Monthly Archives

February 2019

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!

This week we have the second part of our answer for Jerry – wondering whether to buy a unit or an apartment!

One of the perceived downsides of owning an apartment is the body corporate fee. These range in price depending on the apartment: If your block has a swimming pool, tennis court and elevator(s) then, of course, the body corporate fees are going to be higher – but you get to use the amenities at a fraction of the cost of owning it by yourself. The value of the apartment also affects the BC fee – the more expensive the apartment the more you are likely to pay each year. What many people tend to forget is that with your own home there are ongoing costs such as painting, roofing etc., while all of this, including building an insurance and sometimes water rates, is taken care of through the body corporate. The average price to paint a 4 bedroom home in NZ is well over $30,000 every 10 years, while the average cost to maintain a swimming pool in the US is estimated at over US$3,000 per year. So while body corporate fees may sometimes seem high, they are just a reflection of normal property maintenance.

There are quite a  few options when it comes to apartments: City apartments tend to be directed more at the investment market and are often quite small (less than 50m2) and not something we would usually recommend to a first home buyer: Great return on investment but often limited capital gain. Next up are city fringe apartments, in areas like Newton, for example. Some of these are worthwhile considering as first homes, but the newer ones cost up to $16,000 per square metre. Suburban apartments are our personal choice. As we said we bought in Remuera. It’s a 1970’s build, very solid and has a swimming pool and tennis court, meaning the body corp is relatively high but it cost us less than $8,500 per m2, so –pretty good value compared to most newer apartments.

As we said last week, it all depends on what you can get for your money and how concerned you are about re-sale. Units seem pretty pricey at the moment while some apartments really do seem like better value.

Best First Home Buy?

Q: We are first home buyers and are wondering what your advice would be re buying an apartment versus a small home or home unit? Our concern is really around which will be the best investment for us when we (hopefully) move up to a family home in another 5 or so years.

Jerry D.

 

A: We are often asked about this, and it’s quite a complex subject, so we will be answering this in two parts – Part Two next week.

In the past, we have always said “buy land, because they’re not making any more of it” which would suggest that a unit or house with a bit of land would be a better investment than an apartment.

But let’s look at the facts: House values in Auckland have risen by 60.63% since 2012, while apartment values have risen 57.21% (Source homes.co.nz); not a huge difference really. So in terms of future sale price you are probably ok either way.

What may be of more importance to you is how the two differ in terms of initial cost, and on-going maintenance.

Here’s a real-life example: We recently bought an apartment in Remuera, rather than a house/unit. It suits our real estate lifestyle of course, being secure and low-maintenance. But what surprised us was what we saw at the auction. The apartment came up for auction immediately after the auction for a 75m2 brick and tile unit in Royal Oak with about 60m2 of garden/grounds. Now you should know that our apartment is 115m2 and is located in double Grammar zone. It also has great harbour views from a good-sized terrace, and the complex sports a swimming pool and tennis court, all built in the 1970’s.

Now, back to the auction: The home unit was fiercely bid for and ended up at just over $1.1m! Ours was up next and we paid well under $1m, and were left wondering why we hadn’t had to pay more.I can hear people saying: Yes, but you will have a body corporate to pay every year. Yes, we do, and next week we will go into the ins-and-outs of body corp fees and general home maintenance costs. We will also talk about other apartment options.

The Dilemma: New house or Existing Home?

The Dilemma: New house or Existing Home?

Q: We are debating whether to buy a new house in a new subdivision or an existing home nearby. Any suggestions on which is the better long-term idea? Raymond L

A:  Well Raymond, the first thing to consider with real estate is of course: Location. As you are looking at new or old in the same area, then the other things to consider are affordability, securing finance, and what works best for you.

When you build a new property, you have the opportunity to start with a blank slate and can create what you want from the outset. You have the freedom to pick everything from the location, the home’s design, and the other details like wall colours, landscaping, and customised fittings. Unfortunately, most existing homes will require costly changes, renovations, and remodelling to turn them into your perfect home.

The older a property, the more maintenance it requires to keep in top condition. Small issues need to be fixed regularly before they become difficult and costly to repair. Everything in a newly built property is brand new, which means it should require very little, or no, repairs and maintenance. Another benefit is that a new property will be under warranty, and if anything is faulty early on, the repairs or replacement should be fully covered.

When you build new, you are less likely to face issues such as mold, damp, lead paint, asbestos, or even allergens, which can affect your health and wellbeing. With new, energy saving standards being implemented throughout and modern appliances, your new property should also have better heating, cooling, and ventilation, which is good for your family, as well as the environment. 

The latest building trends are all moving towards smart technology, and ultimately changing homes into smart homes. Not only is new technology convenient and exciting, but it can also make a huge difference to the efficiency of a property and drastically reduce utility bills. Your builder should be able to give you options to choose modernly advanced, building materials (which are usually more durable, safer and easier to maintain), as well as a choice of technology for your new appliances, and heating, cooling, and safety products.

A brand-new home should already have a higher value than an older, but similar home from the start, but when you build you also have the power to choose every detail of the home with future value in mind. This means that you can choose design features like a stylish elevation, open floor plans, ensuite bathrooms, high ceilings and outdoor living areas, which will be highly desirable to future buyers.