Buying Your Home with Lorraine Moleta
The costs of owning a home...
Before you decide whether you want to buy a home, you should think about what you can afford and how much it will cost you now and in the future.
The Costs of Buying a Home
The costs of buying a home
As well as the deposit (if you have to pay one), there are other costs you need to know about when buying a house.
Lenders: Some lenders have a loan application fee. Ensure you understand exactly what fees are applicable for your loan.
Valuation: You may want to obtain a market evaluation. This could also be a condition of your loan.
You can find a registered valuer by contacting New Zealand Property Institute.
Visit www.property.org.nz or call 0800 698 258 for details. Alternatively, your lender may specify or recommend a valuer to be used.
Lawyer’s fees: A lawyer will advise you when buying a house – they’ll check contracts (best to do this before you sign), do a title search, explain your rights, and do all the legal paperwork. They can also help you to negotiate the price and other terms with the owners. Family or friends may be able to recommend a lawyer. Otherwise, ask the New Zealand Law Society Property Law Section.
Visit www.propertylawyers.org.nz or call 04 463 2966 for details.
When you have purchased a property you’ll also need to pay a land registration fee. This records the change in ownership of the property. Usually, your lawyer will include this fee into their bill.
Land Information Memorandum (LIM): You may wish to order a LIM. The LIM will tell you what the council knows about the property. Check with your lawyer that the LIM covers everything you need to know. Order from the local council or visit the council to check.
Lender’s Mortgage Insurance: When borrowing more than 80 percent of the valueoftheproperty,youmayneed to pay a one time Lender’s Mortgage Insurance premium or low equity fee, or a higher interest rate. Lender’s Mortgage Insurance protects the lender, not you, if they have to sell the property because you haven’t kept your payments up to date. You can pay that fee as a lump sum, or add it to your loan. Ask your lawyer to explain this before you sign up to the loan.
Borrower’s Loan Insurance: You may be able to get Borrower’s Loan Insurance. Loan insurance could mean your loan gets repaid if you die. Or, if you can’t work because of illness or injury, your loan repayments could be paid for you for up to two years. Make sure you read the insurance policy carefully and check it with your lawyer before you sign.
Builder’s Report: You may want to get the home checked by a suitably quali ed and registered building surveyor before you go any further. Make sure you ask for an intrusive property inspection. This will tell you about the property’s current condition, both inside and outside. This inspection will also reveal any repair and/or maintenance work that may be needed and how much it could cost.
You may be able to negotiate with the seller to make repairs before you move in.
Moving House: These could range from hiring a van, to using a removal company to do the moving for you. You can get insurance to cover you in case anything is damaged while it is being moved from your old house to your new home.
Connecting Services: You may need to pay bonds and/or fees for connections to power, phone and gas.
Before you start house hunting, you need to know what you want. Buying a house is a long-term commitment, so it’s really important that you think of the future as well.
Make a list of things you must have and things that would be nice to have. This will make it easier to narrow down your choices.
Is location important?
Do you need to be nears hops or a school?
Do you want to live near family, work or public transport?
Or maybe you want to live somewhere sunny?
Some where quiet?
Do you want a garden or a garage?
Once you know what you’re looking for, you could find a real estate agent to help you look for a home. Tell them what you’re looking for, where you would like to live and how much you want to spend.
Or you could check the real estate section of the newspaper. These include private sales and open homes. There are also free weekly real estate publications. There are several internet sites dedicated to home sales, such as www.reinz.co.nz, the property section on Trademe, and all major real estate companies have websites with house listings.
Have a good look around to find out what’s available. Don’t rush to buy. Take your time and make the right choice.
It’s a good idea to look more than once at the house you’re interested in buying, just to be sure. If you are looking on your own, take a friend or family member with you so you have someone to talk it over with. Some lenders provide a rst home buyer’s checklist. Take one along as it helps you record what each home has to offer.
Talk with the neighbours in the new location and make sure you ask the real estate agent lots of questions.
When you find a house you like, you should check the general condition and also think about location and the potential resale value. If there are any problems, get professional advice before going any further.
Making An Offer
When you find the house you want, you’ll need to make an offer in writing. The real estate agent or your lawyer will prepare the sale and purchase agreement. If it has not been prepared by your lawyer, make sure they check it before you sign. The offer will outline what chattels go with the sale (this may include curtains, light ttings and dishwasher). You may be able to negotiate other chattels. It’s helpful to make a list of any chattels you want to include in your o er to buy.
Most first offers are ‘conditional’. This means you are making your offer subject to one or more conditions being met.
Conditions may include:
Finance being approved
A satisfactory independent valuation
A satisfactory title search
A satisfactory building inspection
A satisfactory Land Information Memorandum.
The seller may not accept your offer and could come back with a counter offer. This means they might want to raise the amount you’ve offered, or change some of the other things you’ve asked for. This may happen many times before you agree to the final price and terms, but make sure you stay within your budget.
Once you’ve agreed on the sale price, settlement date and conditions, you’ll have an agreed period of time to get the reports and finance you need to allow the contract to go unconditional and be finalised.
House buying is a lengthy process, and it can take a while to find the right place for you. Don’t be disappointed if it doesn’t work out with the first house you find.
