All Posts By

SteveandLisa Stone

Where Should my Property be Advertised?

Q: I’m about to list my property for sale and I’m concerned that I get it marketed properly so that my home sells for the best price. What should I be looking out for?

Bruce F.

A: It is really refreshing to hear someone asking about how best to market their property. In our opinion, a comprehensive marketing campaign is the first, and possibly the most important step in getting a premium price. There are three main areas to cover: online, print, and social media.

Advertising online will certainly get you in front of buyers, but these buyers are actively searching for a property and you need to reach  ‘passive’ buyers too. Passive buyers come from print advertising. Secondly, make sure your agent uses a professional photographer to take the photographs of your property, and make sure he has someone complete a floor plan. This is all about making sure you get as many people to view your home as possible –  amateur photos will not do the job.

Check the copy for print advertising. Your agent should run this by you prior to having  it submitted to the magazine or newspaper.  People make mistakes, so check spelling  and grammar carefully. Do the same with advertisements as soon as they appear online.

Facebook: Not many agents know how to market on social media, but it can be a very effective way to advertise to a large and active audience. Ensure that your agent has a plan,  and check them out on Facebook to see how many followers and interactions they get. You do not need to be on Facebook to get your home sold, but if you want to maximize your exposure to produce more bids on your home,  this social market is great exposure.

Don’t choose an agent just because they offer you a low-price marketing budget – make sure all your bases are covered so that you reach as many potential buyers as possible, and you will have your best chance of getting a premium price.

What’s My House Worth?

Q: We are moving out of town and selling  our home of the past 9 years. It’s a little  shabby and could maybe do with a bit of  work. We have had two appraisals from  agents, but they both have given us a value  below what we need to sell it for, and below  what it’s worth. What should we do?

Try another agent or spend some money  tidying it up? Janice W.

A: Many people think that what they paid for  their home, or even what size mortgage they  have on it, makes it worth a certain price. You  may try another agent and that agent may well  give you a price that is close to your number,  but don’t be fooled: At the end of the day, it’s  only worth what a buyer is willing to pay for it  and a reputable real estate agent should never  give you a price just to get the listing.

If your property needs “tidying up” then by  all means give it a tidy and a declutter but  don’t go down the renovation road because in most cases you only get back a percentage  of what you spend. Different improvements  offer different returns but in general these  improvements will make your home easier to  sell, but not necessarily increase the sale price.

Finally, remember that everything is negotiable.  Don’t focus just on the sale price – for example  you can perhaps negotiate the price using  some of the chattels that are not normally  included in the sale (maybe include the fridge  that fits perfectly in the kitchen – it may be  worth just $1,500 to you, but maybe more like $5,000 in convenience to the purchaser). The  settlement date can be used as a negotiation  too: Perhaps you can settle early to suit the  purchaser and  save a few thousand on your mortgage even though their offer is a  little below what you really want.

As above, at the end of the day your house  will be worth what a willing buyer is prepared  to pay, and that buyer will be found by a good  agent who reaches as many potential buyers  as possible via a good marketing plan.

Good luck with your sale.

What’s an Agency Agreement?

Last week we answered Diana’s question on why her home had not sold, and because we mentioned that it might be because she is using the wrong agent we thought we should tell you what is involved in a Sole Listing Agreement, and when and how you can cancel it. The real estate agent you choose to sell your house will ask you to sign an agency agreement.

This is a legally binding contract so make sure you read and understand it before signing. Your agent should also recommend that you take legal advice before signing.

Your agent must also give you a copy of the REAA  Agency Agreement Guide which explains your rights under the agreement.

If you use any of the major Auckland real estate brands you will most likely be signing an agreement that contains just the approved standard clauses – if your agent modifies the agreement in any way then definitely seek legal advice before signing.

Your agent must explain to you when the agency agreement will end.  Make sure you check the cancellation terms. These can vary from agency to agency.

A sole agency agreement gives one agent or agency the exclusive right to market and arrange the sale of your property. If you sign a sole agency agreement you should not sign another agency agreement with any

other agent until you have cancelled the first agreement.  If you do, you may have to pay all agents a commission,  regardless of which one arranged the sale.

If the sole agency agreement is for a residential property and for a term longer than 90 days, the client or the agent can cancel the agreement at any time after 90  days.

Make sure you check what happens when the sole agency agreement is cancelled. Some sole agency agreements become general agency agreements when cancelled – this means that you will also have to cancel the general agency agreement if you no longer want to work with the agency.

When a sole agency agreement is cancelled your agent must give you a list of people they have introduced.

If you sell to one of these people, the agent may be entitled to a commission.

If you change your mind after signing a sole agency agreement you can cancel it by 5.00pm on the first working day after you have been given a copy. This must be done in writing ie, letter, email or fax.

However, if an agent carries out any work before the agreement is cancelled and that work results in the sale of the property after the agreement is cancelled, the agency agreement will be legally binding and you will have to pay that agent commission.

Why isn’t my Home Selling?

Q: We put our home on the market 3 months  ago (auction) and had no bids. Since then we  have put a price on it but we haven’t received  one written offer. Our agent is a lovely lady but  we just don’t seem to be getting anywhere.

Any suggestions? Diana C.

A: There is nothing as frustrating for a home seller as their home not selling, and I’m sure your agent feels the same way too!

There are a number of possible reasons, but the most obvious is price. If you have been through an auction campaign and had feedback at say $1m  and you are holding out for $1.2m then maybe that’s your problem, especially if the market is

not on the rise. We are often confronted with a  potential seller who has based their price on what the house owes them, or what a neighbour’s  property sold for. The sale price is determined by the buyer, not the seller I’m afraid.

Another reason can be your choice of agent.  There is no doubt that a good agent will get you a better price than an average agent, and in a  tough market such as we have now, this is even truer. We have written before about choosing the right agent for you, and as we say, it’s even more important in the current market. Make sure you have good rapport certainly, but also check their listings to sales ratio: How many properties  have you taken to market this year, and what percentage of them have sold? Over 80% or 90%  is good.

There may be a whole raft of other reasons you are still on the market. People will tell you that presentation makes a big difference, and it does.  But price will always trump any other reason:

If your home needs a $100,000 makeover then it will be reflected in the price. Drop the price by $100k and you will very likely sell. If you want to spend the $100k doing the makeover you may find it easier to sell, but not necessarily for an extra $100k!

We’re sorry you haven’t managed to find your buyer, but keep an open mind and think hard about what you are willing to accept in order to move on.

Next week we will talk about what your rights are in terms of a listing with a sole agency.

What is a Final Inspection?

Q: I purchased a house at auction last week.  I have been told I have the right to a ‘final inspection’. What does that mean exactly?  Alison M.

A: Congratulations on your purchase! Yes, you have the right to inspect your new home prior to taking possession at settlement (when the exchange of funds and the title takes place). The final inspection entitles you to look through the property to ensure that it is ‘as inspected’ i.e. it is in the same condition as when you last saw it, excluding reasonable wear and tear, before bidding at the auction or having your offer go unconditional.

