Buying a dream home for real
Article courtesy of Richard Meadows, Fairfax media
After months of hopeless house hunting, you have fallen in love with your dream home. The extremely obliging real estate agent has helped you out every step of the way, and now has you poised to sign on the dotted line. Stop and pause a minute. Have you really done your homework on what is likely to be the biggest purchase of a lifetime, or blindly accepted the assurances of the silver-tongued agent?
Agents are required by law to treat buyers fairly. But as the Real Estate Agents Authority warns: ‘‘No matter how friendly and helpful they are, be aware that they are working on behalf of the seller’’. Property commentator Alistair Helm says there are some things you just do not want to mention to an agent. ‘‘They’re not on your side,’’ he says. ‘‘You’ve got to get beyond the facade of a pleasant, friendly agent.”
They need you to be a buyer, but at the same time they’re looking for any opportunity to find out more about you.’’ It is not that they are trying to rip you off, Helm says. But they will leverage any information you let slip to get the best outcome for their client. Buyers’ agents are unusual in New Zealand, so you have to be ready to fight your own corner. Here are five tips for coming across as if you are a confident veteran, rather than a naive newbie.
Keep your cards close to your chest.
‘‘We’re in a hurry to move quickly.’’ Keep that to yourself. Sharing timing pressures with an agent means they can use it as leverage to try and get you to agree to less than ideal conditions or pricing. The same goes for disclosing your budget, says Helm. Rather than saying ‘‘we have $450,000’’, it’s much better to say ‘‘we hope we don’t have to spend more than $425,000’’. Helm says even better again is to make general comments that the house is ‘‘within your means’’, and you are prepared to pay what you think it is worth. ‘‘You want the agent to be confident that you can afford the property, but unsure as to how much you are prepared to spend.’’ It is also important to keep a clear Chinese wall between the agent and your finances, says Helm; in other words, do not ask them to arrange a mortgage for you.
Know where you stand.
Rule Financial Services mortgage broker Simon Rule says even though getting a mortgage preapproval is a ‘‘no-brainer’’, some people still do not bother. ‘‘You go along and find a house you fall in love with, and then the bad news is, you can’t get the finance from the bank,’’ he says. Rule encourages his clients to get pre-approvals before they go on the hunt, so they know where they stand and can make confident offers. Helm says having all the paperwork in place can be a big advantage in a competitive market.
‘‘Confidence plays a large part in the process.’’
Being assertive with firm bids at auctions can also pay off, as you may be able to scare off more timid bidders, he says.
Get an independent building report.
You can ask real estate agents anything you like about the property, but the authority warns you should not rely solely on the information they provide. ‘‘The agents are bad at this. They’ll say ‘you don’t need a building report, it’s fine’,’’ says Rule. ‘‘[But] you’re spending four or five hundred thousand on a house. At the very least, you want to get an independent report done.’’ Rather than shelling out for a report on every home you are interested in, Rule says a good approach is to make an offer conditional on a satisfactory building inspection. ‘‘If the property’s got no issues, it’s not going to worry the vendor if [your offer] is subject to a few days for a builder’s report.’’ If they do turn up their nose, you may well have managed to avoid buying a disastrous lemon. Rule says it is foolish to get a report from the agent or an inspector they have recommended, as it can lead to a biased or shoddy report. The authority recommends checking that the inspector you choose is a member of the Building Officials Institute of New Zealand or the New Zealand Institute of Building Inspectors, has professional indemnity insurance, and adheres to industry standards. On top of that, it is also often useful to do a title search and get a Land Information Memorandum (LIM) from the local council. A LIM will let you know handy things like whether an apartment block is just about to go in next door, the house is built on a former landfill, or the bodged garden shed does not have a building consent.
Look past window-dressing.
Specialist firm Home Buyers Reports warns that while newly renovated homes look good, it is all too easy to get sucked in by a new paint job or flashy flooring. ‘‘The fresh paint could be disguising damp, the laminate flooring may be covering a dodgy sub-floor, while ‘tricks’ such as the great smell of fresh coffee or home baking might disguise the smell of drains or mildew.’’ First-time buyers keen to get their foot in the door are particularly vulnerable to falling for style over substance. Amazing furniture and décor should also be discounted. Be aware that many sellers employ the services of home ‘stagers’, who dress the house beautifully just to maximise the sale price.
Do your own research.
Do not admit to an agent that you are unfamiliar with the area, says Helm. Instead, do your own research, and make sure you demonstrate you understand the positives and negatives. A quiet suburban street at 10am on a Sunday morning might have been strewn with drunken teenagers the night before. ‘‘Always visit at different times of the day and on different days of the week, so that you get a feel for noise, traffic and general activity during work hours and weekends,’’ says Helm. Talking to the neighbours is a good idea too. The majority will be happy to have a chat and give you the dirt on the vendor, if there is any, as well as giving you a feel for the neighbourhood.
If you are looking to buy a house, call us to inspect it first.