Buying At Auction
Once you have identified an auction property that you’re interested in, it’s important to have your finances organised by the auction date. This is also a good time to get all of your other affairs sorted, such as finalising the sale of your existing property, organising a property check and familiarising yourself with all the auction documents. Your solicitor can also inspect the title of the property and investigate all legal matters relating to your prospective purchase.
This time is also when I will help you gain a better insight into the local market – a very important consideration when trying to assess the market value of the property. You could also consider obtaining an independent property valuation as a further guide. If you’ve never attended an auction before it’s a good idea to have a look at a few before attending the auction of the property you intend to purchase.
This will help you to become more familiar with the auction process. It’s also good to note, that sometimes after all of this, the property may not go to auction on the auction date. Often a property is purchased by ‘prior agreement’. In this instance, you can submit an offer to the seller for their consideration – a key step of identifying your interest in the property.
Let me know if you are interested in a particular property. Then, if another buyer submits an offer prior to the auction, you’ll be contacted and given the opportunity of submitting your own offer. Note also that with multiple offers submitted prior to auction, the sellers may decide to bring the auction forward. If you’ve made an offer, you will be notified if the auction is brought forward. Inspect the property as many times as necessary and, if you have any doubts, arrange for a builder, plumber, electrician or any other trades person to accompany you.
Also check the auction documents. Make sure you’re familiar with and understand all the details and conditions of sale (the deposit, possession date, settlement date, balance of payment, list of chattels, the title, registered interests on the title, etc). You don’t want any unexpected surprises come auction day.
On Auction Day
On the big day, it will be your last opportunity to ask questions before the bidding begins.
The auctioneer will begin by reading the terms and conditions of the contract of sale – listen carefully as these may have changed. The auctioneer will then talk generally about the property. Most auctions are held ‘subject to a reserve price’ – the price below which a property may not be sold.
When this level has been reached, the auctioneer will then announce that the property is for sale or ‘on the market’. Making a bid simply involves making any gesture to attract the attention of the auctioneer and stating your bid.
Be aware that any bid you make could be the one that buys the property, so bid only within your means. When a property fails to reach the reserve price it is ‘passed in’. After being passed in, the property will now be open to the market, and everyone will have equal opportunity to submit their offer. Some properties that go to auction may have conditional buyers who are interested in purchasing the home (that is buyers that can’t bid under auction terms and conditions).
These prospective buyers can take advantage of a property which has been passed in and may make an offer, so if you are in a position to bid on auction day, give it your best shot and come prepared to put forward your best offer. If you’re successful on the day you’ll be asked to sign the contract and pay a deposit. This is normally 10% of the purchase price, but it is advised to always double check with me before the commencement of the auction.
Buying by Tender
What is a real estate tender?
A tender is a form of marketing and selling a property through intensive marketing designed to capture the maximum attention of buyers within a set timeframe. The process is a means of purchasing/selling real estate through private negotiations to determine the market value of the property at that time.
How should I approach the tender process?
The tender contract, which is your offer, is filled in and then deposited at our branch office and held secure until closing time. The tender documents are different from normal sale and purchase agreements and you may wish to seek legal advice before submitting your tender contract. I can assist you in completing your tender.
Can I submit a Tender if I have to arrange finance?
Obviously, an unconditional and cash tender would be more attractive to the vendor and you can organise finance prior to submitting your offer. However, do not hesitate to submit your tender, even if it is conditional. We are able to assist you with your financing requirements through our recommended mortgage advisors if required.
Can I submit a tender if I have a house to sell?
Yes. There are three options;
(1) You may make a tender conditional on the sale of your property
(2) You may want to arrange a bridging loan to cover any delay in settling the property
(3) You may make an o er on an unconditional basis but with a longer settlement date, giving you time to sell and settle your own property.
How do I decide how much to pay?
Naturally the more attractive the offer, the more likely the chance of having your tender accepted. Although vendors reserve the right to negotiate with the highest or any tenderer, in most cases a decision is reached on the tender day. However, the vendor can have up to five working days from the closing of the tender to make a decision. For this reason, your submitted tender should be your best offer. A combination of your own instincts, market awareness and guidance from your sales consultant will give you a good indication of price. Obviously, the price you tender is in direct proportion to your desire to own the property. Prior to tender you may have considered getting the property valued by a registered valuer.
Can I buy before tender day?
Any tender received will only be considered at the close of the tender at the date and time stipulated on the tender documentation. However, If the wording on the tender advertising includes “unless sold prior” or similar, the seller may consider and accept an offer before closing date. In this case all other interested parties will be informed so they can also submit their o er at an agreed timeframe and date. These offers will not be complete on a tender document but on the normal sale and purchase agreement.
What contract do we sign and what are the standard conditions?
The contract is the standard tender contract approved by the Law Society of New Zealand and the New Zealand Real Estate Institute. This is available from me. You should have read and understood the tender documents. If you need to insert any conditions or vary the settlement date, do so. To ensure the correct wording, seek assistance from your solicitor or myself. If your tender is accepted, you are legally bound by the terms and conditions of the tender contract.
If you have any questions or would like to discuss further please feel free to get in touch!