What this highlights is that you should be very sure of what you are buying before making an offer or bidding at auction. We strongly suggest you have a building inspection to be sure that you have identified any issues of concern. If there is a hole in the carpet that has been covered with a rug, or a hole in the wall behind a painting, you need pre-settlement inspection the pre-settlement inspection. Unless you can prove that it was not  there when you inspected the property then there is  no come-back for you.

A few things to consider:

Anything that has not been excluded as a chattel  should be in good working order: We suggest that  you check that all the lights work, and that any  included appliances (stove, dishwasher, waste  disposal etc.) are all in working order. A competent  real estate agent will have noted on the Sale and  Purchase agreement that any chattels that are not  working are either specifically excluded from the  chattels list, or are noted as “not in working order”.

Under NZ law the property does not have to be  cleaned prior to settlement but should not have  rubbish left on or in the premises – so it doesn’t  have to be ‘clean’ but it does have to be ‘tidy’. So  if, for example, you notice a pile of old bricks under  the house when you are looking through before buying, be sure to mention to the real estate agent  that you expect them to be gone by settlement – the  last thing anyone wants is a last minute dispute  when you are about to take possession and move in.

As always, be sure to seek professional advice when buying a property, and we’d just like to re-iterate that a building inspection is a really worthwhile investment.

Enjoy your new home!

Can you trust on-line valuations?

Q: We are looking at buying, but find it really hard to get a price indication on auction or  ‘by neg’ properties. How accurate is it to use  the CV of an online estimate of the sale price?  Julie and Bruce

A: Didn’t your mother ever tell you “Don’t believe everything you read online”! There are some real problems with online valuations. No-one  has actually looked at the property. Basically the estimate is the result of a computer algorithm and doesn’t take into account interior condition,  renovations, aspect, charm or just the general feel of the home. The Auckland property market moves rapidly, and online estimates are based on historic data of settled sales – sales that settled in the past month may have actually sold  at auction several months earlier so the sale price is way out of date.

Remember too that there is more than one price for a home: It will be a different value for a buyer who wants to make it their home versus an investor. It may be worth more to you if it’s close to family, or in a school zone that you particularly want. These are the kind of factors that can lead to one buyer paying much more than another.

We have written before that we bought our apartment for just under $1m. Would we care if we had paid just over a million? Not at all. It just doesn’t matter in the scheme of things as long as you get the home you want and you are going to live in for the medium to long term.

We see online valuations that are both too low and too high. Don’t let an online valuation pressure you into paying more than you think it’s worth to you. It is your opinion of value that counts, not a computers!

When you find a home that you really think will work for you, our very strong recommendation is to do your own in-depth research on sales in the area. Take the time to visit other open homes nearby and ask the agents what they think. By all means look up the values online, after all, the more information you have the better, but don’t  let a computer-generated valuation stop you fro trusting your instinct and getting the home of your dreams.

Does a Sleep-Out Add Value?

Q: Hi Steve and Lisa. We have bought a  property in South Auckland as an investment and have noticed a few of properties in our area have sleep-outs in their backyards. This seems to us to be a great way of adding rental income to our investment. Is it worthwhile, does it add capital value, and how do we go about it?

A: A minor dwelling (or sleep-out) is a second unit built on the same title, detached from the primary residence. It has its own bedrooms, bathroom,  kitchen, separate water and electricity meter.

The average size of a minor dwelling is 60-65sqm,  and varies depending on the zone you’re living in.  Adding a sleep-out to your home property can be a cost-effective way to provide a home for elderly relatives or older children struggling with rising rent. It can also be a great way for investors to generate extra cash flow through rental income and increase the property’s overall value.

With rental yields of anywhere between $200 and $600 a week, sleep-outs can be a great strategy if you’re looking for a long-term return on investment. Not only that, but a sleep-out can make your property a far more attractive option and stand out from the competition when it comes to selling.

In terms of how to go about it, the first stop is your council. If you are adding a building of more than 10m2 then you will need building consent (and 10m2 is too small for a sleep-out!)  Regulations regarding what size your minor dwelling can be will vary from council to council so be sure to check before you buy. Once you know what you can fit on your land then Google  “minor dwellings NZ” and you will see that there are plenty of options. By law, sleep-outs must comply with both the Building Code of  New Zealand and any relevant NZ standards, so go to a reputable company to ensure you will be fully compliant. Useful information can be found at www.building.govt.nz as well as on your local regional or city council website.

Just one word of warning though: A sleep-out that isn’t in keeping with the design of the existing property or encroaches too much on the garden may actually end up devaluing the property, so use common sense and install something that fits your property.

Pools

Q: Hi guys, even though we didn’t really have a summer this year we are seriously considering putting in a pool for next summer.  We were a bit taken aback at the price so just want to know if it is going to add value when we eventually sell. Can you help? Thanks, Jan and Don W.

A: Firstly, adding a pool will not always add value.  On occasion we get buyers who see the pool as a detriment rather than attribute to a home.

In general though, a pool is likely to be an advantage at sale time, but it has to be done well so it doesn’t detract from the appeal of the home.

Pools are often considered statement pieces and should always add aesthetic value – in other words, they need to look good and fit with the general style and feel of the home. Pools should complement a property, rather than take attention away from it.

The best pools are almost an extension of the house, making them visible from living rooms and other areas within the home and bringing that all important ‘indoor-outdoor flow’ to your home. Glass fencing looks fantastic and doesn’t visually  interfere with the outdoor flow, but it can be  expensive so be sure to get a quotation for the  whole installation before ‘jumping in’(pun intended!)

Another factor to take into consideration is whether the project will over-capitalise your home. Remember, you can always ask a good real estate agent to come around to give you their opinion of value before and after – a second opinion can sometimes save you money and heartache.

When it comes to selling, remember that while it  can be aesthetically appealing and can enhance  the value of a home, a neglected pool can do the opposite, so make sure the pool is vacuumed, the  water crystal clear and clear of leaves and other  debris when it comes to going to market and  having your open homes.

For buyers looking to purchase a home with  a pool, make sure the real estate salesperson  shows you documentation to ensure the pool and fencing is fully compliant with council regulations.

 

Sale & Purchase Agreements

Q: What are the implications of making a conditional offer on a property, and what conditions are available to us? Jeremy P.

A: What a great question Jeremy! This is a big subject so we will answer in ‘instalments’ over the next few weeks. Firstly, the more conditions there are in an offer to purchase property, the less attractive that offer will be to a vendor.  Vendors have a natural aversion to contracts with many conditions because each condition introduces more opportunity for the purchaser to cancel the contract and therefore more risk to the vendor that the sale will not proceed. So if you are in a competitive (multi-offer) situation then you either need to be offering a good price or have as few conditions as possible. The three most common conditions are listed on the front page of the sale and purchase agreement (9th edition): Finance, LIM and building inspection. (It also includes OIA Consent. This is seldom used and applies to foreign buyers purchasing ‘sensitive’ land – and that’s a whole other subject!) And there is then the option to insert conditions in the Further Terms of Sale towards the end of the agreement. These are probably the conditions that you will be more interested in – things such as Due Diligence, Back-up agreement, Escape clause, sale of purchaser’s property, etc. There are plenty of them!

