Monthly Archives

January 2017

Choosing an Agent

Q: I’m looking at selling next year and wondered if you have any advice on how to choose the best agent to sell my home? Steve H.
A: What a great question – especially to ask a real estate agent! We cover this off pretty thoroughly in our book ‘SOLD, How to Sell Your Home for the Best Price’, so I’m sending you a copy. For everyone else reading this here is a bit of a summary.
Before you choose your agent think about what is most important to you: the best price, the simplest transaction, the shortest sale time, the least stress, or probably a combination of some of these.
The next step is to interview at least two agents, preferably from different agencies, to see how they will meet your requirements in terms of what is most important to you.

Many people focus too much on the commission when in fact all agents are relatively close in terms of fees – the important thing is to get the best sale price. The same goes for marketing: Money spent on a comprehensive marketing campaign will come back in spades when you attract more people to your open homes, resulting in more bidders at auction, and a higher price.
Here are some of the questions you should ask your potential agent:

  • What is your listing to sales ratio? This is a great way to measure how good your agent is: If they sell over 90% of the properties that they take to market then you can be sure they know what they are doing, and it also means they will stick around when the going gets tough.
  • What is your marketing plan? It’s easy to do just the basics – everyone puts the property on TradeMe and realestate.co.nz, in the Property Press or the local paper. You want a plan that covers all the bases: Print, web, and social media, professional photography and video. The more people that see your property the more buyers you will have and the more money you will get.
  • How do you use technology to reach potential buyers? Facebook is especially useful for getting your property more profile and every agent should have a strategy for this.
  • How will you communicate during the sales process? This is very important. It’s easy for an agent to forget that this is a really important transaction for you, and to leave you in the dark – very frustrating for you! Make sure you have, at a minimum, a written report every week, and a call after each open home to keep you in the loop.
  • How important is it for you to like the agent? It’s very important for you to have rapport, if you don’t you won’t be able to communicate well enough and you really need to know everything that there is to know about the sale of you house.

Finally, remember, the agent works for you, the seller, and everything he/she does has to be with your best interests at heart, as long as it’s within the law of course!


Today we have the second part of our answer to Steve H’s question last week on how to select the best agent to sell your home. Point one last week was that the agent who charges the lowest fees and/or the least marketing is NOT necessarily the agent who will put the most money in your pocket at the end of the sale. Many people focus too much on the commission when in fact all agents are relatively close in terms of fees – the important thing is to get the best sale price. The same goes for marketing: Money spent on a comprehensive marketing campaign will come back in spades when you attract more people to your open homes, resulting in more bidders at auction, and a higher price.

Here are some of the questions you should ask your potential agent:

– What is your listing to sales ratio? This is a great way to measure how good your agent is: If they sell over 90% of the properties that they take to market then you can be sure they know what they are doing, and it also means they will stick around when the going gets tough.

– What is your marketing plan? It’s easy to do just the basics – everyone puts the property on TradeMe and realestate.co.nz, in the Property Press or the local paper. You want a plan that covers all the bases: Print, web, and social media, professional photography and video. The more people that see your property the more buyers you will have and the more money you will get.

– How do you use technology to reach potential buyers? Facebook is especially useful for getting your property more profile and every agent should have a strategy for this.

– How will you communicate during the sales process? This is very important. It’s easy for an agent to forget that this is a really important transaction for you, and to leave you in the dark – very frustrating for you! Make sure you have, at a minimum, a written report every week, and a call after each open home to keep you in the loop.

– How important is it for you to like the agent? It’s very important for you to have rapport, if you don’t you won’t be able to communicate well enough and you really need to know everything that there is to know about the sale of your house.

Finally, remember, the agent works for you, the seller, and everything he/she does has to be with your best interests at heart, as long as it’s within the law of course!

Buying at Auction

Q: I’ve just bought at auction and I settle in another three weeks. The property is tenanted but will be vacant at settlement. What safeguards do I have that it will be in good condition when I settle? Gary W.

As a purchaser you are entitled to a ‘pre-settlement inspection’. What this means is that you can insist on the agent showing you through the property a day or two prior to settlement. Strictly speaking you can only insist on the property being in ‘as inspected’ condition i.e. the same condition as when you viewed it at say the open home, and that the chattels are in good working condition. When we market a property we ensure all chattels are in good order; if the dishwasher, for example, is faulty, we list it on the sale and purchase agreement as an ‘excluded chattel’, so make sure you check all the included appliances are working and that things like the alarm system and all the lights, are working too. Contrary to popular belief the sellers do not have to clean the property prior to settlement, although most do of course.  Enjoy your new home!

Q: I am going to be bidding at auction in two week’s time. The agent selling the property has told me I need 10% deposit on the fall of the hammer, but I can’t raise it until just before the settlement date of late April. What options do I have? Sarah W.

