By Peter O’Malley
A widely acknowledged side effect of the pandemic has been buyers leaving capital cities and ‘buying remotely’ in the regions. Whether it is a ‘sea change’ or a ‘tree change’, people have departed capital cities and ‘buying remotely’ in the regions. A lesser acknowledged side effect of the pandemic in the property market is buyers who are ‘remote buying’. Property buyers buying real estate via video and/ or Facetime calls has risen just as fast as house prices in recent times.
Whether these remote buyers are living interstate or overseas, there is little doubt they have increased in numbers post COVID-19 and are still very keen to do business even as borders remain closed. There was a sense in the past that technology and the internet would be limited as to how deep it would intrude upon the real estate transaction. Most people quickly accepted that the internet would redefine how properties were marketed/advertised. This assumption was proven correct as the internet completely decimated newspaper empires lucrative real estate classifieds, in less than 10 years.
Buyers acquiring real estate remotely, sight unseen, relying exclusively on footage and information available over the web is next level. As with many parts of the economy, how real estate is now being transacted and leased has changed since the pandemic began.
House prices have risen so quickly in 2021, many overseas buyers don’t feel comfortable waiting for the International borders to reopen before being able to physically inspect properties. Instead, they are acting now and buying remotely without conducting a physical inspection. Tenants are increasingly leasing remotely, relying on video tours, photos and friends on the ground.
Remote buyers are employing a combination of Buyer’s Agents, friends & family and even the seller’s listing agent to offer guidance on properties of interest. Genuine phone bids at auctions are common. In recent times, most agents have found themselves streaming a live property video tour, to an overseas buyer before or after an Open Inspection.
The Australian Financial Review (AFR) recently reported “Demand from wealthy expat Australians for prestigious investment properties and homes has “exploded” because buyers believe the nation’s world-leading containment and management of COVID-19 make it a safer place to live.
“Demand from wealthy expat Australians for prestigious
investment properties and homes has “exploded” .
Agents say overseas buyers, typically located in the world’s leading financial centres, are making competing telephone bids for multimillion-dollar properties they have inspected online or viewed footage from drones, but not visited.”
Whilst the trend is most prevalent at the upper end of the market, there is no doubt remote buying is occurring across all price points. The Department of Foreign Affairs and Trade spokesman advised the AFR 500,000 Australians have returned to Australia to live since the pandemic began in early 2020. As more stranded Aussies look to return home, we can expect continued demand, with many prepared to bid and buy remotely.
Buyers and sellers should be aware of a few points in relation to this new trend of ‘Remote Buying’.
- Engage/employ people completely independent of the seller’s agent
- Have more than one person on the ground providing feedback about the subject property. At least one person should be a friend who stands to gain nothing, whether you do or don’t buy the subject property
- Review as much information as they possibly can – due diligence reports, videos, contracts, council reports on the local area
- Double check the claims in the agents marketing – such as room sizes on the floor plan, distance to local amenities etc.
- Consider what could go wrong with the proposed purchase
- Make every effort to travel and inspect the actual property, if they are interstate, or in NZ. A physical inspection of the property you intend purchasing is preferable than a virtual inspection
- Get tax advice (before buying) if they intend on leasing the target property out whilst they continue living overseas.
- Never allow an employee of the vendor’s real estate agency bid on their absent behalf at an auction
When questioned on buying real estate sight unseen, Buyer’s agent Patrick Bright cautioned, ‘the agent’s job is to present their vendor’s listing/property in its best possible light to the marketplace. This often involves clever photography, touched up photos, use of particular angles to avoid certain negatives and wide angle lenses that glorify features. All of these little tricks are exposed once you physically inspect a property’.
All of these little tricks are exposed once you physically inspect a property’.
Bright says that when he does a video tour for an absent buyer, the buyers often ask ‘are you sure you went to the right house?’ such is the difference between what is displayed online and what exists in reality.
- Accept remote buyers are a potentially lucrative pool of prospects in this market
- Provide an abundance of information and due diligence reports upfront so buyers have all crucial material at hand. The more information a buyer has the easier it is for them to make a decision
- Deal with any adverse issues in a Pest and Building Report and then have the report updated before going to market. Issues seem far more dramatic in writing than they do in the flesh
- Consider professional video tours as part of their marketing package
- Insert a clause in your contract stating that you are willing to exchange on electronic signatures and/or scanned copies
- Employ an agent that is prepared to engage with overseas buyers who are operating in different time zones. Eastern Suburbs agent Michael Pallier told the AFR he has been taking calls from Northern Hemisphere buyers between 2am and 4am on occasions.
Expat and remote buyers are not a dominant force in the current property market. However, their presence in an already crowded field adds to their imbalance between supply and pressure.