To get the most out of your Proppy experience you need to get in the know. We have crafted a raft of no-nonsense resources below which will provide you with everything you need to know about buying with us. From top tips to definitions of industry jargon and how to guides, we’ve got you covered.
A quick guide to buying a house
Buying a house is not as daunting as you might think. The trick is to do your homework and learn as much as you can about how the process works before you start.
Top 5 tips for online auctions
- Do your homework. Make sure you have had a chat to your bank and they are prepared to lend you the money. Also, take a good read of the legal documentation and get a lawyer to review this for you. Simple things like this will save you money in the long run.
- Get a second opinion. You can take anyone along to an open home to view the property with you. So if you have a friend whose good at spotting potential or problems then take them, and ask lots of questions. This is a serious investment and needs some good thinking.
- Register early. Do not wait until the day of the auction to register. There is a bit of paperwork required for an auction and you need to be approved to bid. So save yourself the stress and don't leave it till the last minute. And remember, by registering you are under no obligation to bid.
- Bid boldly. It's very tempting to wait until the last second to bid which is all well and good if you have the nerve. However, we advise you set your price and bid confidently in your own time. Don't leave it to an element of chance and wait until the final second.
- View the property. Don’t buy anything unless you have actually seen it. If you are offshore – get someone to view it on your behalf. This might seem like a no brainer, but it has hurt buyers in the past.
Find out what you can afford before you start seriously looking and viewing properties.
The best way to do this is by searching online and making use of the many online mortgage calculators. Most banks offer mortgage calculators where you can enter terms for a mortgage and see what your repayments might look like.
It is also a jolly good idea to visit Sorted.org.nz for more information about:
- how much you can afford to pay
- how much the bank will lend
- government help
- credit reports
When doing your maths, don’t forget to consider the other costs associated with buying a house:
Most lending institutions will insist on you having a builder’s report and professional bank-approved valuation before they will lend you a dime. These reports don’t come cheap, but they are great peace of mind.
You will need to make an allowance for the cost of moving into your new home and to connect the phone, power and internet.
Ongoing annual costs
When you calculate what you can afford, don’t forget to include the cost of insurance, rates and if you are buying an apartment or similar, the cost of body corporate fees. And you must not forget repairs and maintenance. Staying on top of any repairs and maintenance will not only help you reduce costs, but it will improve the value of your property in the long term.
Getting a mortgage
Unless you win the lottery, you are going to need a mortgage (home loan). A mortgage is a loan from a lending institution allowing you to borrow money to purchase the property on the condition that you pay it back in installments over a period of time (term). The catch is you have to pay interest on this loan and, the longer the term and higher the interest rate, the more you pay.
Choosing the right home loan for your circumstances is important - so shop around for the best mortgage. You are under no obligation to stick with your regular bank. Negotiate with the lender and don’t let them get you in too deep. You don’t want to overcommit yourself and find yourself with a 95% loan and be eating toast for 20 years! Just borrow what you need. And pay if off as fast as you can. The quicker you pay it off the less interest you pay.
If you are uncomfortable dealing with a bank or lending institute then chat to a mortgage broker. They are experts in this field and will help you structure a loan to suit your lifestyle.
When you join Proppy as a buyer you will need to sign a buyers agreement and read the REA NZ Residential Property Sale and Purchase Agreement Guide.
How do I know what a property is worth?
These days there are many ways to assess the value of a property.
- CV – this is the current valuation assessed by the local authority for rating purposes. This is sometimes referred to as a government valuation (GV) or a rateable value (RV).
- There is a growing number of apps and websites out there these days that help you with getting an indication of what your property maybe worth. However, none can be as accurate as a registered professional valuer who actually visit your property. They come with experience and qualifications that a computer algorithm could never ever replicate. Netherless we do believe you should look at them in conjunction with the valuations (if shown by smart vendors) and other information given as part of being a Proppy member.
- Sale price – in some cases sellers will advertise a fixed price or will provide a price indication.
Finding what you want
Once you’ve got a good feel for your level of financial commitment you can start searching for properties– we would recommend you bookmark Proppy.co.nz, TradeMe Properties, for Sale and Realestate.co.nz. These should cover all the bases.
Searching can be pretty overwhelming, so start by making a list of all the ‘nice to haves’ and absolute ‘must haves’.
Consider all types of houses and their respective pros and cons from villas and cottages, bungalows, 1970’s houses, townhouses and apartments and lifestyle properties.
A word of caution, many homes built in the 1990s and early 2000s may have water tightness issues so do due dilligence.
Now you can get down to the business of serious searching and finding a selection of homes that fit your criteria.
Methods of Sale
An online auction is a method of selling to the person who bids the highest, the person who is prepared to pay the most! It is an open process whereby keen buyers bid against each other. Once the reserve price is reached, the highest bidder becomes the successful buyer.
Negotiation – Private Treaty
A negotiation selling method is when properties are advertised with a fixed price, a price band or with a price and the words ‘by negotiation’. Buyers are invited to make an offer on the property based on the prices advertised. From there the buyer and seller negotiate on an agreeable price.
Buy Me Now
This is a unique proposition by Proppy. The owner sets the price, which is fixed and there is no room to negotiate. The terms and conditions of the sale are similarly fixed and non-negotiable. Like an online auction, a 'Buy it now' offer is unconditional and legally binding. This method works best for investors and people who want to sell in a hurry and for buyers who don't want to negotiate, they think the property is a great price and are happy with the terms.
This is the secretive selling method whereby a vendor asks for written offers to be presented by a certain date. Any prospective buyers need to submit their “best” written offer to a digital lock box for the owner to then review and consider. It is a very confidential process and there is no reserve price. When selling by tender the prospective buyer needs to complete, sign and submit their sale and purchase agreement when they present their written offer. Because you are signing a legal document it is a good idea to get your lawyer to check it before you submit your offer.
The sale and purchase agreement
This a contract between you and the seller that sets out the details of the sale of the property. Proppy emails you the sale and purchase agreement for you to digitally sign. You can also download this from your "My Proppy Page.
What is the deposit and how much?
The deposit is usually 10% of the purchase price and is considered an indication of your seriousness as a purchaser. When the contract goes unconditional you will be required to pay the deposit, which is deposited into Proppy's independent trust account.
Your deposit may only be paid by:
- Internet Banking - Direct Credit or
- Cheque payable to: Public Trust o/a NZ Real Estate Trust
PLEASE NOTE: NO CASH DEPOSITS
Payment to be made to:
Account Number: 03-0104-0186911-00 Account Name: Public Trust o/a NZ Real Estate Trust
Before you sign a sale and purchase agreement it’s wise to get your lawyer to look at it and typically your lawyer will handle the conveyancing when the property is settled. If you don’t have a lawyer, now would be a good time to find one. You can find more information about the legal side of buying property at the Property Law website (http://www.propertylawyers.org.nz/).
You’re almost there. The date for settlement is agreed during the negotiation of the sale and purchase agreement. This is the day when you pay for the house, take possession and pop the bubbles!
Congratulations - you are now a proud property owner!