BRISBANE homeowners are collectively losing millions of dollars by blindly selling their properties with development potential.
Specialist real estate agent and former property developer, Chris McKnoulty of Best Use Real Estate, has seen many examples of Brisbane properties being undersold by as much as 50%.
Last year, a rundown Camp Hill property was sold for $420,000 by an everyday real estate agent only to be on-sold to a developer for $800,000 in less than 12 months time.
The Camp Hill example was marketed as a ‘renovator’, common practice for real estate agents, yet the agent failed to notice it was zoned Low Medium Density Residential and suitable for the development of units.
“The property was listed for sale at $398,000 and a bidding war erupted, ending with a developer buying the property for $420,000 – still well under market value,” Chris said.
“Just 10 months later, this developer sold the property to another developer with a pending development approval for seven units for $800,000,” he said.
Chris, who has just launched a specialised real estate agency to help vendors realise the development value of their assets, said the main reason why homes were being undersold in the first instance is due to a lack of property development expertise, on the part of both the seller and their real estate agent.
“Nobody has realised this is a problem. Homeowners don’t know that they undersold their property and agents think they’ve got their client a good price. Developers are the only ones who know this is going on and they’ve been taking advantage of it for years,” he said
Yet, Chris was quick to point out that real estate agents were not necessarily to blame.
“The ability to identify the development potential of a block, to do the ground work and then entice a developer to pay a premium for that property is a highly specialised one,” he said.
“But, the cold hard facts are that, through no fault of the agents, vendors are missing out on millions of dollars by not cashing in on an amazingly strong development market.”
Chris said that the lesson is very clear. Vendors really do need to get expert advice and do their homework.
“I want to focus on fixing the problem by becoming the missing link between sellers and developers.”
Having worked alongside some of Australia’s biggest developers in the past 12 years, Chris hopes that he can at least make sellers aware of the practices that were at play in the market at the moment, so they can avoid the traps.
Case studies of other undersold properties in the Brisbane area where vendors have missed out are listed below. (Source: RP data)
- 111 Adelaide Street, Carina: Sold for $500,000, weeks later same property sold for $705,000 to developer.
- 27 Ison Street, Morningside: Sold in under 24 hours for $575,000 to an opportunistic buyer who on sold within a month to a developer for $780,000.