Tag Archives: Buying
As your single largest investment, you’ll probably spend a great deal of time searching for or designing your perfect home. When house hunting, you’ll consider things like location, price, market trends, costs and the condition of the property. And you’ll probably have a list of things you absolutely have to have and those you’re prepared to forgo. Deciding whether to buy an existing home or build a new home is an important part of your decision. To help you make an informed choice, we’re taking a closer look at each option.
Buying An Existing Home
The primary advantages to buying an existing home are convenience and cost. Once you have pre-approval, you’re able to shop around, pick out the home you like and then make an offer. Working closely with your mortgage adviser and your real estate agent, you’ll already know how much you have to spend, and have a list of properties that fit your requirements.
Despite a number of steps involved – arranging finance, attending open homes and auctions, getting inspections done – once your offer is accepted, you’ll be able to move in within a month or two, all going well. Buying an existing home is ideal for those buyers on a tight schedule – relocating for a new job or whose children are starting school in the area
The Cost Factor
In many cases buying an existing home may be more cost effective, particularly if you’re looking to move into an established neighbourhood near your work, school, friends or family. You may find it hard to find available land in these areas, so buying an existing home will be your only option. It also means that your garden will already be established so you won’t need to worry about starting a lawn, planting shrubs or waiting for trees to grow.
On the other hand, buying an existing home means you may not get exactly what you want, and you may need to spend money remodelling, repairing or redecorating any outdated features of the home. These additional costs could make the difference in deciding whether to build or buy.
Building A Home
While building a new home is not as convenient as buying an existing home, it does mean you get the home you want. One of the biggest advantages to building a new home is the fact that everything is new. You’re also able to build in features that make your home more energy efficient, like heating, cooling, insulation or air filtration systems that are environmentally friendly, saving you money in the long term.
In fact, your home may quite literally be better for you as it’s less likely to have health concerns or toxic materials you may find in an older home – things like asbestos, lead paint or mould. And it can be built using materials that are better for the environment like Energy Star rated appliances and more efficient plumbing systems.
The Cost Factor
While the cost of building involves a number of upfront costs, it’s easier to recoup your investment long term. A newer home will require less repairs and lower ongoing maintenance, and is likely to fetch a higher resale price when you decide to sell.
The biggest drawback to building your own home is that it’s not immediately available for you to move in, and the costs may be higher. But money and time aside, building your own home can be emotionally satisfying in that you feel you’re achieving a dream and living in the home you created; a home that perfectly matches your style and personality.
Build Or Buy
Whatever you decide, it’s vital you seek professional advice before you commit to any decisions. Determine how much you can spend and obtain a pre-approval from your bank or lender. This will help frame any conversations with builders or sales agents should you buy.
In a competitive market one of the questions we most encounter from homeowners is should we buy or sell first?
Harcourts New Zealand CEO, Chris Kennedy shares his thoughts on the matter.
It comes up because in a tightly competitive market homeowners are often worried they’ll miss out on a rare dream home if they wait until they’ve sold their existing property.
On the other hand, some homeowners are scared to list their home for sale without having already bought a new property in case the settlement period comes and goes and they are left essentially homeless and forced to find (and pay for) temporary accommodation.
Unfortunately, there’s no perfect answer to this, but the key variable in what will work best for you is how much finance you have at your disposal.
In a market where supply and demand are reasonably balanced, selling your existing home before you buy tends to make the most sense. It means you know exactly how much you have to spend when it comes to shopping around for your new home.
If you have your home completely sale-ready when you list, you can spend the time scheduled for your open homes, visiting other properties for sale. It’s also a good idea to do some looking around before your own property is listed, so you have a clear idea of what you want – or don’t want, where you want to be, and how much you’re prepared to pay.
Have your finances in order as much as possible based on the asking price of your own property so when you’ve sold or close to selling you can move quickly on your preferred new home. Remember too that if you make an offer on a new property that is accepted while your existing home is still on the market, you can still make your purchase conditional on the sale of your other property.
It all gets a little more complicated when the market is heated, such as it currently is in several regions around New Zealand. Many homeowners feel that buying before they’ve sold is the only way they’re able to compete for hotly contested properties, and it gives them the reassurance they won’t be shut out of the market and left without a roof over their head.
The obvious trap here is the risk of over-stretching yourself financially if you are forced to accept less than you hoped for your existing property and you have no nest-egg to tide you over. It’s worth remembering too that if you’ve already bought, you may be persuaded to take a lower price just to sell quickly.