Before we get into what the various clauses mean, just be aware (just stating the obvious here!) any conditions that you put in the agreement are intended to be fulfilled: clause 9.8 (2) of the agreement requires purchasers to “do all things that may reasonably be necessary to enable the condition to be fulfilled by the date for fulfilment.” So if you put in a subject to finance clause (more on that next week) that means you are expected to at least seek finance from banks and other lenders. If the vendor can show that you haven’t done that you cannot exit the agreement because ‘I haven’t managed to get my finance’.

We will go through a few of them over the next few weeks, starting with the common ones.

So let’s start with finance. This is one condition that some think is a bit of a catch-all for buyers to almost indiscriminately exit from a contract. But according to clause 9.8 (2) (“the party for whose benefit the condition has been included shall do all things which may reasonably be necessary to enable the condition to be fulfilled…”) the purchasers must seek finance from banks and other lenders. As we say, some think this is an easy way out of a contract but recent court rulings, where the purchasers have made no attempt to secure finance, have resulted in the purchasers having to pay (sometimes considerable) costs to the vendor.

The finance condition is usually entered under Conditions on the front page of the agreement. Here you enter the Lender (you don’t need to nominate a lender, you can put “purchaser’s choice” if you prefer. If you don’t want to disclose how much you are borrowing you can enter “sufficient to complete” under Amount Required. Finally, under Finance Date you may decide to put an actual date (perhaps your preferred unconditional date), or a number of working days (usually three to five) – your real estate agent will help you here.

Incidentally, under Clause 9.8 (6) “At any time before this agreement is avoided, the purchaser may waive the finance condition…”. This means that if your finance comes through prior to the finance date you can tell the vendor or his agent that the condition is satisfied; you don’t have to wait for the time stipulated under the finance clause.

Next week we will cover off the LIM clause. This is an interesting one as it can be quite complicated.

As always, please seek legal advice BEFORE you sign a sale and purchase agreement – whether you are buying or selling.

We covered finance last time, so now we would like to go over another well-used clause: The sale being conditional on your acceptance of the LIM (Land Information Memorandum). In our opinion it is essential for you and/or your lawyer to view the LIM prior to purchase – the reasons for this will be the subject of another article at a later date.

You have two choices when including a LIM condition in the contract: You can use the clause on the front page of the contract, or you can insert your own clause under Further Terms of Sale.

Inserting your own clause gives you plenty of flexibility of course, so let’s look at what the standard front-page clause means to a prospective buyer.

When you ask for the LIM using this clause you have a total of 15 working days in which to order and examine the LIM. The 15 days includes up to 5 working days to order the LIM, and then another 10 days in which to review it. If there is anything that you are unhappy with in the LIM “on reasonable grounds” then you need to advise the seller and/or his solicitor exactly what it is, in writing, within the 15 working days – failure to do this will result in the clause being taken as satisfied. The vendor then has the right to give notice of their intention to remedy within 5 working days of receipt of the notice. The issue(s) must then be remedied by settlement date (the date at which you take possession of the property) otherwise the agreement will be cancelled.

If they won’t or can’t remedy the issue(s) then, again, the agreement is null and void, and your deposit, if any, must be refunded to you.

As with any legal agreement be sure to get legal advice before signing and make sure your solicitor checks the LIM thoroughly for you.

Selling a Property

Q: I’m looking at selling a property by auction. Last time I sold was over twenty years ago so it’s all a bit new to me. How long will it all take? Darryl H.

A: If you are in Auckland you will find that most agencies suggest a three week marketing campaign (three weekends of open homes) with the auction being held, usually, mid-week following the last open home. But before this they will need about a week and a half to organise professional photography, book press and gather the necessary property information (title, LIM, council property pack) – so allow up to five weeks from signing the listing agreement until you are sold. If you sell under the hammer you will normally receive a deposit of 10% of the sale price. This is held in the agency’s trust account for 10 working days before being released to your solicitor, less the agency’s fee (commission). The balance of the sale price is payable by the buyer at settlement, which can be anything from several days to several months or even a year or more, depending on what you have arranged prior to the auction.

Q: I am curious about auctions. Is it best to have them in rooms or on-site? And what exactly is a “vendor bid”? Danny S.

A: What a great, topical question – especially with all the talk in the media about how auction clearance rates have dropped in the past few weeks. Auctions are a very popular method of sale in Auckland and it surprises me how some agents fail to explain the process to their clients when it is so important to the sale. We almost always hold our auctions on-site. This helps in several ways: Firstly, it is all about your property – it’s not lost amongst another 20 or 30 properties. It also means that we can take as long as we need to take bids and negotiate. Did you know that can take over 40 minutes to add $100,000 to the price in bidding increments of $1,000? You don’t get that opportunity in an in-room auction where there can be a time-limit of less than 10 minutes per property. (It always amazes me that people are willing to spend just 10 minutes auctioning a property after spending so much time and money on open homes and marketing.) The extra time available with on-site auctions also gives us the opportunity to re-inforce potential buyer’s emotional attachment to the property. We open the property 30 minutes prior to the auction and have plenty of time to introduce the auctioneer and allow them to re-engage with the property as they walk around “their new home”.

A Vendor Bid is essentially a bid made by the auctioneer on behalf of the seller. It must always be announced as a Vendor Bid by the auctioneer and must always be under the reserve price. We firmly believe that vendors should be allowed to take advantage of their right to have the auctioneer to “vendor bid’ on their behalf. What it means is that the auctioneer can get auctions going and build some momentum when there is maybe just one buyer for the property. We have found that in recent times, with fewer buyers at auctions, a vendor bid is invaluable in getting the auction moving. This is borne out in our auction clearance rates: Our office clearance rates for auctions for the past 3 months is well over 85% (most, but not all, under the hammer). In terms of our own (The Stones) last 4 weeks of auctions – 5 properties – all sold under the hammer with the exception of one selling 24 hours later. All auctions are not created equal!

Q: My agent has told me that the best time to sell is in winter but I think my house looks better in spring – is he just trying to get me to sign up now or is it true? Jenny F.

A: There is no doubt that most houses look better in spring and summer, but unfortunately that means that most people decide to go to market then. The property market is like any other market – it’s all about supply and demand. So because demand is high (as it is now in Auckland – all our open homes are really busy) and supply is low (because so many sellers are waiting for spring/summer) it is a great time to be selling. Things will change in another few months, especially given the law changes coming up in October (more on that later), so my advice would be to go to market now and take advantage of the shortage of supply.

Q: Is it better to sell my house through an ‘exclusive’ listing where just one agent lists it, or should I engage several agencies? Seems to me that the more agents involved the more buyers I will get. Thanks, Jeremy W.

