Saturday, February 11, 2012

7 Experts Who Helped Us Buy A House in NZ

house_with_chimney.jpg free clipart
Wherever one is in the world I think the anxiety and excitement of buying one's own property is universal. We were scarcely able to believe that we were finally taking the plunge. And we had no clue as to what was involved.

We started off by peeking into houses as discreetly as possible. We drove around on weekends looking for "for sale" boards. We boldly ventured far, as, the further we went from the city, the cheaper and more spacious the houses seemed to get.

We trudged around visiting "Open Homes", drove around looking for "For Sale" boards, read the classifieds and ...nothing. What we loved wasn't for sale and what we didn't, was! We felt tired and dispirited before we'd even begun.

There are many ways to search for houses and for us, the best was "TradeMe" - New Zealand's answer to Ebay! The only problem was that the agents - all of them - took wide angled photos of each room so that the room looked bigger than it actually was. We had to gauge how stretched the rooms looked in the photos compared to their actual sizes by looking carefully at the ridiculously stretched furniture - cabinets, sofas and micros. But these photos are taken with the agents banking on most people not looking at the furnishings as much as the rooms in which they are placed. The idea is to get people to actually visit the property before discarding it. Can't help wishing housing agents stopped doing that.

After many false starts we finally decided on the house we wanted. I can't begin to tell you how thrilled we were. The housing agent was wonderful and showed us around the property.

The Housing Agent (or broker) is the first professional one meets when one decides to buy property in NZ.  It is quite a hard job to be in as the agent gets a commission only if he or she notches up a sale. No sale, no pay. It is in his or her interest to ensure the process moves along smoothly.

If buyers have done their homework, they know the government valuation of the property and what houses in the area have recently sold for. Government valuations are revised every three years (I think) and if one wants to know the current value of the property as compared to a three year old valuation, one can, if one wishers, employ the services of a valuer. This involves a fee.

The valuation is a good starting point for the buyer. The seller has an asking price. The housing agent helps with the negotiations. This, to my mind, needs great delicacy and tact. The buyer and seller don't meet till negotiations are over. The agent needs to keep both positive as they hammer out a compromise. The agent also needs to be a mind reader. For example, at what point in the negotiations will/won't/can/can't the buyer or seller call a halt? If they settle for a price it is a major hurdle overcome but there's still plenty the buyer has to worry about.

How on earth does one find out if everything is above board and the property is sound? That is where the other experts come in. 

The professionals we dealt with were the housing agent (as above), the city council, a certified builder, our lawyers, the bank and the mortgage (loan) agent. Here’s what each of them did for us.
  • We applied to the city council for a LIM report. LIM stands for Land Information Memorandum. It lets us know whether the land on which the property stands is safe to invest in. Involves a, to my mind, hefty, fee.
  • For peace of mind, it is best to invest in a certified builder for a builder’s report on the state of the property one plans to invest in - what needs painting or repairs or redoing. One pays a hefty fee for this service too. 
But in the long run, these reports are invaluable for what is right or wrong with the property and the land it stands on. Just to give an example, the property we finally bought had something wrong with the drainage system and we managed to get the cost of repairs off the asking price.

Once we decided on the home we wanted to buy, we informed the sellers through the housing agent, negotiated and settled for a price and signed a conditional contract.

The conditions in our case were:
  1. subject to finance from the bank, 
  2. subject to the LIM report from the city council which really took a long time - ten working days, and 
  3. subject to the builder’s report.
We'd picked a lovely property and were all ready to sign on the dotted line when we received the builder’s report. That wasn’t satisfactory and put a halt to the proceedings. Oh the dejection, the desire to ignore what was in the report and having come this far, to go ahead anyway. But in the end, thanks to the advice of a friend experienced in the property line and of course, the builder's report,  good sense prevailed. It was worth the fee we paid the builder or we would’ve made a terrible mistake. For a lifelong investment and possibly something one would like to leave for the kids, one cannot afford to make such mistakes.

The search was on again. We were lucky the second time around. Somehow, it was a more subdued affair. The house agent (a different one for a different house in a different locality) stood by quietly as many hopeful buyers wandered through the property looking for the pros and cons on "Open day". The agent was there to answer any questions potential buyers might have and we had plenty.

The builder’s report had a long list of exactly what he thought was wrong with the second property we liked. We noticed they were mostly minor repairs or associated with normal wear and tear. Keeping in mind the time frame, the kind of repairs to be carried out and what was RIGHT with the property, we picked out a few repairs we considered essential and asked the seller to attend to those. The seller agreed. Then there was no going back. We were committed. We were full of misgivings and doubt, our experience having told us anything could happen at the 11th hour. Yet, along with the fear there was that undeniable little knot of excitement and elation.

All three conditions above were met within a certain number of (specified in the contract) days and the contract went unconditional. It was now over to the bank and our lawyers. The housing agent sent us a gift basket with chocolates, cheese, crackers, gourmet jams and other goodies including a thoughtfully provided packet of special spices to make "Bombay Potatoes". This was her own personal touch. With or without the goodies, she comes highly recommended by this family of buyers.

The lawyers and bank were essential but our mortgage agent was invaluable in securing the best possible terms the bank could offer. Without his help we couldn’t possibly have known what to ask the bank for. He negotiated hard on our behalf. The papers he ensured we had ready for the bank were a thick wad (I think about 80 pages) but they helped the process along smoothly and rapidly. The bank, after satisfying itself that we would have the wherewithal to pay, ensuring if anything happened to us, at least our insurance could, mortgaged the property to itself at the current rate.

The final professionals we employed were the packers and movers. They were wonderful. Their work is punishing and yet they were cheerful and efficient. What they lifted and moved in one day would’ve taken reasonably strong and ordinary folk a week. There was no damage and perhaps minimal loss.
Shock.jpg free clipart

After we moved in, we stepped out for lunch one afternoon. When we got back we had the shock of our lives. We'd been burgled. Not everything is rosy in New Zealand and having lived here for many years, we don't see it through rose spectacles either. It is just that when things go right, one tends to forget what could go wrong. We ought to have remembered to install an alarm system; we ought not... no point in hashing all that up.

Our insurance covered our loses and now, we have an alarm system installed. Our neighbours were really supportive and we feel we can finally begin to enjoy our new home.

This post was prompted by Smita's experience of buying a house in India. Her first post on the series is here


  1. That's a lot of steps and feedback loops! But I hope buying a house in the US involves less steps than that in the NZ. We're planning on buying a house in the near future.
    I haven't heard of any LIM report or builder report here. Guess there are similar things that I need to find out.

    1. Let us know, Indrajit. I am sure someone will find the info helpful.

  2. oh my god! quite an experience - first the buying & then the burglary
    house-hunting & then narrowing down that ONE house we want to live in is quite a thing :)
    u know i have nightmares of being robbed i have no idea why and to read someone who HAS been,is ...uh! goosebumps

    1. It isn't what they take away that stays with you. But to think someone has invaded your privacy and walked around your home! You are right, goosebumps. But the flip side is that we've come to know our neighbours in a hurry and are on "Hi, hello and a cheery wave" terms. Normally, it takes a while!

  3. Sorry about the burglary, but happy that have a safe new home now.

    In India, and more precisely, in cities like Bangalore the price of land and houses have shot up like nothing else, and middle class people like me can only dream of a own house.

  4. Thanks Joshi and welcome to the blog. They say, for real estate, our Indian cities have become one of the most expensive worldwide. I remember, some of the better companies (like Tatas) used to loan their employees the money to buy homes at nominal interests. Wonder if they still do that?