So you have your pre-approval and you are about to embark on your hunt for your perfect home! There are so many things to consider when buying your first house; Location, price, type of home, local schools, transport and amenities, type of street, number of bedrooms, the list goes on and on and where to start?
For the best places to search online for property visit our
You can of course search the various real estate agents websites however usually you will find most properties will also be listed on one of the sites mentioned in the above link.
For information on capital gains and yields on property in NZ check out this Westpac Property Investor Report
Looking for information on Auckland Suburbs? Check out Hometopia’s – ‘The Streetwise Home Buyer’
Defining your Perfect Home
We recommend first really defining exactly the type of home you are looking for and prioritising things that are critical. It may be you have pets and so main roads are a no go for you, or that due to your family size it must have 4 bedrooms. Or perhaps you are keen on DIY so are looking for a place that you can do up a little. To help you may like to use our handy checklist.
Knowing what to avoid!
Buying a property is usually the biggest single purchase you will ever make, so it makes sense to ensure you don’t buy a lemon! There are things that need to be checked out so as to avoid buying a leaky home, or one that has structural problems. We recommend always getting a building report just to be on the safe side.
In the meantime, it pays to know what signs to look out for. For more information regarding leaky homes, refer to the link below. You’ll also find a handy checklist of questions to ask your real estate agent or vendor.
Types of Properties
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Estate in Fee Simple
This type of property ownership is the best as you own both the land and the property.
The advantages of fee simple is that you own all of the land and are able to make additions or alterations to your property (subject of course to Council bylaws and consent requirements) without having to get consent from neighbouring property owner(s) unlike a cross lease title and unit title.
This type of ownership is common where there is more than one home on a block of land. You are all owners of the land and you each lease your home. The lease will usually provide for an exclusive use area for each cross-leasee. It’s like owning a freehold property but there are some restrictions.
Another form of ownership for more than one home on a block of land is a unit title.
For more information regarding cross lease click here
In the case of unit title – you own the unit and a piece of land which cannot be defined. You own a stratum estate in freehold under the unit titles act (or stratum in leasehold if on leasehold land). This is for multi-storey units governed by a Body Corporate (Body Corporate members are all owners of the units in the complex). There are usually common areas such as driveways & gardens that are maintained by the Body Corporate and levies are payable by each unit yearly to pay for the maintenance charges together with insurance for the entire complex. Be aware that there may be special or one-off levies payable prior to buying the property. These should be disclosed to you by the owner/developer before you settle.
Unit Title Disclosure
The unit titles act 2010 brought a number of major changes regarding unit title properties. One of the major changes relates to property owners disclosure obligations when unit title properties are bought or sold.
Before any Sale and Purchase Agreement is signed, a seller must provide potential buyers with a ‘Pre-contract Disclosure Statement’. The seller can usually arrange for the Body Corporate’s manager to prepare this for a fee. Information provided in a pre-contract disclosure statement will include information such as amount of any levies payable, proposed maintenance, body corporate bank balances and whether or not the unit is part of any weather tightness claims.
Once the Sale and Purchase Agreement has been signed and at least 5 working days before settlement day, the seller must provide the buyer with a Pre-settlement Disclosure Statement. The Body Corporate should be able to prepare this for the seller for a fee. A Pre-settlement Disclosure Statement will include information such as any outstanding levies or metered charges and whether there are any proceedings pending against the Body Corporate.
If the buyer does not receive the Pre-Settlement Disclosure at least 5 working days before settlement, the buyer may delay settlement or opt out of the purchase entirely.
Additionally, buyers have a limited timeframe in which to request an ‘additional disclosure statement’. This will be prepared at the buyer’s expense (a cost estimate for this should be provided in the pre-contract disclosure statement). Information included in an additional disclosure statement will include details about the Body Corporate’s finances, contracts the Body Corporate has entered into, ground leases, body corporate rules and the long-term maintenance plan.
Estate in Leasehold
In this case you own the building but NOT the land. The land is leased to you at a certain rental per annum. This type of property is not recommended for residential property and banks will not usually lend on this property type.
Auctions/Tender/By Negotiation – What’s the Difference?
There are many methods of sale available to vendors. Before you hit the road on your journey to find that perfect home, you may like to up-skill yourself on the types of sale methods.
AUCTIONS – Going once, going twice…sold!
