Conveyancing Feb 24, 2021

How to save 10% on your next property purchase

7 min read

17 Goodsir Street Rozelle
17 Goodsir Street Rozelle

What would you be willing to do to save money on a home purchase? Would you be willing to live in a house where someone was murdered or perhaps where killers once lived? Properties that are stigmatised have fetched far lower prices than their unaffected peers.

Crimes and property

A property in WA sold in January which was the home of a pair of notorious serial killers and was sold for nearly 10% less than the original asking price – selling for a mere $425,000.

Interestingly, current laws in place in Victoria (for more, check out our previous article here) means information such as whether a criminal lived in the property, the property was used for criminal activities and/or whether a crime was committed on site (if this information is known by the Vendor or their representative/s) are required to be disclosed to potential purchasers.

 

What impact might this have on price?

The history of a property can have a short term effect on the sale/purchase price. Whilst Buyer’s Advocates have indicate that once two years have passed since a ‘serious incident’ at a property the property price is likely to be back at ‘market value’ (whatever ‘market value’ may be in this property market gone mad).

137 Easey Street, Collingwood is a good example of this. There were two heavily publicised, notorious, unsolved murders at the property. The property sold for under the median as recently as in 2011. But when it last transacted in 2017, it sold for well over $1M.

So, it would seem that if you want to bag a property below the suburb median, you’ve got to get in when a crime or criminal issue has occurred in a property. We by no means advocate this as a way to get into the market – it’s is simply an illustration of circumstances as to when property prices ‘may’ be outside of the median (and is also perhaps a reminder as to what Vendors must disclose to a Purchaser!).

There have been cases where Purchasers have been able to withdraw from a Contract to Purchase when significant criminal activity at a property was not properly disclosed prior to purchase.

 

What questions should you be asking the agent?

There are a range of different types of stigma that may affect a property. These may not be an issue for you – whether a criminal lived in the house may not bother you (and may not be a legal basis to be an issue for you). Other things may be an issue – for instance if there are possible environmental problems that could affect your health.

Some questions to consider:

  • Have any crimes been committed at this property?
  • Did the previous owner/tenant have any debt issues i.e. will debt collectors or unpleasant types be around chasing money?
  • Are there any environmental concerns you are aware of? Toxic waste, near to treatment plants, any contaminants on the site and / or has the property been used as a meth lab?
  • What are the neighbours like? Are they quiet or have there been instances of violence and police attending any other properties on the street?
  • Has there been any paranormal activity reported at the property?

 

Why would stigmatised property sell for less?

Usually because the property isn’t as desirable as one without the stigma attached. This means there are likely less interested buyers and without the competition to drive up the price the ‘haunted house’ will likely attract less competition and will perhaps hit a lower price point than anticipated.

If you do see a price advertised well under the median, make sure you are asking the agent why this is. It could be for a reason that doesn’t bother you at all. But you certainly don’t want to find out after you’ve settled that there’s a problem.

Make sure you ask ‘why a Vendor is selling’ (especially so if there is even a hint of something hinky with the property) before you look to purchase. We can of course otherwise also assist you with your due diligence enquiries before signing on the proverbial dotted line.

We admit that we cannot assist with paranormal activity (who you gunna call?). Whilst we are not Ghostbusters we are well equipped otherwise to help with pre purchase advice and assisting to provide advice as to problems hidden in the Contract.