Listing photographs
never show the cracks

The agent's verbal guide was above one million dollars. We did not think the property was worth it.

“Walk away above $1,000,000.”

The client had said, standing in the hallway, that the house felt unfortunate compared with the photographs. Our own read was the same. The stone benchtop was real and the flooring was new, but that was the renovation talking. Underneath it was a 1970s–80s house that last sold in December 2015 for $480,500.

There were two cracks, and they were not the same

A stepped vertical crack following the mortar joints is common in older brick homes. The one that concerned us was beside it: a continuous horizontal crack, 1.5 to 2 metres long. Horizontal cracking that runs unbroken behaves differently. We split it into three scenarios and put a probability and a cost against each.

A low probability is not a reason to ignore something. If the ten per cent case runs past a hundred thousand dollars, that is a matter for a building inspector and a structural engineer before you go unconditional. Saving $400 to $700 on an inspection is a poor trade against carrying $100,000.

Three more things, none of them cosmetic

The toilet had been built into the laundry. The renovation kept the original plumbing footprint to save money, and re-engineering it properly would cost $30,000 to $40,000. Floors squeaked underfoot in several rooms, which points at an ageing subfloor rather than a finish. And there was no usable backyard. The greenery in the photographs was a neighbour’s hedge; the actual outdoor space was a small front lawn open to the street. For a couple expecting their first child, that outlasts any crack.

Then we checked the price three ways

We anchored on a freestanding house (Torrens title) sold two months earlier in the same street for $1,180,000, adjusting for title type, land size and timing. We repeated the exercise against two other nearby sales. All three paths converged around $1.05m to $1.08m, and we discounted 4 to 6 per cent for the cracking risk to arrive at a fair value of $980,000 to $1,025,000.

Opening offer $925,000 to $950,000; walk-away ceiling $1,000,000. If the vendor held firm above it, we named three alternatives that did more for the same budget.

The last page was for the buyer to confirm

The report closed with five statements the client was asked to read and acknowledge before any offer went in.

• I understand this is a strata-titled property and what that means for capital growth
• I understand the wall cracking requires a formal building inspection
• I understand the outdoor space is limited and may not suit the family long term
• I understand the verbal guide of “$1m+” may not match the vendor’s expectation
• I understand my buyer’s agent has recommended a ceiling of $1,000,000

It exists so that nobody says afterwards that they were not told. It protects us, but more usefully it makes the client read once more, before contracts, exactly what they are accepting.

Everything that went wrong at the previous house was absent here. No cracking. No movement in the walls, ceilings or floors. No renovation covering up the age of the place. The kitchen and bathroom are not current spec, but they are good for another three to five years exactly as they stand.

“Solid double brick, 610 square metres, 19.2 metres of frontage. That combination does not come up often in Rostrevor.”

The value was in the land

A 19.2 metre frontage over roughly 31.8 metres of depth divides, on the geometry, into two side-by-side allotments of about 9.6 metres each. Campbelltown’s General Neighbourhood zone allows subdivision applications on that footing. We wrote it up as an option, not a certainty — realising it needs council confirmation — and listed the five things to verify before contracts: zone classification, easements, any tree damage control order, title type, and the outcome of a pre-lodgement meeting.

The option alone carries value. Adelaide buyers pay a 5 to 10 per cent premium for allotments with subdivision capacity, and that premium survives whether or not the owner ever exercises it.

We costed what the house becomes in five years

The report modelled the property as a share house for the point at which the clients move on. The existing roof and walls make that conversion unusually cheap.

The area averages about 3.4 per cent gross. These are gross figures before costs and are not a guarantee of performance. In South Australia a share house of five or more unrelated tenants may require development approval, and the report said so.

The price was checked three ways here too

One path from the suburb median, one from actual sales in the same street, one from land rate plus depreciated dwelling value. They returned $1,150,000–$1,210,000, $1,100,000–$1,180,000 and $1,065,000–$1,135,000 respectively. We took the overlap — $1,100,000 to $1,180,000 — as fair value.

Opening offer $1,050,000; walk-away ceiling $1,200,000. Above that ceiling the only remaining justification is the subdivision option, and there is no sense paying for an option you may never exercise.