A: Our first suggestion is to talk to the agent and explain your situation. Although auctions usually call for a 10% deposit you can ask the agent to approach the vendor with a variation allowing you to pay, for example, 5% deposit. If the vendor agrees then you are all set for auction day. In our opinion it is short-sighted for a vendor or agent to reject a lower deposit – at the end of the day we want every interested party to be at the auction and able to bid, and with property prices in Auckland the reduced deposit is usually still a significant amount. This is another reason our auction clearance rates are so high. The same thing applies to settlement dates: If the vendor’s settlement date doesn’t work for you then you can approach the agent and ask for a variation. This variation will only apply to you and no other buyers will be told.

Q: Like many other young people new to the market I’m looking at buying my first home with a friend, just to get a ‘foot on the property ladder’. What do I need to know about ownership options for my property? I hear words like “jointly owned’ but what does this mean for me? Bruce G

A: Well Bruce, this is a very common approach now that prices have increased so much. It’s really more of a legal question so I passed it on to Nick Birdsey of Birdsey and Associates. Here is Nick’s response:

For a residential property, ownership can be held by a private person or persons, in 3 different ways. First, a person can hold the property in their own name, or in their trust. So, looking at personal (non trust) ownership, a person such as Allan, whose spouse or partner is Brenda, can buy in his own name but Brenda still has or may have a relationship property interest.

Secondly, Allan and Brenda can buy the property in (a) joint ownership – the Title will say “Allan and Brenda” are the owners – or (b) as Tenants in common in equal shares, where the Title says ” Allan as to a half share and Brenda as to a half share.”
There are important differences. With joint ownership ((a) above), if one party passes on, say Allan, his share goes immediately to Brenda, under “survivorship”. The property does not go through Allan’s will or estate. So there is no control over what happens to the couple’s biggest asset. That may be fine, but there are situations where (b) is better. Say that Allan and Brenda have not been together long, and bring 2 children each, Diane and Eric and Gerald and Hesta. Allan can leave his defined half share to his children with Brenda having occupation for as long as she needs it. Brenda can do the same, and after a time they can change the ownership to joint ownership. (b) is also good where there are unequal contributions to the purchase price, eg one third Allan, two thirds Brenda. Sounds complicated I know, so I suggest you discuss it with your lawyer before putting pen to paper.

Q: I’m looking for an investment property and I’ve been following mortgagee sales. Looks like there are some bargains out there, but what are the drawbacks? Johnny M.

A: Great question, and happy to answer it here but as always, we suggest you get professional legal advice before undertaking any purchase, mortgagee or otherwise. You will probably know that a mortgagee sale occurs when a property owner is not meeting the terms of their mortgage and the lender decides to sell the property to recover its debt. That can mean you get a bit of a bargain with a mortgagee sale (there may not be a huge amount owing on the property), but there are some real pitfalls to watch out for too. The thing to be aware of is that a mortgagee sale and purchase agreement differs from a standard agreement in several ways. Firstly, all liability transfers to you as the buyer once the agreement is unconditional (i.e. at the fall of the hammer in an auction) and any damage is at your risk from then instead of at possession as with a normal purchase. Secondly, the chattels (E.g. stove, floor coverings, etc.) are not included in the sale. This means that between unconditional and settlement/possession the previous owner can remove any, or all, of them – leaving just a shell of the building when you take possession. We’ve seen instances where complete kitchens have been removed leaving holes in the floor and walls, handrails on the stairs taken and even in one instance a deck off the living area removed completely! All of that means you need to have insurance in place between then and settlement – not an easy thing as many insurers won’t want to cover you before you have legal possession. Lastly, the mortgagee sale and purchase agreement does not guarantee ‘vacant possession’ meaning that if the previous owners decide not to vacate it will be your problem to get them out – and that can be a nightmare! Again we strongly suggest you take legal advice before bidding on a mortgagee sale so that you are fully informed of all of the risks involved.

Q: I’m going to auction my home for sale later this year and I’ve been seeing lots of houses being sold before auction. How does a pre-auction sale work and is it a good thing to bring the auction forward? Thanks, Lily W.

A: No problem Lily. When a property is being marketed for auction, provided the agent has advertised it as “unless sold prior (USP) the agent can present a pre-auction offer to the vendor. Once an offer is presented the vendor has three options: (1) Accept the offer, sign it and it’s a done deal (2) say ‘no thank you, we will wait for the auction date’ or (3) say “yes that’s enough for me to sell’ and bring the auction forward. In this case (#3) the reserve is set at the offer figure and the auction starts with that as the opening bid, and if no higher bids are received then the property is sold at the offered price. Of course other buyers can still bid and the property will then sell to the highest bidder.

In our opinion, 99% of the time pre-auction offers only benefit the buyer. And what are those benefits? Firstly, bringing the auction forward means that less potential buyers will view the property (one or two weeks fewer open homes) so the buyer is cutting down on competition. Secondly, most pre-auction offers are not at the maximum the buyer is willing to pay. We have seen many auctions brought-forward where there has been additional bidding and the buyer that made the original offer has bid many thousands of dollars more than their first offer.

