We are seeing a high number of signed up sales falling over. This is strange in a rising market. A large number of these are Auckland investors.
I once dealt with a Commercial developer whose catch phrase when he heard about a new property was “Just get my foot on it ” . That meant get a contract in place and then I’ll do the research to see if I can make any money out of it. Great for him, but a real bastard for the owners if he couldn’t see money in it or, even got too busy to be bothered with the research. It meant their property had been off the market for that time and usually involves some costs to the owner in legal fees.
There is at least one property coaching school where they advise their clients to put in a full price offer on a property, sight unseen.They add a clause that says the agreement is subject to a building report and doing a due diligence within 10 days . They are basing the buying decision on the internet photo’s, the Whangarei District Council website and a look down the street using Google maps. I have heard one such client say “its not an emotional buy so I’m just looking at how it stacks up in a practical sense. I don’t have to love it” . They are often putting in several such offers on properties in the district ,then travelling up one day to inspect all the properties and decide which one they want.
While these deals are exciting at the time they have a high fall down rate, as once the buyer sees the property, warts and all, they often find they do have an emotional reaction after all, or worse still pick a better option and cancel the contract.
The other strategy they recommend on this course, is to find a problem in the builders report and every property has some issue. They then use this item to negotiate the agreed price down.
I personally believe the buyer should inspect the property or have someone else inspect the property before putting in an offer. It’s not to say you won’t still have problems with the builders report but at least you know the property has passed the first visual hurdle and the agent has met the buyer and been able to form some sort of opinion as to their motives and character.