Good question Jeremy. In my opinion you should go with just the one agent. A good agent will ‘conjunct’ (i.e. share the commission with any other agent who brings a buyer along) so you will not miss out on any potential buyers. When a listing is shared by several agents/agencies (i.e. a ‘general listing’) you will find that they will all expend some effort for the first couple of days and then often forget about you and move on. When you list with one agent, and invest in some marketing, the agent knows you are serious about selling and will really try to get you sold. At the end of the day, if you show 100% support for your agent then they will show 100% support for you.

Q: I am looking at listing my house for sale. Can you give me some ideas on how we can get it ready for sale? I’m particularly interested in whether it’s worth staging the property. Raewyn L.

A: Good question Raewyn. We cover this comprehensively in our book “Sold” so I am sending you a copy, but in the meantime, here’s the short answer.

Firstly, we would highly recommend that you have your property staged (or ‘dressed’) if you’ve moved out and it’s vacant. This really is a no-brainer and you will get a return on your staging ‘investment’. If you are still living there and worried about your furniture being up to scratch there are companies that specialise in staging properties using existing furniture complemented by their own additional items (throws, rugs art etc). If you are happy with your furniture and your agent tells you it all looks fine then here are a few cost-free things you should do, at little or no cost: Nothing will scare off a potential buyer faster than a dirty home. Though some agents will recommend that you hire a cleaning service for a top-to-bottom deep clean, you can save money by taking care of this on your own, provided you’re willing to put in the time and elbow grease: You have to pack to move anyway, so you can get a jump start on it by gathering any and all personal decorative effects. This includes framed family photos on your walls or shelves, picture albums and all your personal knickknacks. Buyers like to envision themselves living in your house, and that’s much easier without things that remind them of you. Living a normal life requires a fair amount of stuff, but you’ll need to keep all signs of being a regular person hidden while your house is on the market. Once you’ve finished packing away your personal items, use your spare time to pack anything you don’t need on a daily basis. Clear shelves of books, pack away rarely used games and DVDs, and remove out-of-season clothing to make closets look more spacious.

If you live with young kids, have them choose their favourite toys to keep on hand, but only allow ones that can easily be stowed away under the bed or in a toy chest out of sight when your agent calls with a 15-minute warning for a surprise viewing. For adults, clear a bathroom and kitchen drawer that you can sweep counter clutter into in a pinch. If you’re willing to spend the time and put in the effort to stage your home, you can make your house appealing to prospective buyers without spending any money at all.

Q: I am thinking about selling privately but I’ve been told there are potential legal issues I should be aware of. Can you tell me what these are? Andy C

This is a question for a lawyer and Nick Birdsey, of Birdsey & Associates has kindly agreed to answer it.

A: There are many reefs under the waves in selling your property without professional help. The Agreement for Sale and Purchase has many obligations in the “fine print” and needs the correct clauses and conditions. These deal with potentially minefield vendor topics such as compliance or otherwise with local authority matters, for example, additions and alterations. Purchasers may want building reports and LIM reports, and all these clauses have to have the right wording. Timing too is important- tenancies have time limits which can trip you up. We have even had to point out that settlements do not happen on the weekend, banks need to be involved so that mortgages are discharged! When it comes to the Title, you should be aware that there can be still more fundamental title issues with properties such as cross leases (that apparently harmless carport can cause lots of headaches!) and Unit titles. These should be addressed before pen goes to paper on the Agreement or it may end in tears.  In summary, the use of experienced professional agents and lawyers will give you real peace of mind.

Q: My husband and I are thinking hard about moving out of Auckland, with the hope of becoming mortgage free. This means selling our home in Remuera and moving to somewhere like Tauranga. I understand this is happening a lot – do you have any suggestions on where best to head and where we could get the best value? Jenny M

A: You certainly are not alone Jenny! With the median price in Auckland in December last year at $867,000 (according to REINZ) it’s no wonder people are looking to move out if they are not tied to the city for work or family reasons. In the past six months we have sold homes for people who have moved from Auckland to Mt Maunganui, Hawkes Bay, Queenstown, Keri Keri, Cambridge, Dunedin, and more. Two of our recent vendors have even moved to Queensland.

But let’s stay local for this. As you will have read, many of the regions have had very strong increases in value, while some have stayed quite stable. REINZ statistics show that Queenstown has had a huge increase from December 2014 to December 2015: 54%! The median price went from $490,000 to $752,000. If you want somewhere cheaper (and warmer?) you could try Keri Keri. The median price there moved from $400,000 in December 2014 to $515,000 in December 2015 (29%). Although Tauranga and Mt Maunganui have been hitting the headlines more than most other areas they aren’t so bad. The December 2015 median price in the Mount/Papamoa was $560,000 up by 24% from the previous December, while Tauranga was up by 16% to $470,000. Further away, and far less expensive is Gisborne: The median in December ’15 was just $238,500, down from $255,000 the previous year. Napier also seems like good value at $345,000, especially being close to the vineyards!

Of course all we have compared here are median prices, we haven’t taken into account whether you could find work, you like the area or can find the perfect house for you.

What the numbers do tell us though is that you could potentially pay off your mortgage, or certainly reduce it significantly by moving out of the Auckland region. Hope that is of help Jenny, and good luck with your search.

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. This is Part One – Part Two will follow next week.

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.

Most people are most concerned about getting the very best price and many focus too much on costs (commission and marketing) instead of getting the best sale price. A really good agent will more than make up the difference of a few thousand dollars in fees when they sell your house for tens of thousands of dollars more than the ‘cheaper’ agent, and a good agent will be very reluctant to discount. The same goes for marketing. The question of ‘costs’ should be the least important on your list, and here it is:

What is your listing to selling ratio? (I.e how many properties that you take to auction do you sell?)

What is your marketing plan? How will you make my home stand out from all the others on the market?

How many potential buyers do you have on your database?

How do you use technology to reach potential buyers?

How will you keep in touch during the sales process?

What sets you apart from other agents?

What is also pertinent in today’s market is: What is your auction strategy if you have only one buyer? And do you use vendor bids?

Next week I will run through some of the answers you should expect, whether or not you have to really like the agent you engage and lastly, what is important in an agent from an insider’s point of view.

  1. We are thinking of selling our home of 40 plus years. We’ve never sold a property before and are a little concerned about the whole process, especially from a stress point of view. Can you offer any advice?

Some people get emotionally attached to their cars and have a hard time selling them. To get an idea of what it will be like to sell your home, magnify that reaction by about 100 times!

The first thing to do is to understand that it will be stressful and be prepared for that.

Next talk to a few real estate agents: I’ve covered what to ask them in previous articles, but for you the main thing is to find someone capable (check out their testimonials and success rates – especially for auctions) and who you feel you can really relate to. Then listen carefully to their suggestions. And don’t let them push you: Wait until you’re ready.

Maybe you have no choice but to sell — which can be even more difficult emotionally. Get as much support as you can from friends and family. Be honest with your real estate agent about how difficult this is for you. The more information you give the agent, the more they can work around any potential problems.

