Monthly Archives

October 2018

Are You Worried About Your Auction?

Q: I’m thinking of selling my property and have been told to take it to auction. What worries me is that I’ve been to some auctions where hardly anyone turns up. How do I know I’m going to get a result?

Jerry B.

A: Property is an incredibly dynamic market. At any point in time there are a finite amount of properties and buyers in a market, but an infinite number of outcomes. Each property and auction campaign is unique, as is each property. So with all these variables anything can happen!

Generally speaking, an auction that has a big crowd on the day will also have a good number of bidders. You may think that an auction with ten bidders would get a higher price than one with just one buyer, but that is not always the case. Sometimes the only bidder in the room is “the buyer” and with good negotiating skills from the auctioneer we can get a price that our seller is delighted with.

One reason an auction might only have one bidder or limited bidding is that the agent has lost their main buyer/s in the lead up to auction day. It could be that the buyers have purchased something else, or they’ve simply had a change of heart. External factors like job losses, family illness and relationship upsets can also affect who turns up to bid. Either way, a campaign can go from having several strong interested parties to nobody at all, regardless of how fantastic the property is. Timing plays a huge part of any auction campaign, and if there are a number of comparable properties on the market at one time there’s a higher chance an agent will lose buyers during the campaign.

Something else that can happen is that you turn up to your auction and there are only 3 people there – your heart (and the agent’s!) will sink, but we’ve had auctions with just 2-3 people where they have all bid and the property has sold well above reserve, so don’t be too put off by numbers.

Finally, just remember that in real estate, a lot can happen in one day. We have had several auctions where the successful buyer viewed the property for the first time in the 30 minutes before the auction, and another, believe it or not, where the winning bidder was painting the roof of the neighbouring property and hadn’t seen the inside of the property until after he had won the auction!

Good luck with your sale.

Should we have a Property Inspection?

Q: Our agent has suggested that we get a building inspection before we list our home for sale. It seems like a waste of money to me – if a buyer wants one then can’t they just get it themselves? What’s your advice?

James L.

 

A: Personally, we think it is a sensible idea. It costs money but it could save you plenty, in fact it can be the difference between selling and not selling – especially at auction.

Why? We recommend that all buyers, whatever property they are looking at, get a building inspection before buying or bidding at auction. If we have a vendor’s inspection available for them to view then it can give them the confidence to do their own inspection – this is particularly important for monolithic- (plaster) clad properties. When an agent allows a potential buyer to view the vendor’s inspection report they must be very clear that the inspection was undertaken at the vendor’s cost and that the buyer should do their own due diligence, but it can certainly give the buyer the confidence to move forward in his or her decision making.

 

Getting your home inspected before you list it for sale can also help you avoid any unexpected surprises. Almost every home, even new builds, are likely to have issues raised in an inspection, so having one done before listing for sale gives you the opportunity to fix anything that may scare a potential buyer off. What most sellers don’t realize is the building inspection is the place where many sales fall apart. A pre-listing building inspection will allow you to get a clear picture about the state of your house – including any problems that may derail your sale. By getting most or all of the problems taken care of you increase the chances of having a smooth and pleasant transaction.

It pays to do this well before you go to market – there are few things as stressful as selling your home, and you certainly don’t want to add to the stress by having to do last minute ‘repairs’, so get an inspection well before you want to go to market and give yourself time to get your house ready for sale. Good luck.

Should I buy an Apartment off Plan?

Q: We are about to put our home of twenty years on the market and are considering buying an apartment in the city off the plans. The block we are looking at will be finished in another 18 months so then we can decide whether to move in for a while or rent it out. What are your thoughts in buying off the plans and what are the risks?

Julie & Bryan K.

A: Interestingly our partner company Loan Market has just published an article on this, so I have summarised this in my answer. Signing a contract for an apartment that is yet to be built can be a little daunting. After all, you’re handing over money for a property that hasn’t been built yet. Buying off the plan can be tricky but doing your homework can help prevent disappointment down the track. Here are some tips to help guide you through the process.

Firstly, researching the developer and their reputation is probably the most important step to determine whether to invest in a particular project. Reputation is everything, so research the work ethics and level of integrity of the property developing company. Definitely take a look around some of their previous projects and speak with owners (if you can) about how they feel about the company.

Next thing to research is the location. This is hugely important. If you are buying in the city then you will be fine for services such as transport and restaurants but just be sure to check that there are no new developments planned that might block your view or sun in the future.

The NZ Building Code should ensure that the building is properly built and weather-proof and that you will have all the required safety and security features (fire alarms, etc.) but be sure to check that sound-proofing, the standard of finish, measurements, car parking etc. are all consistent with what is in the contract.

During the course of building, the developer may still have the right to modify the building plans so it’s paramount to go over the contract with a fine tooth comb and ensure the contract mitigates the risks involved in purchasing off the plan.

As always, seek the opinion of your solicitor before committing to paper, and always talk to a mortgage advisor re your finance.

4 Questions You Must Ask at an Open Home

Q: We’ve been doing the rounds of open  homes recently. While some agents are really  helpful, many are not. What are the most  important questions we should ask when we  find a property we are interested in?

John & Becky L.

A: The open home is the best time to qualify  a property in or out of your search. Take the

opportunity to ask the agent questions face-to-  face rather than via email or phone. If it’s busy  then either come back another time or stick  around so you can speak directly to the agent  after the open.

Remember, the agent is not allowed to lie, but  many are pretty good at avoiding giving you a  direct answer! Here are four initial questions  (we’re assuming sales by auction here), to make  sure you are as informed as possible.

Why are the owners selling? It’s great to know  the seller’s motivation. If the owners have already  bought, or are moving into a retirement village for  example, then you know they are serious and the  property will very likely be sold.

How long has it been on the market? If a property has been on the market for a long period of time it is most likely due to an unrealistic price expectation,  so a good guide to owners price expectation. But don’t let that stop you making an offer!

What is the seller’s price expectation? You can certainly ask this but most agents will not give you a straight answer. We do our best to be honest and we often have the same list of sold properties that we have supplied to the seller at appraisal time, available at the open homes. No one knows what a property will sell for at auction, but the agent should be able to provide you with some realistic and relevant information.

Has there been much interest in the home? This gives you an idea of the level of competition you are likely to encounter on auction day. Don’t be pu off if the open home is really busy. A busy open home does not necessarily mean a busy auction,  so make sure you ask the agent how much interest there is, and base your decision on that.

We don’t have the space here to go into all the detail, but feel free to contact us at  steve.stone@raywhite.com with any questions.