The only up-side for the seller is that they get sold earlier, and they don’t have to go through the stress of an auction where they don’t know if they are sold until the day. In our experience most vendors ultimately care more about getting a good price.

Some real estate companies have a policy to automatically bring the auction forward if an acceptable offer is received prior, but we think that it should be the vendor’s choice to decide how they want to handle the offer – it’s their property after all! We are always willing to give advice of course, but that is all it is – advice. Remember that the selling/listing agent works for the vendor, not the buyers, so always bear that in mind when talking to the agent who is selling the property.

Q: I have found a property I really like that goes to auction in a couple of weeks. Problem is the open homes have been really busy and I’m wondering whether I should even bother going along? Robert H.

A: We know that the mere thought of standing in a crowded auction room with emotions running high is enough to put many people off, especially those who plan to bid, but the best advice we can give is to make the effort and just turn up anyway. We have seen so many people decide not to attend an auction because they think it will sell for more than their budget, only to find their dream property sells for less than expected.

Having said that, it doesn’t necessarily mean that they could have bought it for that price, as they’ll never know if the other buyer had a stronger budget and would have kept bidding if they had had competition. Being the underbidder can be frustrating, particularly when the other buyer pays only $1,000 more, but we will never know if that was their last bid or if they would have gone way higher.

As we have said, you won’t ever know if you don’t go to the auction!

In the current market we are finding that we are having very busy open homes. A couple of years ago we knew that for every 15 open home visitors we would get one bidder, on average. Now that number seems more like one bidder per 35 or 40 open home visitors. SO don’t be too put off by open home numbers. Instead you should ask the agent a few clever, pointed questions. Agents are required to answer questions truthfully, to the best of their knowledge. If you ask about the likely sale price of a property going to auction, be prepared to get a pretty vague answer. The truth is that in this fickle market no-one knows what the final sale price will be – it all depends on the level of interest and the seller’s motivation. So ask the agent about those! And don’t rely on the CV to give you much of a guide, CV’s vary considerably from property to property and can’t be relied on much at all.

To re-cap: Ask the agent the right questions, and go to the auction!

Putting in an Offer

Q: I put an offer on a property last week but was told that my offer was rejected in favour of one through another agent. Isn’t there some process to protect the buyer when two offers are received at the same time? Peter T.

This is what we call a multi offer, and the REINZ recommends a process to be followed in these cases. All offers should be presented to the seller at the same time so they can compare them and choose only ONE to either negotiate with, or these days more likely to just accept. Firstly, your agent should advise you that you are in this situation and let you know how it will work. What you need to know is that it is unlikely that you will get a chance to negotiate with the seller, so put your best foot forward right from the get go. Think about how much you want the property and how much it’s worth to you and base your offer on that. Remember you are in a competitive situation: It’s like an auction but you don’t know where the competition is at and in most cases you don’t have a chance to increase your offer – the best offer will win. This includes conditions as well – you should keep your offer as clean as possible so that is as attractive to the seller as possible.  Remember – there may not be a second chance!


Q: What is the difference between using the Building Inspection clause on the front of the standard sale and purchase agreement, and inserting a building clause in the “additional clauses” section? Which would you recommend to a purchaser? Raewyn T.

Good question Raewyn. Firstly, there is no obligation to use the standard clause rather than your own ‘custom’ clause (which you can insert under Further Terms of Sale). Formerly your agent or solicitor would draft a clause to go in the further terms of the agreement and the terms of the clause could vary. The new standard clause (clause 9.3 in the agreement) is designed to protect both vendor and purchaser from possible misuse of a custom written clause. The main points are:

Written report required: The report must be in writing and must be provided to the vendor immediately should the purchaser decide to void the contract on the basis of the inspection. Note however, that the new clause does not give the vendor the option of rectifying any defects.

Suitably qualified builder: The clause states that the inspector must be suitably qualified, so no getting your mate to have a look over the property if they are not a qualified builder or building inspector.

Ability to cancel (objective test): The clause also states that the purchaser must decide whether the report is unsatisfactory on an objective assessment – that is, would any reasonable purchaser, on reading that report, have found it unsatisfactory? The answer must be yes to cancel validly.

So those are the main elements of the clause. Of course as a purchaser you may want to have any minor defects found to be rectified by the vendor, or even negotiate a price reduction, and you will still have that right. However as a seller you need to be aware that this clause does not give YOU the right to rectify unless the purchaser agrees.
If the above points don’t suit you are still at liberty to have clause 9.3 deleted and have your lawyer insert your own building inspection clause under Further Terms of Sale. You may want to do this because you have a friend who you feel is qualified to look over the property, rather than paying for a full building inspection. Or if you are a seller and you want the option to rectify any defects identified rather than having the purchaser being able to cancel the agreement automatically.

Whether you are buying or selling, as with all contracts, it is best to get your lawyer to check and explain the agreement to you to ensure you understand what you are signing and that your interests are protected.