When you are emotionally attached to your home, it’s difficult to see it as a product. But that’s what it is — something you have to sell and that, with luck, others will want to buy. You can also get in your own way of succeeding.

Often, a seller who isn’t emotionally ready to sell will insist on wanting more than the market will bear. This is why it’s imperative that sellers should be emotionally ready to sell; when they aren’t, they can subconsciously sabotage the process. We’ve seen many instances where a home has been on and off the market for over a year with multiple real estate agents and approaches to selling it. What started off as an overpriced home ended up selling for a bargain to a buyer who capitalized on the seller’s mistake.

So the message is: Choose a good agent who you trust to help you, and listen to their price feedback.

Q: I am thinking of selling my 1970’s-built home in Glen Innes. There are a number of new houses being built close by and I’m wondering whether I should wait for them to be finished or just get on with it now? Pauline J

A: Interesting question. The market is good at the moment, and I think it will stay that way in the medium term, albeit with maybe a few little ups and downs. The great thing about having new-builds in your neighbourhood is that it will increase the median value of homes around you, including yours, even while they are in the process of being built. So it’s probably not a bad time to be selling right now. Of course once they go on the market it is a great time for you to be selling – new homes will attract more buyers to the area, and of course to your property if you are on the market at the same time. A smart real estate agent will time your open homes so that you get the overflow from the other open homes – most open home visitors will look at another open home across the road if it’s open at the same time. In general terms more people through the open homes equals more bidders at auction equals a higher price! Good Luck!

Q: We are looking at selling our home of 12 years on the North Shore, and are talking to a couple of estate agents re how to sell. We are originally from the United Kingdom and have only bought the one home here and have no experience of selling here. Both agents have said we should hold open homes, but we are really not sure.  Catherine G.

A:  There are pros and cons to open homes Catherine, but in our opinion the pros win, and not just for sellers, but for buyers too. Firstly, open homes, like auctions, are an accepted, and often expected, way of marketing your home. Most buyers these days like to schedule their weekend afternoons going through a list of prospective homes, and what better way than to go from open home to open home? If they don’t like it they can turn around and walk out without feeling under obligation to the agent. If they do like it they can arrange to view again at whatever time suits you. And of course potential buyers can ask to view outside of open homes if they can’t make the time on the weekend.

The real benefit to you as a seller is that you have scheduled viewings on a Saturday and a Sunday, rather than ad hoc viewings every day of the week. You can go out shopping or for a coffee and know that 30 or 45 minutes later your home will be free for the rest of the day. Of course there will always be those buyers who want to come back on their own, or with other family members, and serious buyers may well want to organise a building inspection outside of the open home.

Open homes also gives you and the agent to show that your home is popular: A busy open home sends a message to all the buyers that the property is popular, which in turn makes it more desirable to viewers.

As long as you select a good agent, who has produced a good marketing plan, you will get plenty of people through your open homes, which in turn will ensure you get the most number of people at the auction and the best possible price.

Good luck with your sale!

Q: Now that our children have all grown up and left home we want to downsize from our current property in Parnell to a smaller property. We are worried though that if we sell we won’t be able to find anything we like. What options do we have? Margaret B.

A: This is a very common question these days Margaret, especially with the shortage of houses on the market in Auckland right now.

Obviously you have two choices: Sell first then buy, or buy first then sell. If you buy before you sell you won’t really know what your budget is (you can’t be sure how much your home will sell for) and you may very well need bridging finance to get you through the period between when you have to pay for your new home and when you settle on (and get paid for) your current home. (The length of settlement is the time between unconditional date, often the auction date, and the day the new owner pays and takes possession). You can minimise this by asking for a long settlement on your new home, and then be ready to go straight to auction on your current home as soon as you have an unconditional agreement on your new home. This may enable you to get sold and settled before you settle on the new home, but what if your purchaser wants a long settlement too? Either way you do run the risk of being forced to get bridging finance. In the very worst scenario you may have trouble selling your home and end up owning TWO properties – not always ideal!

Alternatively you can do what most people seem to be doing these days: Sell first and then buy. Of course as you’ve said, the risk here is that you can’t find anything to buy once you’ve sold. However, what we have found is that people who have sold get very focussed very quickly on finding their new home, and they become a lot less fussy! And if it takes longer than you expect there is always the option of renting while you search.

Staging

Q: I am looking at listing my house for sale. Can you give me some ideas on how we can get it ready for sale? I’m particularly interested in whether it’s worth staging the property. Raewyn L.

A: Good question Raewyn. We cover this comprehensively in our book “Sold” so I am sending you a copy, but in the meantime, here’s the short answer.

Firstly, we would highly recommend that you have your property staged (or ‘dressed’) if you’ve moved out and it’s vacant. This really is a no-brainer and you will get a return on your staging ‘investment’. If you are still living there and worried about your furniture being up to scratch there are companies that specialise in staging properties using existing furniture complemented by their own additional items (throws, rugs art etc). If you are happy with your furniture and your agent tells you it all looks fine then here are a few cost-free things you should do, at little or no cost: Nothing will scare off a potential buyer faster than a dirty home. Though some agents will recommend that you hire a cleaning service for a top-to-bottom deep clean, you can save money by taking care of this on your own, provided you’re willing to put in the time and elbow grease: You have to pack to move anyway, so you can get a jump start on it by gathering any and all personal decorative effects. This includes framed family photos on your walls or shelves, picture albums and all your personal knickknacks. Buyers like to envision themselves living in your house, and that’s much easier without things that remind them of you. Living a normal life requires a fair amount of stuff, but you’ll need to keep all signs of being a regular person hidden while your house is on the market. Once you’ve finished packing away your personal items, use your spare time to pack anything you don’t need on a daily basis. Clear shelves of books, pack away rarely used games and DVDs, and remove out-of-season clothing to make closets look more spacious.

If you live with young kids, have them choose their favourite toys to keep on hand, but only allow ones that can easily be stowed away under the bed or in a toy chest out of sight when your agent calls with a 15-minute warning for a surprise viewing. For adults, clear a bathroom and kitchen drawer that you can sweep counter clutter into in a pinch. If you’re willing to spend the time and put in the effort to stage your home, you can make your house appealing to prospective buyers without spending any money at all.

Q: What does it cost and is it worthwhile? We cover this in some detail in our book SOLD so have sent Carol a copy with our compliments. Below is what we discussed with Carol:

A: There are a number of levels of staging (or dressing) your home. As mentioned last week you can just do a great job of cleaning and decluttering, or you can go the whole hog and have a staging company come and dress your home with all new furniture. The main purpose of course is to present your home in the best possible light and thereby achieve a premium price, but another reason for staging is that many potential buyers find it hard to imagine the property as theirs, when it is devoid of any furniture. There is evidence from Australia suggesting that staged properties achieve a premium of up to 15% over un-staged properties.

There are a number of companies who will do de-cluttering of your home and then add bits and pieces to dress it while using your own furniture. The cost to do this can vary enormously depending on how much has to be done, but we would suggest you budget for at least $1,000 for this kind of service.