So, you’ve found a property you love and it’s going to auction – auctions can at first seem scary! We have all seen the movies where someone ends up inadvertently buying a property after scratching their nose! Don’t worry, that won’t happen – auctioneers know a bid when they see one!
So what is an auction?
An auction is the sale of a property, through public negotiation on a day and time set by the vendor.
What do I need to do in order to participate at an auction?
In order to participate at an auction you must have completed ALL your due diligence prior to attending the auction. This means you need to have done the following;
• Obtained approval and met all bank finance conditions.
• Confirmed with your KiwiSaver provider your funds can be withdrawn.
• Completed Builders Inspection, Registered Valuations and any other checks on the property that you or the bank require.
• Have had your solicitor review the LIM report, certificate of title and Sale and Purchase Agreement.
• To participate at auction you must register yourself as a bidder and will need to complete a registration form.
• Have the deposit available (usually 10% of the purchase price) to pay on the day of the auction.
• If you’re intending to use your KiwiSaver as deposit, you’ll need to get the vendor’s approval to be able to pay the deposit once the funds have been withdrawn.
Buying at auction can be quite challenging as you have to incur the expense of all due diligence work prior to auction, and may not be successful at auction on the day.
You may be able to make a pre-auction offer, but before you do ask the estate agent how this will be managed, as sometimes the Vendor will bring forward the auction using your offer as the opening bid. If the offer is your best offer, and there are others interested in the property, you may well be quickly outbid.
Be aware that if the auction is moved forward, you will have less time to prepare your finance and get your lawyer to look over the property files.
What Happens at an Auction?
On auction day, the property you’re interested in maybe the only one being auctioned, or it could be one of many, in which case you should be prepared to sit through a few before your property comes up. This can be very helpful as it gives you a feel for the process. You may even like to attend other auctions as a spectator prior to your auction day for just this reason.
The Auctioneer will present and describe the property, its features and legal description, once this is done the auctioneer will open the bidding by asking for an opening bid and will then nominate increments that the bidding can be raised by. As an example say the opening bid was $250,000.00 and the auctioneer nominated bids of $20,000.00, the next bidder could go to $270,000.00. You can, of course, make a higher incremental bid if you choose to. Once the bids have reached the reserve price, the auctioneer will inform you that the property is now on the market.
Auctions – How Do I Bid?
As a registered bidder, you simply raise your hand, or if you have the eye of the auctioneer simply give a strong nod of your head.
Once the bidding reaches the vendor’s reserve price the auctioneer will advise bidders that the property is ‘on the market’ bidding continues until only one bidder remains and the hammer falls, going once, going twice, sold! Hopefully, that’s you!
Auctions – What next?
If you are the successful bidder on the day, you must then sign the Sale and Purchase Agreement and immediately pay your 10% deposit, so make sure you have the funds available. If you don’t have the full 10% deposit available and you have been pre-approved by your bank for finance, you may be able to arrange a temporary overdraft facility, but this needs to be arranged prior to the auction. If you can manage to fund the deposit yourself this is the best option as interest rates for temporary overdrafts can be very expensive! Alternatively, your KiwiSaver may be used if you get agreement from the vendor to pay the deposit once your funds have been withdrawn. Speak to your real estate agent about the process for this.
Sale By Tender
In the case of sale by tender, the property is open to prospective buyers who can make an offer which needs to be submitted by a certain date. The seller then decides which offer they will accept, based on the most favourable offer. It is recommended before making an offer that you undertake as much of your investigations as possible, that way you can reduce the number of conditions you include in your offer, as the offer of the best price with least conditions is the one most likely to be accepted by the vendor.
In the case of a private sale the owner of the property is selling without the use of a Real Estate Agent. You will be negotiating directly with the seller of the property which some people may feel uncomfortable with, however given that the vendor is not paying real estate agents fees, they may be more open to price negotiation. As with any sale you will need to sign a Sale and Purchase Agreement. It is strongly recommended that before you sign the agreement that you get your solicitor to review the agreement, in order to ensure that the relevant conditions are included to protect your interests.
Banks will often require a Registered Valuation to be undertaken for a private sale, regardless of the size of your deposit.
Fixed Price Sale via Real Estate Agent
The seller has a fixed price for the sale of their property and has engaged the services of a real estate agent to sell the property. Often sellers will accept a lower price than the asking price. Again it is recommended that prior to signing the agreement that you seek legal advice. Remember the Real Estate agent is working for the seller!