Bridging finance – a temporary mortgage to pay for the new property until the original property was sold – is available when you can confirm a settlement date for your existing property.
On the upside, you can look at other options such as putting short-term tenants into your unsold property, to help offset the costs while it’s on the market. Though you’ll need to be clear about making sure the property is always tidy for inspections and that your sales consultant has access as required.
You can also talk to the selling agent for the home you want to buy to see what time frames you can work out around settlement dates that give you the maximum reasonable amount of time to sell your existing property. Even at auctions, which typically have a 30-day settlement period, you can sometimes ask if the vendor is happy to extend.
In short, there’s no perfect answer to the question of whether you should buy or sell first. The answer depends very much on your individual circumstances.
The best answer is do as much research and preparation as possible before listing so you’re ready to move quickly if need be. And keep your sales consultant – and that of your dream home’s vendors – appraised of your time frames. That way they can help you make it all fit together.
The house is exactly what you’re looking for at the right price. There are other buyers circling with offers, and you feel an urgency to do something or miss out.
Take a breath.
A real estate dream can sometimes end as a nightmare, but with the right advice and a little investigation and patience, you can minimise the risk of buying to almost zero.
It all begins with taking the time to ask the right questions of your Sales Consultant, and being aware of where to find all the right information that will give you a complete, 360 degree view of the property.
The risk-reducing information you are seeking roughly falls into four categories. (Please note: This article in no way intends to be an exhaustive list, but simply advice for home buyers).
Something that potentially devalues the property
If you inspected the home on the weekend, be aware that the peace and tranquillity that impressed you so much may be non-existent during the week.
There may be rowdy neighbours, barking dogs, or industrial noise close by, or perhaps a local factory producing unsavoury smells during weekdays. Chances are you will only discover this if you visit the home at alternative times.
The boundaries of the land may have looked obvious, but there may be an easement or crown land bordering the allotment that effectively reduce your property’s size from what it seems.
Title searches are available from Government agencies, which will reveal exactly what you are getting for your money in terms of land size, and where you can build any extensions safely and legally.
Be aware that everything you see within the home may not be included. On occasions, sellers may allocate something within as a “chattel” which they intend to take with them after the sale. Ask your Harcourts Sales Consultant for a copy of the chattels inventory.
The difference between a fixture (that which must legally stay with the house) and a chattel can be a grey area, and some potential buyers go to the extent of taking a photo of all chattels mentioned.
For example, the elaborate storage system in the garage, or even an integrated sound system may be classified as chattels if they are not deemed to be permanently fitted to the home and are listed in the sale contract.
Buying Property with an improvement that may be non-compliant or illegal
Laws and regulations change, so even though a home or structure was compliant and legal at the time it was built, it may now be non-compliant or illegal. Normal wear and tear can have the same affect.
Swimming pools are a common case-in-point, with regulations governing pool fencing becoming much more stringent over the years. A pergola built by an owner/builder may look completely acceptable, but only an inspection by a building inspector will give you peace of mind.
Your perceived value of a home could change significantly if you discover that you are responsible for building significant pool fencing or another alteration to ensure your new home meets the appropriate standards.
Building structural flaws
A damp patch in the lawn may indicate faulty water pipes, or mould in the ceiling a leaking roof.
A recently survey of over 3000 homes by building inspectors found that one-in-four homes displayed evidence of structural cracking and movement, while one in eight showed structural pest damage which had the potential to damage the integrity of the entire property.
Sometimes significant structural issues are not immediately obvious.
For these and many other reasons, viewing a pest and building inspection is a no-brainer. Although a pro-active seller will sometimes have these undertaken before a sale, buyers often prefer an independent inspection.
Too risky for finance
If a property is deemed as high risk of flooding or bush fire, or is zoned for commercial development, bank finance may become more expensive, or even impossible. Appropriate searches should discover these factors.
Each State in Australia has different laws governing real estate contracts, so your best bet is to have a good talk with your Harcourts Sales Consultant who will walk you through the finer details of the property, and let you know where you can find further information to give you complete confidence to proceed as needed.
In January, major cities in both New Zealand and Australia were listed as some of the world’s most unaffordable, with both Sydney and Auckland appearing in the world’s top 10 most unaffordable cities according to the 11th Annual Demographia International Housing Affordability Survey.
It’s not exactly great news if you’re looking to buy, invest, or live in these markets, however, despite Sydney being listed as the third least affordable city in the world, and Auckland as the ninth least affordable, there are still reasonably priced pockets in both property markets.
Where are the affordable properties in Sydney?