However the majority of staging companies ask for the house to be completely empty and they then dress the house with furniture that they feel will showcase the house best. This can cost from as little as $2,000 for a small three-bedroom house, to in excess of $10,000 for a large home. As we mentioned last week we believe this is essential for vacant unfurnished homes. Just having a double bed in a room can comfort people that a double bedroom is in fact a double bedroom.

We have a bit of a back-log of rather diverse questions at the moment, so keep an eye out: In future editions we will be talking about how the new tax laws affect you if you want to sell a house you have owned for less than two years, whether you should accept a pre-auction offer on your property, and what are the latest changes to the ever-evolving Unitary Plan.

Q: I’m putting my house on the market and I asked my agent what I needed to do to get it ready. All he suggested was getting it ‘staged’. Isn’t there more I could do without spending too much money? Marion S.

A: Yes there are certainly plenty of things you can do to make your home more attractive to buyers when they view. People used to percolate coffee or bake bread to make their open homes smell nice, but most buyers see past that kind of tactic. One of the most simple, and cost-effective things you can do, especially in winter, is to replace all your bulbs with bright (up to 100watt) bulbs – it really does brighten your home up for those dingy winter open homes. And of course, if you are going to do anything make sure your home has ‘curb appeal’ and a nice tidy welcoming entrance – you only get one chance to make a first impression! I’m sending you a copy of our book “Sold, How to Sell Your Home for the Best Price” – plenty of ideas in there.

Mortgage Interest Rates

Our friend and fellow-speaker, Janet Xuccoa of Gilligan Rowe & Associates, received this question and we thought it would be of interest to our readers:

 Q. Janet, my home mortgage interest rate is 6.5%.  Given interest rates have fallen, should I look at refinancing?

A. I feel for you. Hindsight’s a great thing isn’t it?  Many borrowers have fixed as it wasn’t widely anticipated interest rates would fall.  Consequently, they are now paying more than they might otherwise have done.

Assuming you satisfy a bank’s criteria and can refinance, you’ll need to know what penalties your bank will impose for breaking your existing loan and moving to a lower interest rate.  In order to attract new customers, banks sometimes offer cash which can soften this financial burden.

Interest rates are expected to fall further in the coming months.  Reserve Bank Governor, Graeme Wheeler, indicated further easing to the Official Cash Rate (OCR) is likely as he’ll attempt to stimulate our economy which is suffering from a slump in dairy prices and weak wage growth. Forecasts have said cuts could be made throughout this year and 2016, with the OCR falling as low as 2%.

Because OCR directly affects wholesale borrowing by banks, a cut in the rate may flow through to interest rates borrowers are charged.  Then again, flow-through effects aren’t guaranteed.  Banks have to source their funding from somewhere, often from depositors who demand certain interest rates.  This could cost a bank.  To mitigate against this effect a bank may not be keen to pass on savings as a consequence of a lower OCR.  Potentially banks are also going to grapple with additional capital requirements, and to attain profit objectives interest rate cuts may not be forthcoming.

So, what to do?  Your answer will depend on your personal financial circumstances, including your risk profile.  Floating could be a sensible option because you could then fix your loans if interest rates decrease without incurring penalty fees.  Caveat: floating rates tend to be more expensive than fixed rates because banks subsidise fixed rates at the expense of higher floating rates.  Alternatively, fixing now at a lower rate might appeal. If I were doing this, I’d fix for a short period of time given I’d want to take advantage of lower interest rates in the future. Using special fixed versus floating calculators can assist with decision making.   I’d also ensure I practiced interest rate tranching – borrowing different amounts of money, for varying fixed periods of time, at differing interest rates.  Best of British making your decision.

Auckland Council and Unitary Plans

Q. Recently I’ve been hearing friends say you can make money through the Auckland Unitary Plan.  Can you explain how this works?  Pete B.

A. Recently we spoke at an event alongside Janet Xuccoa, Partner at Gilligan Rowe & Associates, who spoke on this topic so we asked her your question.  Here’s her answer…

It’s no secret; Auckland is experiencing a shortage of housing.  Demand is outstripping supply and consequently as a result of this imbalance, prices are moving skywards.  And this problem won’t abate in the short run.  In fact, population has been forecasted to grow another 700,000 to 1,000,000 in the next 30 years through natural increases (births minus deaths) and positive net migration.  To address the issue of managing population growth and housing people, the Auckland Council has formulated a Plan called the Auckland Unitary Plan.  In a nutshell, the Plan will determine what housing can be built and where.

In loose terms, under the Plan more housing will be permitted to be built in existing suburbs and in green and brown fields.  For example, on some sites where you were able to build only 2 dwellings, you may be able to construct 3 and where you could build only up to 2 stories, you might able to build 4 stories.  This is referred to as ‘intensification’.

Many prospective purchasers are actively researching the proposed Plan and the zoning of a property to ascertain if additional dwellings and levels could be built.  If that’s possible, they are purchasing the property on the premise that the potential to construct additional accommodation, increases their potential to build wealth.

A big caveat here:  The Plan is not wholly approved and so zoning and rules may well change.  For this reason, caution is required.  Full due diligence, including obtaining advice from the likes of lawyers, accountants (for structuring and tax advice), surveyors and Council itself is definitely advised.  Fail to do this and you could lose your shirt, tie and pants on a property transaction.  With that in mind, happy property hunting.


Q: What can you tell us about the unitary plan?

The Auckland Super City was established and began operating on the 1 November 2010.   The Super City took over the functions of one Regional Council and seven City and District Councils.  Since its establishment the, Auckland Council has been administering one regional and seven city and district plans.  The New Proposed Unitary Plan is the first comprehensive plan which covers the entire Auckland City region.   The first draft was released in 2013 and was open to submissions from 30 September 2013 until the 28th of February 2014.  The opportunity to support or oppose submitters request was closed on 22 July 2014.  Since this time there have been extensive pre-hearing and hearing meetings which are estimated to end in April 2016. 


Q: When is it going to take effect? 

The Unitary Plan is due to be ratified in September 2016.


Q: Will it really mean we’re going to have blocks of apartments all over the city?

The Auckland Council is under pressure to increase land supply to overcome an acute short of available developable land.  In an endeavour to stop urban sprawl, the Council is intensifying development in existing urban areas.   In selected commercial centre’s, the council are allowing apartment developments (to include a commercial lower floor use) to be developed up to eighteen stories high.  In strategic locations, close to public transport routes, Council have zoned land as Terrace Housing and Apartment Buildings (where apartments can be built up to five to seven stories high).   The next tier of development is zoned Mixed Use Urban where buildings have a three story or 11 metre height limit and development is confined to a 40% site coverage.  A less intensive zone is Mixed Use suburban (which is the most widespread residential zone in Auckland).  Here one dwelling can be constructed per 200 m2 of net site area but restricted to 35% site coverage and generally two storied construction.  Other less intensive zones include Large Lot, Rural Coastal Settlements and the Single House Zone. 

So yes, we will a see lot more Terrace and Apartment development throughout the Auckland City central urban area.


