of properties available for purchase. If you are choosing to buy, you might be limiting yourself, and potentially ‘settling’ for something, rather than waiting for a place you love.
Deciding to buy when in lockdown is a difficult decision. Before you decide to buy a place without seeing it, there are some important pros and cons to weigh up. As the property market in Australia continues to grow, many of us may feel pressure to get in as soon as possible, but this isn’t always the best decision for you. If you’re unsure what your options are, get in touch with one of our team today.
*Names have been changed for privacy reasons.