Buying property due diligence during coronavirus pandemic
April 30, 2020
Six weeks into the coronavirus pandemic, we now have a better understanding of the mechanics and etiquette of property buying and selling in this brave new world.
Remarkably, deals are getting done. There are owners who need or want to sell and a small but not insignificant corresponding pool of buyers. Many of these buyers were in the market pre-covid-19 and are determined to complete their campaign. But there are fresh entrants who see the reduction in competition as an opportunity.
Overall, I’m not seeing too much in the way of distressed sales or dramatic discounting. And though the average price will have fallen back a little since pre-crisis time in late February, sale volumes in April have been so reduced that we shouldn’t read too much into the numbers, especially when drilling down to more specific markets, be it inner suburban Sydney or outer Adelaide.
May is likely to provide more insights. All will be watching to see how property is affected by sentiment to health and economics. On one hand, we may see a growing confidence that Australia is crushing the pandemic curve. But the inevitable lags for activity and economic recovery will remain a drag. Hope and fear will battle it out within each potential property buyer. There will be the full range of outcomes - ranging from extreme caution to recklessness – depending on individual financial circumstance and psychological makeup. But, on aggregate, don’t be surprised if buyer numbers start to recover.
If they do, it is in great part a credit to the actions of governments around Australia. Moreover, I applaud the responsiveness of the property industry. Innovations have been applied across every stage: the listing process, negotiation, due diligence and settlement. Thankfully the virus struck at a time when technology made much of this possible, but one can’t underestimate the efforts that have been made to adapt.
It remains possible for buyers to undertake all the usual prudent steps before signing a contract and finally taking possession of a property. A buyer must not let them self be bounced into skipping rungs on the ladder because an agent or counterparty grimaces and says it might be difficult. Virtual inspections are great for an initial ‘look-see’, but a physical private inspection of a property is critical before negotiations start. Always arrange a building inspection for houses before making an offer. Once a property is purchased, initiate discussions early with the agent and your own conveyancer to ensure all pre-settlement checks are carried out as they should be, not least a thorough pre-purchase property inspection. R Wakelin