Q: How do we find out which areas will be affected?

You can find out your proposed zoning by referring to maps shown on the Auckland City Unitary Plan website. http://acmaps.aucklandcouncil.govt.nz/unitaryplan/FlexViewer/index.html.  Enter your residential address and the appropriate map will be downloaded.


Q: There’s been a lot of talk in the media lately about how many people are against the new unitary plan. What are the chances of the latest round of amendments actually going through, especially given the apparent turn-around by a number of councillors?

I would sincerely hope that the Unitary Plan is ratified and includes the proposed intensification changes. We have an Auckland housing crisis and we need action.  A lot of work and cost has been incurred to get the plan up to the current stage.  Apparently 11 Auckland City Councillors are getting cold feet and are considering not supporting the ratification of the Auckland City Unitary Plan in September this year.  I agree with Phil Eaton, President of The Property Council, who said “scaremongering by local politicians has residents believing their suburbs will be covered in high-rise apartments. But, realistically, less than 6% of suburbs will have apartments with more than three storeys – which is up just 1% from the previous version of the Unitary Plan. Local politicians must ditch their ‘Not in My Election Year’ mentality and do what is right by all Aucklanders, not just some.”


Q: Once the unitary plan is accepted and put into place what do you think it will do to land and house prices in the affected areas? If we own a property that can now have apartments built on it, will it go up in value – given that there will be lots of other properties re-zoned the same way at the same time?

Greater on site development potential should result in increased property values for existing owners.  When the Unitary Plan is ratified, I doubt that there will be a glut of development properties coming on to the open market.  Certainly not all property owners will want to sell at once.  Also larger more comprehensive developments will require the amalgamation of several adjoining sites, which could take several years to acquire.  The Auckland City Council intensified redevelopment projections will take many years to complete.  After all, we are dealing with the Auckland City Council (high resource consent costs and significant time delays).

CrossLeases & Freehold Titles

Crossleases

Q: I am new to NZ and have been told I should be wary of cross-lease titles. What is a cross-lease exactly? Raymond W.

A: Fee Simple cross-lease is not a leasehold title in the normal sense of the word. It is a freehold title that consists of an undivided share of the whole piece of land that the dwelling or ‘flats’ are built on, and a registered lease (Memorandum of Lease) for a fixed year period (usually 999 years) for each flat owner. Each owner has exclusive possession of their own flat for residential purposes and they are referred to as lessees and lessors. You will have exclusive use of your flat/house and any land allocated to that building. The terms of the lease include agreeing not to enter into each other’s exclusive area. Any land that is not shown on the lease as ‘exclusive’ (e.g. the driveway) can be used by any of the flat owners as a common area. There are some downsides to cross lease ownership, e.g. you may not cause annoyance, grievance or disturbance to each other and you also need the consent of the other owners to make alterations to the exterior of your property if it affects the flats plan as shown on the title – this is to protect all owners from losing ground coverage for the whole section. Things like internal modifications (still subject to council approval of course), repairing a fence or painting your home a different colour can all be undertaken without your fellow lessees consent. There are around 216,000 cross lease titles in New Zealand with almost 50% of those in Auckland – so they are certainly not unusual! When looking at buying a cross lease property be sure to ask the agent for a copy of the Memorandum of Lease and then, as with anything to do with buying a property always have your lawyer check all the documentation before you make an offer or bid at auction.


Easements against a title

Q: I am looking at buying a property that is at the end of a Right of Way. The Agent says that I should “check out the easements”. What are these and why are they important? Susan H.

This is a question for our lawyer Nick Birdsey, of Birdsey & Associates and here is Nick’s answer.
A: That is good advice from your agent because yes, the easements are important. A landowner can grant to another landowner number of rights. These things include important items like a right of way, so that the owner of the “dominant” piece of land taking the benefit can use a piece of the “servient” piece of land, for access to the road, or a right to convey power, water, gas or drainage and communications. All these things typically need access to a road, rather like a landlocked nation needs a corridor to the sea. Important facts to note then, are firstly that easements are registered against the Title, secondly they bind present and later owners, and thirdly you need to be sure what rights or burdens, are involved. Easements are different to licences, which do not “run with the land” or bind later owners.
Because it is registered against the Title, the document that creates the easement can be obtained and studied by your lawyer. This is absolutely essential if you are to know “what you are buying”.

  1. We are looking at a cross-lease property and the agent keeps referring to the “flats plan” but hasn’t really explained what that is. Can you help?  John M.

A: We sure can John. A flats plan is simply the plan attached to the cross lease title which shows the outline of the buildings on the land, allocates the building a “flat” or “area” number (e.g. Flat 1 or Area 1), and identifies the “exclusive use” area(s) related to that flat or area.  The exclusive use area is for the use of that particular flat owner to the exclusion of all other flat owners and is marked with a letter. The flats plan also shows any “common area” which is an area shared by all or some of the owners of the fee simple land and is usually a driveway or accessway. Always be sure to check that the building’s outline is the same as shown on the flats plan. If not check with your lawyer as the tile may be “defective”.

Q: Can you explain what the difference is between a Fee Simple and a Freehold title please? Olivia S.

A: Fee simple is often referred to as “an estate in fee simple” and is the same as “freehold”. (Freehold: not to be confused with having no mortgage!)  A fee simple title is the most straightforward and generally most preferred type of title. An example of a legal description of a fee simple title is, 1234 square metres more or less being Lot 1 on Deposited Plan 12345

The advantages of freehold/fee simple is that you own the whole of the land and are able to make any additions or alterations to your property (subject of course to Council bylaws and consent requirements) without having to get the consent of neighbouring property owner(s) unlike a cross lease title and unit title.

Just be aware that there may be covenants registered against the title to the property that impose restrictions so you should make sure you are aware of these by having your legal advisor search and review the title for you.

Getting Ready for Sale

Q: My wife and I have several investment properties and we are thinking of selling one. It has been rented for many years and needs a makeover before we sell. Any advice? Thanks Jerry C.

A: Renovating as an investor demands your personal wants and needs are put aside, with a focus on the bigger picture instead. Where your own home may allow you to indulge your every design whim, renovating an investment property demands a considered approach that appeals to the broadest possible target market.

Make sure you meet the market, and your competition, in regard to expectations for the property. If it’s situated in a blue-chip area, it pays to renovate with a more high-end spec as the market demands and expects it. Likewise, if your project is in a cheaper or more affordable locale, be sure not to over-capitalise.

Mass appeal

You can never go wrong with white, and timeless finishes can easily be made appealing to the individual market with clever styling. Cupboard fronts, bench tops and floors are very expensive to replace – keep them neutral to appeal to the largest subset of buyers. You want people to imagine themselves in the home and a neutral palette allows them to project their own ideas onto the space.

Key areas

When it comes to deciding which rooms to renovate, bathrooms and kitchens are key, as are outdoor living spaces if applicable to the property. And with these spaces, it is not all about expensive finishes – functionality is just as important. With the popularity of home renovation shows, buyers are a very savvy bunch now and many will immediately notice if a bathroom layout is dysfunctional or inefficient.

