Researching the property market

23 February 2018

Close your eyes and picture your dream home.
What do you see? For some it might be a walk-in closet and spa pool; for others a double garage and sun-drenched deck.

Whatever you might imagine, odds are you won’t tick every single box for your first home. That’s why it pays to do your research. Weighing up the must-haves against the nice-to-haves will help you decide where to compromise and where to stick to your guns. You’ll get a clearer idea about what you’re looking for, narrow down the options, and in the long run save time and money in the hunt for the perfect property.

Read on to find out more about what to look for, the costs involved, and questions to ask before wading into your search.

Different types of property

A good place to begin is thinking about the type of property that will suit you. A single person or couple might like the idea of an apartment in the city close to work and entertainment options. A large family may want a large house with a bit of space for backyard cricket and barbecues.

Whatever you’re dreaming of, there are a few things to be aware of depending on what type of property you’ve got your eye on: 

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Things to consider

Section

New builds are exempt from loan-to-value restrictions so saving to get that required deposit may be easier when buying a section. First-time buyers may have to compromise though - cheaper land may not necessarily be in the most desirable or popular locations.
 
 

Apartment

Usually cheaper than houses and often in good central locations but can be difficult to get a loan for these. Some banks do not lend on apartments at all. Even if they do, you might need a higher deposit.
 
 

Unit

These are usually on a cross-lease or strata title. Banks may restrict lending to 70% or more in larger developments and may have additional requirements which need to be satisfied before they will approve your loan.
 
 

House

Traditionally the dream for many New Zealanders, houses can still be within reach of first-time buyers.
 
 

Buying a house checklist

There are thousands of properties for sale at any given time. Writing a checklist can help to clarify exactly what to look for when buying a house.

  • Do you want to live in a house or an apartment?
  • How important is living in a good school zone to you?
  • Do you need three bedrooms or will two do?

Including all of these questions and more in your checklist will give you a better idea about the things to look for when looking for properties and at open homes.

Questions to ask the real estate agent

When you find a home you like, it’s important to use your head and not just your heart. It’s easy to quickly become emotionally attached to what might appear to be your dream house, especially if you’ve already spent weeks or even months looking. However, it’s important to do your research and find out as much as you can about the property before you buy.

In most cases, a real estate agent will be handling the sale on behalf of the sellers. While they obviously want to get the highest price possible for the property — remember the real estate agent is working for the seller, not the buyer — they are duty-bound to answer your questions honestly.

Some of the questions you should be asking the real estate agent are:

  • Are there any weather tightness issues?
  • Has any work been done without official consent?
  • Are there any problems with the boundary? The house has a nice fence around it so that must be the boundary, right? Not necessarily — the boundary limit and the fence are not necessarily the same thing. It pays to check!
  • Has it been used as a P lab? If in doubt you can get a meth report done before you make an offer or attend the auction.
  • Why is the owner selling?
  • What work has been done on the property? Are any urgent repairs needed?
  •  How long has the property been on the market?

Asking the real estate agent questions is just one way to find out information about a potential property. It is important to do as much research as possible about a new home — this is called due diligence.

Due diligence is important for any property purchase — but is particularly vital when buying at an auction. When that hammer goes down, auction bids are unconditional, so you will need to have fully researched the property by the day of the auction.        

Costs of researching your first home

Depending on your individual circumstances and the property you want to buy, these are some of the things you might need to check when buying a house. 

Builder’s report

Why?
If you find a home you really like, and you’re seriously considering trying to buy it, the next step is to have the house checked out by experts. A professional building inspection, especially for first-time buyers, is a good way to find out if there are any hidden issues.

Cost: $400-$800
 
 

LIM report

Why?
A LIM (Land Information Memorandum) report summarises information the local council has about the property and may include information about flooding risks, erosion issues, any rates that are still outstanding and other information.

Cost: $200-$400
Depending on which council you go to. Real estate agents sometimes have these available for you
 
 

Valuation

Why?
A registered property valuation will give you the market value of the house — so if you’re worried you might be paying too much for the property this might be the way to go.

Cost: $500-$800
 
 

Engineer’s report

Why?
You might also want to get an engineer’s report, especially if you have specific concerns about a property or a builder’s report has thrown up something you need to investigate in more detail. An engineer’s report might be helpful for certain types of property, such as one where there may be issues with unstable land.

Cost:
Will depend on whether you are requesting a pre-purchase inspection or something more specific and comprehensive.
 
 

Title document

Why?
A property title shows the property’s owner(s), rights and restrictions and legal information describing the property. A property title won’t give you any information about the value of the property though.

Cost: $15
through Land Information New Zealand. Although a real estate agent will have a copy for any property they are selling.
 
 

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