Buying a house? What you should know

By Sophie Bond


Our rent's just gone up, interest rates are enticing, the savings are ready and there's a baby on the way. For my husband and me it feels like the perfect time to buy. The problem is: everyone else has the same idea.<inline type="photogallery" id="13406" align="outside" embed="no" />

Real Estate Institute NZ sales figures for May show Auckland residential values were up 7.8 per cent on last year, setting a new record median of $500,000. The increase in the number of sales compared to last May was 27.6 per cent. QV issued three-monthly figures on Tuesday that showed annual house property growth for Auckland was 6.8 per cent and the average sale price was $627,411. It's a double-edged sword, low interest rates but high prices.

Regardless, we've joined the throngs at viewings, queuing to peek at the bathroom and losing our shoes in the door-step mountains. At one mid-week open home, the house has been on the market all of 24 hours and close to 50 people traipse through the property. One agent informs a curious potential buyer that there have been five offers already. We've found those buyers speak in hushed tones only to each other: no information is shared with potential "competitors".

I wonder if others have noticed the undulating floor, the rusted roof and the soggy patch of lawn. I whisper all this, of course, to my husband. We cross this one off the list and check out a different possibility in Albany. But will these things become less important as our desperation grows to become homeowners?

Knowing the importance of keeping a clear head before a decision, I find out what you should always know and follow before you buy.

SELLERS' MARKET

Shane Coote of Central Realty North Shore, who has been selling houses for more than eight years, points out what we've definitely encountered: buyers outnumber sellers in the current market. "It's a sellers' market and stronger than it has been in four or five years," says Mr Coote. "Prices are on the up; we're getting a lot of multiple offers and more auctions being brought forward than usual."

As an agent, he says it's his responsibility to be open with potential buyers about any defects a house may have. "There is more pressure than ever on agents to disclose absolutely anything the buyer might need to know."

In his experience over the last year people have become more diligent about checking properties. His advice to buyers in a sellers' market is to be as prepared as possible before making an offer on a home.

"Buyers sometimes, to their detriment, put too many clauses [conditions] into an offer. We definitely want everyone to do their checks, but the fewer clauses you can put on the offer, the more attractive it becomes to the vendor."

He says if you can be prepared and have your finance sorted, that will simplify things. If your offer is conditional on a building survey it's standard to specify five working days for this to be carried out.

John Gray, president of the Home Owners & Buyers Association, says the association is concerned some buyers are being careless.

"People are in a bit of a frenzy and are not doing due diligence."

"Because of the pressure that has been brought to bear by agents saying, 'You've got to get in quick, got to make the offer unconditional', that means people drop their guard in the heat of the moment and have been caught out."

His advice is for all potential buyers to obtain the Land Information Memorandum (LIM) report and a copy of the property file held by the council. "Compare the original plan to what is currently in existence as many homes have been altered and the changes may not have been noted on the plans."

"The other thing is really to form a view of the current condition of the property.

"People should get a pre-purchase building survey done by a competent building surveyor. The emphasis is on competent because there are a lot of people out there who are unlicensed."

He recommends surveyors who are members of the New Zealand Institute of Building Surveyors, or Building Officials Institute NZ, and suggests asking to see a copy of their current professional indemnity insurance.

He says buyers need to base any offers on a solid foundation.

"The value is not only that as perceived by the valuation, as that doesn't look at the condition of the building. That's why we say that a pre-purchase building survey should be carried out. Also, we've seen people buying do-ups and they haven't been realistic about the costs of all the necessary work.

"If you have a broad idea of what needs doing from the pre-purchase survey then it's a short hop to get a builder's estimate of what that would cost."

INSPECTIONS REQUIRED

Bruce Symon is director of Realsure, a business offering house inspection services throughout Auckland. He says inspections by accredited building surveyors must meet all the requirements of building inspection standards.

"From that, the buyer should receive an accurate assessment of the house condition, which should inform them if they can afford to purchase and also if they can afford to fix and maintain it."

Mr Symon says the standards outline every check the surveyor should make, including but not exclusive to: opening and closing all doors, testing power points, checking floor levels, measuring moisture, inspecting the hot water cylinder, examining insulation and noting roof and piling condition.

"On a standard three-bedroom house it should take two to four hours and if anyone's doing it in less than that they can't be doing a good job."

He says whatever a house's age, a building inspection should be carried out before purchase.

"Every era has its issues. With older buildings it can be poor maintenance and illegal building work, and newer homes can have leaky issues or poor workmanship."

Accreditation is vital.

"Currently, we have four clients who have purchased leaky buildings through getting substandard building inspections done by people who are not accredited."

When visiting a house, Mr Symon suggests several things to look out for.

"Does the house sit level on the site? Is the roof plane undulating?

"Is there decay in the weatherboards or cracking in the bricks?"

Inside, take a good sniff for damp or musty odours and remember fresh paint may mask telltale odours.

He warns that a buyer who does their due diligence, pays for building inspections but keeps missing out at auctions may decide to flag this step.

"We've had one client who has just bought a place - without getting a pre-purchase survey - that needs so much maintenance, going into the tens of thousands of dollars and perhaps they wouldn't have bought if they'd known that."

As for me, well, I think there'll only be a couple of weekends left of traipsing round open homes before hibernating and hoping summer brings a little sanity to the market.

TOP 10 TIPS FOR BUYERS

1) Get a pre-purchase building survey. The Institute of Building Surveyors' website provides details of registered members. A "certified weathertightness surveyor" has completed a specialist course and those listed as 'remediation specialists' are qualified to design and project manage weathertightness repair works. Prices vary depending on house and region, but generally $600-$700. www.buildingsurveyors.co.nz

2) Homes built since the late 80s could be 'leaky'. Auckland has about 30,000 leaky homes. Contact the Weathertight Homes Resolution Service to see if a claim has been lodged on the house. www.dbh.govt.nz/weathertight-services

3) Carefully consider the reports you want to obtain on the property before you sign a purchase agreement, eg., builder's report, valuation report or LIM. If any of these do not meet your standard, you may cancel the agreement. You may want your lawyer to inspect the reports and the agreement, especially if you are a first-time buyer.

4) Love your LIM. Pick up a copy of the council's Land Information Memorandum at the open home or from the listing agent. Or it can be ordered online (for $255, more for urgency) from Auckland Council.

5) Go deeper with a property file. Held by the council, these files may contain additional information to the LIM, such as plans and correspondence on the property. Depending where you live, the file can be ordered on CD or viewed at council service centres. Prices vary from $20-$100 depending on urgency and region.

http://tinyurl.com/propertyfile

6) Take agent-speak with a grain of salt. Remember, their job is to get the best price for the seller - and they take a cut.

7) Is it a multi-unit dwelling? Get a copy of the maintenance plan. Educate yourself about the Unit Titles Act and understand your rights and responsibilities as an owner. http://tinyurl.com/unittitles

8) Open your eyes inside. Check for mould, strange odours and uneven floors. Test the water pressure, figure out the orientation for sun, check the state of the hot water cylinder and fuse box.

9) Open them again outside. Look at condition of the roof and guttering. Look under the house at the piles - are any missing or rotting? Peek over the fence for clues on the neighbours - dogs, student flats, etc.

10) Keep it together. It may feel like you've been looking forever and you're desperate, but don't let this lead to a hasty or uninformed decision.

Are you trying to buy in Auckland? Tell us about your experiences below or leave us a comment on our Facebook page.

- THE AUCKLANDER

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