With our enviable climate, the outdoors is such an integral part of the modern Kiwi lifestyle. If there is a way to blend your outdoor space seamlessly with the inside, do it. Think large areas of glazing that take in the outdoors, or bi-fold doors that open onto a deck.

Also, don’t forget your property’s façade. Most buyers usually make up their mind about a property upon arrival. As such, addressing its street appeal is very important in reeling potential buyers in.

It sounds obvious but you must always look at ways of adding the most value when renovating as an investor. If you add value to the property, you are more than likely increasing its sale price too.


Q: I am thinking of selling my 1970’s-built home in Glen Innes. There are a number of new houses being built close by and I’m wondering whether I should wait for them to be finished or just get on with it now? Pauline J

A: Interesting question. The market is good at the moment, and I think it will stay that way in the medium term, albeit with maybe a few little ups and downs. The great thing about having new-builds in your neighbourhood is that it will increase the median value of homes around you, including yours, even while they are in the process of being built. So it’s probably not a bad time to be selling right now. Of course once they go on the market it is a great time for you to be selling – new homes will attract more buyers to the area, and of course to your property if you are on the market at the same time. A smart real estate agent will time your open homes so that you get the overflow from the other open homes – most open home visitors will look at another open home across the road if it’s open at the same time. In general terms more people through the open homes equals more bidders at auction equals a higher price! Good Luck!


Q: We are looking at selling our home of 12 years on the North Shore, and are talking to a couple of estate agents re how to sell. We are originally from the United Kingdom and have only bought the one home here and have no experience of selling here. Both agents have said we should hold open homes, but we are really not sure.  Catherine G.

A:  There are pros and cons to open homes Catherine, but in our opinion the pros win, and not just for sellers, but for buyers too. Firstly, open homes, like auctions, are an accepted, and often expected, way of marketing your home. Most buyers these days like to schedule their weekend afternoons going through a list of prospective homes, and what better way than to go from open home to open home? If they don’t like it they can turn around and walk out without feeling under obligation to the agent. If they do like it they can arrange to view again at whatever time suits you. And of course potential buyers can ask to view outside of open homes if they can’t make the time on the weekend.

The real benefit to you as a seller is that you have scheduled viewings on a Saturday and a Sunday, rather than ad hoc viewings every day of the week. You can go out shopping or for a coffee and know that 30 or 45 minutes later your home will be free for the rest of the day. Of course there will always be those buyers who want to come back on their own, or with other family members, and serious buyers may well want to organise a building inspection outside of the open home.

Open homes also gives you and the agent to show that your home is popular: A busy open home sends a message to all the buyers that the property is popular, which in turn makes it more desirable to viewers.

As long as you select a good agent, who has produced a good marketing plan, you will get plenty of people through your open homes, which in turn will ensure you get the most number of people at the auction and the best possible price.

Good luck with your sale!

Final Inspections

Q: I purchased a house at auction last week. I have been told I have the right to a ‘final inspection’. What does that mean exactly? Alison M.

A: Congratulations on your purchase! You now have the right to inspect your home prior to settlement (when the exchange of funds and the title takes place). The final inspection entitles you to look through the property to ensure that it is ‘as inspected’ when you last saw it before bidding at the auction. In other words the property should be in the same condition as when you viewed it at the open home. There are a few things to watch out for – do all the lights and appliances work, is everything mentioned in the chattels there and in good order? Basically it is your final opportunity to ensure that you are getting everything you bid for at the auction.

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’ve just purchased a home and am about to take possession. The previous owners moved out last week and I did my final inspection with the house empty… and the place was a pig-sty!  On top of that there were lightbulbs missing, rubbish under the house and piled up in the driveway. What can I do? Garry S

A: Your agent should advise you that you do have some rights around these issues. Firstly, the house must be ‘as inspected’ – in other words, in the condition that it was in when you saw it at, say, the open home. If there was no rubbish at the top of the drive then there shouldn’t be any there now. And if there was rubbish under the house when you first saw it then unless the agent told you that it was staying, you should expect it to be removed. In terms of light bulbs you can certainly insist that these are replaced – however sometimes it’s just easier to replace them yourself! At the end of the day it’s best to talk to your lawyer – he will explain your rights in detail and take the appropriate action on your behalf.

When to buy?

Q: I am looking for a new property and I’m not sure whether to buy now or to wait until after Christmas. What’s your advice? Barry V.

A: Interesting question Barry. I’m assuming you’ve been reading how the Auckland market has slowed: Fewer people through open homes, not as many bidders at auctions, and more properties being passed in at auction. The ‘fizz’ certainly appears to have gone out of some sectors of the market and that could certainly suggest that it’s a good time to be buying property right now. I’m not sure that anyone can really identify why this is.

The Reserve Bank says that its slow-down measures are working, others say that the Chinese are out of the market, and still others think it’s the result of investors having done all their buying before the October rules came into effect. And maybe it’s a bit of all of those, together with many people just having other stuff on their minds rather than buying property. What with Christmas and the holidays looming many people just don’t have the mind-set to go looking for property. Of course no one knows what will happen to the market after Christmas so in my opinion, if you are in a position to buy now, then the time is right.

With fewer buyers in the market you will at least avoid the auction fever that we have been seeing over the past 12 months (although there has been no real indication, as yet, that prices have been affected). And of course you have the added bonus of being able to go away on holiday knowing that you have a new home all sorted for when you get back.

As always, what we do know is what the market is right now, and what we don’t know is what it will be like in the future. We can be sure though that the fundamentals affecting the Auckland market have not changed: Money is cheap and housing is in short supply. Good luck with your house-hunting!


Q: Now that our children have all grown up and left home we want to downsize from our current property in Parnell to a smaller property. We are worried though that if we sell we won’t be able to find anything we like. What options do we have? Margaret B.

A: This is a very common question these days Margaret, especially with the shortage of houses on the market in Auckland right now.

Obviously you have two choices: Sell first then buy, or buy first then sell. If you buy before you sell you won’t really know what your budget is (you can’t be sure how much your home will sell for) and you may very well need bridging finance to get you through the period between when you have to pay for your new home and when you settle on (and get paid for) your current home. (The length of settlement is the time between unconditional date, often the auction date, and the day the new owner pays and takes possession). You can minimise this by asking for a long settlement on your new home, and then be ready to go straight to auction on your current home as soon as you have an unconditional agreement on your new home. This may enable you to get sold and settled before you settle on the new home, but what if your purchaser wants a long settlement too? Either way you do run the risk of being forced to get bridging finance. In the very worst scenario you may have trouble selling your home and end up owning TWO properties – not always ideal!

Alternatively you can do what most people seem to be doing these days: Sell first and then buy. Of course as you’ve said, the risk here is that you can’t find anything to buy once you’ve sold. However, what we have found is that people who have sold get very focussed very quickly on finding their new home, and they become a lot less fussy! And if it takes longer than you expect there is always the option of renting while you search.

Pre-auction Offers

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.

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!