Welcome to the first week of Spring!
I must admit that I love this time of the year although we’re always quite busy in September and this year is already proving to be no exception.
One of the main reasons many of our clients choose to sell their homes is that they are ‘empty nesters’ left with an enormous family home…and no need for such a large property anymore.
Their kids grow up, move out and all of a sudden, they are maintaining a yard that no-one really uses and dealing with stairs as knees begin to weaken.
As such, many of our clients choose to move to an ‘Aged care’ style of housing.
There are plenty of options for aged care accommodation these days and unlike a time 10-15 years ago where there was a huge shortage of ‘Over 50’s’ housing, there are plenty of options nowadays.
I’ve been told by many that are involved in the selling of this kind of accommodation that competition is fierce, and sales are not necessarily easy to come by.
From what I’ve seen when we sit with clients and help them sort through many different developments, there are lots of different options and financial packages…and whilst I’m going to be criticised for saying this, I’m consistently surprised how extraordinarily high the fees seem to be with many of these packages.
The ‘aged care’ industry seems to be relatively unregulated and, in my opinion, some of these options are very restrictive.
Many properties seem to be priced appropriately when you purchase their product but if you want to sell, there are fees that are ridiculously expensive.
In my experience, many of the modern complexes are beautifully appointed and offer a fabulous lifestyle so it’s not the product that’s in question here – it’s more about the ramifications if you decide that you want to sell and move to somewhere else.
Without naming names, I want to highlight a few of the different ‘packages’ that I’ve seen over the past few years and where I believe that these options need to be very carefully considered before purchased.
- “You build the home but don’t own the land” – My best friend’s parents purchased a brand-new home in a particular development a few years ago…in a complex that is beautifully maintained and offers some breath-taking communal facilities.
A few years on and they’ve decided that the small lot that their home occupies is a little too small and they want a bit more space…hence they are selling.
They’ve had their home on the market now for almost 6 months with very few buyers that have actually inspected.
They purchased a 3-bedroom home with upmarket finishes for approximately $500,000…and here’s the clincher – they don’t actually own the land as the agreement was that they ‘rent’ it for $140 per week.
Well, they rented it for $140 per week up until recently where the rent increased to approximately $180 per week without any justification on how this increase was calculated.
Keep in mind that the owners all pay a fee (that’s effectively a Body Corporate fee) for the upkeep of the facilities so your on-going costs are pretty high.
When you don’t own the land, my point is that you really have no choice but to accept this increase – what else can you do?
Now, the home is a low set rendered brick modern construction so you can’t even pick it up and move it anywhere.
These people were sold on the premise that there are only limited numbers of homes available but have now discovered that the developers/management have sourced an adjoining parcel of land and are now selling a large number of new homes in this development.
There have been 2 recent re-sales in this complex…neither of these for prices that are flattering.
One of these sales was made by the owners and the other by an external agent.
Currently, the owners believe that there are approximately 6 available for re-sale (some of which are for sale with the managers and some are listed with external agents).
Management have a policy where external agents are not permitted to conduct open homes (and after reading the agreement, I have discovered that the management actually stipulate that they are to be engaged to sell any re-sales although this condition doesn’t seemed to have been policed at this stage).
The problem is that the owners are focused on selling their new product and clearly have little interest in helping their current owners re-sell.
I did call the management and pose as a buyer…and as I suspected, I was gently ‘encouraged’ to purchase an ‘off-the-plan’ product rather than a re-sale.
Another issue is that because the owners don’t own the land, it’s very hard to keep up with the prices that re-sales are obtaining and from what I can tell, the owners that have re-sold seemed to have lost money – admittedly, not a lot of money but a loss is a loss…and this is over a time where the median price of houses in the area has increased by 5-10% over the past few years.
So my friend’s parents feel trapped – do they list with the on-site managers/owners who can clearly control the buyers coming into the estate and have an agenda to sell new stock or do they list with an external agent that’s working on their best interests but does have their hands tied behind their back to a certain degree?
Even a recent ‘Open Day’ for the complex, it was made very clear to those re-selling that any external agents were not welcome to participate.
To his credit, one agent I know that has one for sale in the complex turned up in casual clothes and tried his best to bring in a few buyers to his clients’ home.
It is a very difficult situation and when I went to meet my friends’ parents just to try to help them find a solution (as it is at some distance from where we generally sell), they were literally in tears and very stressed out – not a nice way to spend some precious twilight years of their lives.
Looking at other possibilities that could provide issues for individual owners, we’ve seen situations where the owners of a facility like this one go broke or perhaps decide to sell to another operator.
You have a home you can’t move on a block of land you don’t own.
And what protection is put in place in order to stop the fees (land fees or Body corporate style of fees) from skyrocketing out of control?
This probably won’t happen now by too much more when they are trying to sell another stage but what happens when the development is complete?
My friend’s parents went on to tell me that some residents were asked to remove small plants or flowers from their garden as they aren’t ‘uniform’ with what the Managers deem to be fit so it is a very controlled environment.
In hindsight…would they have purchased here if they knew how hard it would be to get out? No way!
They are thinking of reducing the price to sell but like a lot of retirees, they don’t have a huge amount of money lying around and simply can’t afford to lose a lot of money on this property – their main asset that they own.
Unfortunately, the final chapter has yet to be written here so I will keep you informed.
Next week, we’ll look at another completely different option that one of our clients is considering right now.
Until then…Happy Listing and Happy Selling.