When plans go sour, the dream home can look like a trap.
It has to be a record: just one hour after selling a Richmond townhouse, Frank Mlikota resold. The buyer, whose father opposed the purchase, got cold feet. So another bidder became the new owner.
Such speed is rare, Mlikota says, but reselling within months of purchase is not. And while a buyer may dislike the house, financial problems, a work transfer or relationship breakdown are often the reason.
Mlikota tells of reselling a Hyatt home backing on to a railway line. The couple decided they could tolerate the trains to own an affordable home. ”They did not mind the trains – except for the fact that there was a 3.08am train and the father was a light sleeper. It drove them nuts,” he says.
And there was the couple who quickly resold their Frankston home after finding a halfway house nearby.
Nelson Alexander director Arch Staver says buyer remorse is not uncommon, particularly after an impulse buy at auction. ”Conducting the final inspection, they roll up and the house is more often than not empty and the expressions on people’s faces – if they had an opportunity to on-sell it then and there they would.”
But few of his agency’s 2500-plus annual sales are resales within a year. That is often cost-driven: in particular, ”the big elephant in the room – stamp duty. There are not that many people who are willing to bear that cost.”
Also, unless buyers qualify for exemption (for example, a work move may qualify), capital gains tax applies if a home is sold within a year.
But Glen Coutinho, of RT Edgar, Hawthorn, says his agency handles a quick resale every couple of months. ”The main motivation is mixed, a lot of times it can be a separation, the other one is that they just don’t like the house,” he says. ”It’s not often financial.”
His agents first seek a solution. For example, a couple with young children who found their pool a worry, wanted to sell. Instead, the agent got a $15,000 quotation – less than the stamp duty – to fill it in.
But sometimes selling is unavoidable: a woman client immediately sold when she discovered her former husband had bought across the road. And yes, deliberately.
Selling fast is not necessarily a disaster. During the property boom those reselling could make a profit, Mlikota says. That is still possible, perhaps after a few improvements. For example, when neighbours objected to extension plans for a $1.2 million Port Melbourne home, the owners spent $15,000 on improvements, then sold for $1.5 million within a year.
But he warns that Google helps buyers know what sellers paid and they may not want to contribute to a quick profit.
The agents advocate honesty: ”I think honesty is always the best policy and we just tell the people, you tell the truth and sell through that issue,” Mlikota says.
Vendors failed to tell him their home had been a morgue, but confirmed it after a purchaser did. One interested party was deterred, but the buyers enjoyed the quirky difference.
Staver says work transfers often prompt a quick sale. ”But I suspect some over the years have been because they don’t get on with the neighbours. But they rarely are that candid with their real estate agent about that sort of thing.”
Buyers often ask why a property is being sold and, Mlikota says, if he knows and there is no privacy issue, he must disclose. So he says sellers who do not want their reasons known should keep mum.
That is endorsed by property lawyer Dan Flynn, of TressCox lawyers. He says that in Victoria, unlike New South Wales where legislation requires agents to disclose material facts, sales are governed by the adage, buyer beware.
Australian Consumer Law does not cover sellers who are not commercial entities or engaged in trade. But it covers real estate agents. ”If they become aware of things that a buyer ought to be made aware of, there is a possibility they should disclose that to the buyer. If you are a vendor, you are better off saying nothing to your agent,” Flynn says.
However, if a buyer asks you a question – for example, is there rising damp, when you have carefully covered it up – and you lie, you could expose yourself to legal action.
Flynn tells of a woman who sold her large home and garden to fulfil her dream of having a bay view, but, feeling claustrophobic, moved out and sold her bayside apartment within six weeks.
But he knows of no Victorian legal action over failure to disclose – unlike New South Wales where, before the current law, Buddhist buyers learnt their new home was a triple murder scene only after paying the deposit. They eventually had it refunded. Quick sale tips
- Use the agents from whom you bought the house. They know it, you will save on photographs and floor plan and perhaps negotiate reduced commission. They may sell to an underbidder without more marketing.
- Agents recommend you be honest with them – they say they can sell around problems with the home and will not reveal private issues such as divorce.
- But if there are problems you don’t want buyers to know, do not tell your agent – Australian consumer law requires they disclose problems they know about.
- Stay away from inspections. If a buyer asks you a question and you are dishonest, you could face legal action.
- If viewing a home recently sold, ask the agent why it is selling. Talk to the neighbours and check out the area.