For many of us buying a residential property, particularly our first home, can be an impulsive and very much an emotion based decision. With that in mind, we have listed some tips that could help residential property buyers to avoid common pitfalls.
If applicable, contact your mortgage lender to ensure that you are able to obtain finance for any contemplated purchase. The sooner you do this the better. Many lenders are happy to give buyers pre-approvals.
If you are looking to purchase an investment property, explore and carefully consider any potential tax issues or implications.
Request to arrange a second viewing with a real estate agent outside of the regular open home hours. This will give you a chance to have a good look around the property without other prospective buyers in the way. It is also a good idea to view the property during different times of the day. This can also give you an idea if any traffic outside the property will be of concern in terms of noise and/or privacy.
Don’t be afraid to be upfront and ask the real estate agent about any known issues with the property. It is in your interests to ask as many questions as you can. Likewise, consider arranging a separate visit from a trusted and qualified builder to give you their opinion on the condition of the property. We recommend that your offer for purchase has a condition added to reflect obtaining a builder’s report.
From our experience, maintenance issues can result in significant costs. It is always best to check these out so that you don’t get any nasty surprises later on and know exactly what you are signing up for.
If making an offer, make sure that your offer is conditional on getting a satisfactory valuation.
Contact an insurer or two to find out whether the property is insurable and to get an idea how much your premiums would be for the property you are interested in.
Call the local council to find out whether any significant works have been approved in the area as that may effect the value and/or live-ability of the property.
Check the property has had no issues recorded on the council’s records (e.g. flooding etc). Obtaining a Land Information Memorandum (LIM) from the council would cover these matters and we recommend this as it provides a more comprehensive review on the property and would provide for any known work that has been completed on it. Again, ensuring you have a condition inserted in your agreement is recommended when making an offer for purchase.
Discuss any sale or purchase you may be contemplating with your accountant or tax advisor. You should be aware of any tax implications before you sign a contract to sell or purchase as this could save you money and complications in the future.
From 22 October 2018, anyone buying residential property in New Zealand will have to state whether they are eligible to buy under the Overseas Investment Act 2005. That is New Zealanders, Australians, Singaporeans, and overseas people – everybody.
An eligibility statement will need to be completed by the purchaser and provided to conveyancers, who must retain a copy for at least seven years. There are significant penalties for both for conveyancers who do not comply, and for purchasers who make false statements.
It will be important for purchasers to work out whether Overseas Investment Office consent is required at the early stages of a transaction. Obtaining expert advice in this field is highly recommended.
Most importantly, get legal advice before you sign any agreement. It can be very difficult and costly to get out of even conditional agreements.
Contact our Property Team today to discuss how we can assist you.
Disclaimer: The information contained in this publication is of a general nature and is not intended as legal advice. It is important that you seek legal advice that is specific to your circumstances.