Edward has lived in the Belconnen area for over fifty years, he raised his family in a simple three-bedroom, red brick home with a giant backyard that would make any young family jealous.
He’s always known there will be a time to sell but it’s not something he ever gave much thought to. Until one day, when his next-door neighbour knocked on his door with an idea Edward had never considered – “let’s join up and sell our homes together”.
This is not a new concept to real estate. Long a trend in Sydney, builders are looking for other options to meet the needs of growing cities. Back in 2016, 62 owners in Sydney’s French’s Forest teamed up, sold off a combined 4.3 hectares and were paid just under $200 million.
But how relevant is this to Canberra and people like Edward? Curious to know more, we spoke to Wayne Harriden, Executive Director of Project Marketing at Independent Property Group.
What does it mean when neighbours “join forces” to sell?
A joint sale is often done when there is a block of units, townhouses or two or more houses that can be sold together. In Sydney, Melbourne and larger cities you may see owners of units coming together and selling their block to a builder or developer.
In Canberra, you are more likely to see two or more neighbours partnering up to sell their blocks together. The usual buyer is a builder who sees increased value in such an offering because of the size of the land or the location. Ultimately, the thinking is that you are likely to receive a higher price if you sell as a group rather than on your own.
Canberra’s established suburbs are often where this happens, where blocks are large and suburbs have amenities, public transport and are not far from the city.
Belconnen for example, where Domain Group figures show the city’s best performing suburbs are, has a lot of blocks initially developed in the 1960s and 70s. These could be attractive to builders as more and more buyers look for residences close to the city but still offer Canberra’s small-town feel.
You can see how this is an enticing idea for some people but it is important to remember that this sale method does not work for everyone or apply to most properties. There are some blocks in Canberra that have no value in being sold as a part of a group. For example, there are planning rules and restrictions in RZ1 zoned suburbs that may not make such a deal possible or financially beneficial.
There are plenty of examples of groups doing this across Sydney and other cities, is this something that happens in Canberra too?
It does happen, but the sales are not as large as those you see in the bigger cities, so we may not hear about it as often. Sometimes, sales like this are done privately so you may not see marketing or advertisements like you would for a standard sale.
I worked with a group of people in the inner north of Canberra, who lived in a row of houses in a suburb that was seeing a lot of growth.
More people were wanting to move into this area, while this group were at the stage of their lives where they were looking to downsize. They had made a pact with each other, that if one sold, they all sold.
When it was time for them to look at selling I worked with them to facilitate the sale of their four homes together.
Why would a group of neighbours decide to sell together?
The most obvious benefit is financial. Owners can stand to make substantially more money from a sale by selling as a group rather than individually.
Usually, these deals are facilitated privately by the agent so there is a quick exchange and no marketing fees, all of which helps the seller save money. The sales terms are also quite favourable for the seller, particularly if there is a lot of interest from buyers.
Selling as a group is not always ideal for owners, it is very much based on a case by case basis. While some people will stand to make more profit together, it may be a better option for others to sell individually.
Selling your home can be stressful enough when you’re dealing with only one other person. What’s your advice for a group?
Brokering a deal that involves multiple people requires a lot of trust and clear communication. If you do not have a positive relationship with your neighbours, it will be very difficult to reach a decision that everyone is happy with.
The group I worked with had a real all for one, one for all attitude – they trusted each other and would not accept any offer until everyone agreed. They all had a clear understanding of what each other expected and what the process would be.
Having an agent facilitate the deal is also very important, they act as a go-between for the owners and the potential buyers. Without an agent who knows the process, it is very easy for the situation to become overwhelming.
To avoid an overwhelming situation, what would your advice be for a group considering a joint sale?
Research, research, research. Speak to an agent about the value and potential uses for the block – you may find you have sewer lines you didn’t know about or an oak tree in your yard which impacts what can and can’t be done.
Canberra is split into a range of different zoning types which dictate what you are able to do. Sellers need to be aware of what’s possible before they begin negotiating with any buyers.
The ACT government has some online tools which can help owners in their research. The ACTmapi search tool lets owners search by street address or urban block number and gives them a clear idea of what zoning laws apply to their property. Of course, it’s important to get this verified by a trusted agent but it is a great place to start.
From the beginning, a group need to agree on a number of key decisions. The minimum sales price, the agent and the selling procedure for example. The most important decision can be how the profit will be shared amongst the group. Is this based on square meterage or the position of the block? These are the tricky questions that needed to be decided on.
It’s not uncommon for developers and builders to approach owners directly about these opportunities. When that happens, it is vital for owners to do their own research and seek advice. Speak to an experienced agent that you trust to get the best advice for your specific situation.
We have agents within Independent Property Group who could very quickly identify if a homeowner would benefit from a group sale. They are able to provide this information quickly and with no obligation.
We know how a joint sale benefits the owners, but how does something like this impact the suburb and other buyers?
There’s an ongoing conversation in Canberra about the variety of properties available to buyers, mostly around the mix of property types in inner-city established suburbs.
For many of Canberra’s older residents, particularly in older suburbs, living in a three-bedroom house with a large yard is no longer necessary but they don’t really want to leave an area of the city they’ve called home for all these years.
Selling as a block can be a great option for the development of townhouses and other smaller homes. This provides long-term residents with another option of housing without needing to leave the suburb they love.
In the streets of Canberra’s suburbs, it is not uncommon for the neighbourhoods to become little communities. Children riding bikes together, adults gathering to watch sports and celebrate holidays and now, perhaps coming together to sell houses.