Why buying property should never be a gamble

The increasing numbers of people prepared to buy property sight unseen could prove to be a financial disaster, according to a leading buyers’ agent.

BFP Property Buyers founder and principal Ben Plohl said that there appears to be a growing volume of buyers willing to take a “gamble” on a property because of lockdown frustration or their fear of missing out.

“Real estate should never be akin to gambling or speculation,’ Mr Plohl said.

“If anyone wants to do that there are plenty of places to roll the dice with your finances, if you so wish.

“The reason why I say this is because investing in property, whether you’re a homeowner or an investor, is an expensive thing to do, so, there is too much at stake financially to roll the dice and purchase a property sight unseen.

“Just think of it this way – would you be prepared to work for free for a year, which is the average deposit size these days, because you ‘threw your hat in the ring’ on a property that you had never even inspected?”

Mr Plohl said that technological advantages, such as video walk-throughs with selling agents, seem to be replacing due diligence and thorough inspections by objective professionals.

“In many instances, buyers are saying that the video footage from the sales agent had helped to convince them to purchase the property,” he said.

“I’m not going to disparage our selling agent friends because we work well with them to secure properties for our clients.

“But I don’t know about you but – just as it is with real estate photography – it’s unlikely that most sales agents would point out any overly ‘warty’ bits during that walk-through, would they?”

Mr Plohl said that as well as potentially only being shown a property’s favourable attributes and not many of its “issues” during the video tour, buying sight unseen also prevented buyers from understanding myriad other important factors, such as its topography, orientation, and whether it may be impacted by traffic noise, including trains and planes.

According to Canstar, 11 per cent of Australians would be willing to purchase a property without viewing it in person, that’s a percentage that hopefully includes people who are working with qualified property investment advisers and buyer’s agents.

Mr Plohl said that if millions of people are prepared to take a gamble on real estate, believing in perpetual capital growth regardless of whether they blindly buy a dump, such a decision could wind up being financially catastrophic from them.