Blacktown in Sydney’s west remains an affordable and family-friendly suburb, with the area becoming a major commercial hub, close to schools, and transportation, and still only 35 minutes to the CBD.
Blacktown had an average list price $535,500 over the month of December 2014, but two bedroom homes in the area averaged even less, at just under $500,000. Two and three bedroom units offer even more affordability, with the average two bedroom apartment listed for $360,000.
Other Sydney fringe suburbs with comparatively affordable average prices include:
Rouse Hill – Average house price: $811,000
Campbelltown – Average house price: $423,750
Dee Why – *Average unit price: $591,000
*Whilst Dee Why house prices are relatively high, units still present an affordable option.
Many of these areas are considered growth areas, with Rouse Hill one of the new North-Western Rail Link subdivisions.
The satellite city of Campbelltown in South-West Sydney is only 50 kilometres from the Sydney central business district and is home to the Campbelltown campus of the University of Western Sydney.
Most of these areas are family-friendly, growth areas, but coastal suburbs like Dee Why present a unique opportunity to invest or buy a unit in a real lifestyle area.
Sydney properties have also proven to be a sound investment over 2014, increasing in value by 2.3%, one of the largest increases of any capital city in Australia.
Where are the affordable properties in Auckland?
According to news website, stuff.co.nz, some of the most affordable houses in Auckland are in the city’s southern suburbs.
According to the website, Core Logic’s Residential Price Index for December listed Central Manukau, Papakura and Franklin as the three Auckland suburbs with an average house price of less than $500,000.
Central Manukau is home to the Manukau Institute of Technology, and is easy to travel to with Manukau Station, a central transport hub for both buses and trains established in 2012.
As of December 2014, the average list price for South Auckland properties was:
Central Manukau – Average property price: $479,063
Papakura – Average property price: $463,342
Franklin – Average property price: $483,529
These areas are all ones to watch for potential growth, not just because of affordability, but because of their relatively close proximity to the Auckland CBD and amenities.
Papakura is home to several sporting facilities, including an international-quality athletics track. Franklin is known for its quiet, country lifestyle and is popular with tourists, with antique stores and fresh produce making it a real lifestyle destination.
As with any outer suburb, commuting costs need to be factored into a move, with the suburbs listed above around 20 to 30kms from the Auckland CBD.
The bottom line? When it comes to entering the seemingly unaffordable Sydney and Auckland housing markets in 2015, it pays to look at growing outer suburbs for your next property.
Buying off the plan can be a great move for some security in your investment. It has advantages such as locking in a price to safeguard against rising values, as well as a number of tax advantages.
Off the plan properties may just be the solution for investors who need to organise their finances or first home buyers who currently do not have enough capacity to purchase. Here are some ‘do’s’ and ‘don’ts’ to ensure you get the most out of your investment opportunities:
Research which suburbs will provide you with the best growth and the best yield. For example, in some inner city suburbs, capital growth on a two bedroom apartment far exceeds other apartment types, although one-bedroom apartments generate the best yields.
Register on project agencies’ databases
Understand that sales people will always contact the potential buyers who are the easiest to contact and the most responsive. Further, people who register with project marketers’ databases often get the first opportunity to see the project.
Usually the first third of the project is sold, not only to members of agencies databases, but also to those members who act quickly. In most projects, prices are increased after the first third of the project is sold. Smart buyers want to be amongst the first half of the purchasers because if they are not, they are in effect paying more for the same property.
Understand the value of time
Generally, property prices increase annually between five per cent to seven per cent and may occasionally dip in value. Don’t panic: over time, your investment will serve you well. And with the strong performance that our property market is seeing at the moment, you can feel confident.
Buy in the areas people want to live
A recent study showed the top three priorities people have for choosing somewhere to live
are proximity to schools, work and transport. Some other things to consider are shopping
centres, parks, cafes, restaurants, water and the size of the property.
Don’t buy without knowing who the key people in the project are
It is always important to know the profiles and previous projects of the developers, architects, interior decorators and the project manager. Don’t buy without having your solicitor look at the contract. It is important to choose a solicitor who understands off-the-plan contracts. An experienced solicitor is worth their weight in gold.
Don’t expect the agent or developer to wait for you to organise your finances
Most banks will not give you an approval more than six months before completion. Get an
indication from your bank that you will be okay, and then go for it.
Don’t distrust your agent
Your agent wants to do the right thing by you, and will encourage you to get in early and grab the apartment of your dreams or a great investment.
Don’t forget the reason you are buying
It’s either a great new home or a solid investment. Never confuse the two reasons.