I spoke with The Australian Financial Review's Michael Bleby over the weekend about why it pays to hire a buyer's agent!
How it Sold: Two mums have their 'Alan Bond' moment, buy in Sydney's Freshwater
Oct 16 2017 at 12:23 PM
Michael Bleby
Read more: http://www.afr.com/real-estate/how-it-sold-two-mums-have-their-alan-bond-moment-buy-in-sydneys-freshwater-20171016-gz1mrj#ixzz4viFGLhGgwww.afr.com/real-estate/how-it-sold-two-mums-have-their-alan-bond-moment-buy-in-sydneys-freshwater-20171016-gz1mrj#ixzz4viFGLhGg
Follow us: @FinancialReview on Twitter | financialreview on Facebook
The Australian Financial Review has spoken to the team behind the most intriguing recent property sale for our column, How it Sold.
The property:
Two houses (4-bedroom, 3-bedroom) on 730 sq m at 14 (A&B) Kooloora Avenue, Freshwater, NSW. Sold private treaty $3,850,000.
Who was the agent/agency?
Mark Madsen, Raine & Horne Manly.
Buyers' Agent Peter Kelaher.
How long was this on the market?
[Mark] Four weeks.
Why did this one sell?
[Mark] It's location, location.
[Peter] To get a house 200 metres from the beach for under $2 million in Freshwater is unheard of, especially for a four-bedroom house on 365 square metres. The two houses, one three-bedroom and one four-bedroom, were separately metered and had their own yards.
Was it overpriced?
[Mark] Not at all. Not for this location.
[Peter] Yes, it was.
What did you think it would go for?
[Mark] I would have hoped high $3 (million)s early 4s – that's what we were quoting.
[Peter] Four (million).
What was surprising about it?
[Peter] The property had two houses on one title. I had two buyers – two friends, two mums – who were able to buy both together and then separate them on separate titles. They're two very smart businesswomen. They went to a town planner and said: "This is a good opportunity. It's our only opportunity to get into Freshwater for under $2 million." In Freshwater, 200 metres from the beach, a 65-square-metre, entry-level, two-bedroom unit with garage on the beach is $900,000.
[Mark] The homes were built in 1993. Back then it was agreed to as a dual occupancy. They were separately metered and separately yarded. Councils recognised dual occupancy, but for one reason or another, the family never chose to put it on two separate titles.
The houses, built on less than the current-day local council requirement of 450 square metres, could not be split into separate titles today. But the council is likely to grant separate title based on historical use. In that time, the LEP changed and the minimum land size [for one house] is now 450 square metres, so it would prevent [a new block of that size] today being subdivided, but there is a recognition of "existing use" prior to the LEP changing and council will look more favourably on you getting it on two separate titles.
[Peter] It was a deceased estate. They pitched it too high. The vendor didn't change their price right up until the two days before the end of the campaign. But by then, everybody had disappeared.
[Mark] There's zero truth to that. To his client's benefit, they were offering the best settlement terms – a six, or seven-week term – while the majority of the others, who had significantly higher offers, were after longer settlements. It isn't all about price.
Why didn't the agent push the title-separation angle harder?
[Peter] He was saying: "You might be able to do it." He could not say that you definitely can. He had to be very vague.
[Mark] As result of time constraints related to probate [the vendors] felt the best option was to sell as is. To have got that approval through council, the two-year [window] period [for deceased estates to sell to avoid tax liabilities] should have come and gone. Any additional profit would have been absorbed by taxes.
At the end of the day, I'm a real estate agent and not a town planner. While I would have loved as the selling agent to go out and spruik that you can do it, it is all subject to council approval. Whilst I had my suspicions, there was obviously no defined outcome. If there was, we would have had more interest in it.
[Peter] We made out we hadn't done our due diligence. You had to engage a solicitor and a town planner. It would have cost $6000 to do. When we got the [town planning advice that to split the site was] OK, 24 hours before the EOI campaign was going to end, we negotiated. We started a lot lower than that. Then we said: "We're going to offer this, we're giving a deadline of 5pm, take it or leave it." They bought houses on 365 sq m each for $1,925,000.
[Mark] The two families who bought it – financially they would have never stood a chance of buying that property in that sort of position. If they get it on two separate titles, both homes stand-alone are probably worth $2.7 million, maybe $2.8 million in their current condition. They've taken the punt and rolled the dice. And I think this will probably be the Alan Bond moment of their life.
Do you reckon we'll see another result like this: a) next week b) next year c) next cycle d) never?
[Peter] d) Never. You don't usually get two properties of that size on that size block near the beach. You just don't.
[Mark] b) Next year. The market is so tight it might take 12 months or three years before another property comes on the market similar to this.