Posts Tagged ‘House Inspection’

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House Buying Negotiating Tactics

There are plenty of house buying negotiating tactics out there - In New Zealand we love a bargain and we love to negotiate. The vendor of any house for sale will not hesitate to counter-sign an offer if it is not to their liking – so don’t be afraid to start house buying negotiations with a lower offer than you are prepared to pay.

There are exceptions to the ‘go in low’ theory and that is when you are involved in a tender, or ‘best offer’ situation – here you need to put your best offer forward.

Negotiating tactics come into their own when you are in a one on one negotiating situation with the vendor. So here are a few guidelines.

Don’t be influenced by the advertised price, or what the real estate agent is indicating, or even the RV - plan to pay what you feel the house is worth - using your experience of what you have seen to guide you (we have some suggestions on how to work out a houses market value) and offer accordingly.




Now, there is low and there is LOW. Don’t go too low - offer something that you would be pleased to get it at, but you feel is still fair, or at least in the ballpark. Sometimes negotiations can stall right from the beginning when an offer is just too low, and there is a feeling that no agreement will ever be reached.

If timing is something you want to use to your advantage - have a think about using a sunset clause.

Once you get that first counter-sign, you will have your first indication of what the vendor will accept. You may be partying on the inside as you are actually happy to pay this, but let’s just see if we can get them a bit lower. The meet in the middle technique in this situation is usually a good one - and often expected.

It is not always money that changes on a counter-signed agreement or that is up for negotiation - sometimes settlement date is a big issue and being flexible with this is as good as cash to some vendors. Find out if this is the case and use it in your negotiations.

Take time to think about it if the sale and purchase agreement comes back counter-signed you don’t have to respond straight away – give it a few hours or even sleep on it.

If the negotiations stall and you are still more then 10% away from the vendor’s price, then it is unlikely to happen. But once you in the 5% realm, then it would take some very stubborn people to let the negotiations fail.

If negotiations do fail and weeks later the house is still staying stubbornly on the market – if you are still interested – re submit you same last offer – the vendor may now be prepared to meet the market.

Need more help on making an offer – check out the Propertytoolbox house buying guide.

The Building Report Says There is a Problem…

It is always a good idea to get a building inspection before you commit to buying a house – either before making an offer or as a condition in your sale and purchase agreement.

When you get a building inspection done you are hoping that everything comes out OK, with maybe the odd minor maintenance issue identified here or there in the building report – but what if there is something unexpected, something big, something that leaves you dazed and confused? Here is a summary of our advice on what to do…

First things first – are you still thinking of buying the house? If not – this is the easy bit – walk away! Tell your lawyer you are not going unconditional, or just don’t make that offer – easy! Or maybe not so easy as you have already invested time, money and emotion into the house...

So you are still interested in buying the house.  Now you need to work out how serious the problem is – a good person to question initially is your building inspector – you need to make sure that you fully understand the problem that they have identified in the building report. Remember, your building inspector is not an expert in all aspects of building so if a particular problem has been identified it is best to speak to, or get quotes from, an expert in the area.

Now that you have the full picture of the extent and cost of the problem you can make a decision with all the facts to hand. Now you can walk away, or continue as if nothing has changed, or begin re-negotiations with the vendor - either negotiating down the price or asking the vendor to fix what is wrong with the house.

If you have obtained this building inspection before even beginning negotiations you are now in a much stronger negotiating position. You can start price negotiations fully armed with exactly what is going on with the house and adjust your price accordingly.

If you and the vendor come to an agreement that involves the vendor having to complete work, or anything changes on a previously agreed sale and purchase agreement, or anything else at all, this needs to be formalised in the sale and purchase agreement by your lawyer.

Finding something wrong during a building inspection is the main reason why you need to give yourself plenty of time to get a building inspection done – at least 5 working days is a minimum! You never know what you are going to find, and what processes you are going to have to go through after getting the building inspection and reading the building report.  So give yourself plenty of time and don't rush any decisions.

For a more comprehensive rundown of your options when there is something wrong with the building inspection – head here.

We have more great advice, tips and information about house buying in our house buying guide - make sure to check out the section 'I've found a house!'
 
 




 
 

There is a Problem With the Building Inspection! What Should I Do?

The first thing you need to do when your building inspection identifies a problem is to work out how serious the problem is – a good person to question initially is the person who did your building inspection – you need to make sure that you fully understand the problem that they have identified.

Building Inspection Problem? Get a Specialist Building Advice

A building inspector is not an expert in all aspects of building so if a particular problem has been identified and the building inspector has indicated that they cannot tell you the extent of the problem or the cost to fix - it is best to speak to, or get quotes from, an expert in the area.




Say the piles are a problem – speak to a replier – they will be able to assess the extent of the problem and give you a quote for the remedial work.

Now you are in a position to start making decisions depending on your situation...

I Have a Signed Sale and Purchase Agreement

You may have gotten the building inspection as part of working through the conditions on a sale and purchase agreement. If you are not happy with the building inspection:

  • You are now legally entitled to cancel the agreement. To do this you tell your lawyer, and usually the real estate agent that you are not going unconditional based on an unsatisfactory building inspection. This can be a very hard decision to make as by this stage you have invested time, money, and emotion in the house, but in many cases it is the best decision.
  • You can re-negotiation the price of the house with the vendor. Go into negotiations with quotes for remedial work in hand – and bargain hard! Don't forget, it always pays to budget for some extras!
  • You can ask the vendor to fix what is wrong before you buy the house. Especially if the problem is fairly easy to fix i.e. a few hours work by a plumber or electrician this is often a good solution. If the problem is major – the vendor will rarely agree to fix it.
  • You may still be happy to proceed with purchasing the house at the agreed price - and you still can. Perhaps none of what was identified in the building inspection is a surprise, or you now know why the house was a reasonable price from the beginning! Before proceeding double check your numbers, make sure you are happy with the amount you are going to have to pay in repairs and renovation, and add a contingency of at least 10%.

If you and the vendor come to an agreement that involves the vendor having to complete work, or the price changes, or anything else at all, this needs to be formalised in the sale and purchase agreement by your lawyer.

Even if the work agreed is small (i.e. rubbish removal or repairing flashing) and seems insignificant to include – the reality is that it will not be done unless the vendor commits to it via the sale and purchase agreement.

I Haven’t Started Price Negotiations

If you have obtained this building inspection before even beginning negotiations on a house that you are interested in you have similar options:

  • You can walk away – the house is not suitable anymore – move on!
  • You can start price negotiations fully armed with exactly what is going on with the house. This is a much stronger bargaining position then if a price had already been agreed and a reduction was being negotiated. It is hard for people to comprehend that seemly overnight their house price has decreased significantly.
  • You can start negotiations from the beginning with a condition that lists things for the vendor to fix before you will settle on the house – again, if the problems are extensive - this can be a very short negotiation!

Sometimes the extent of the remedial work needed to fix a problem identified by a building inspection can not be worked out exactly by a ‘surface only’ examination by a building inspector or tradesman i.e. extent of rot given evidence of rotten weatherboards.

In these situations you will only be able to get an estimate of the cost of fixing – as a lot will depend on the extent of the problem and this will only be known when the remedial work starts.

It is up to you here to make a decision based on how much of a risk you want to take! In these cases, if you are not comfortable with what can potentially be an unknown, and large, expense it is best to walk away.

Building Inspection Problem - What To Do
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The Propertytoolbox Home Buyers Guide

The information you have just read about building inspection problems has been added to the Propertytoolbox house buying guide - An essential resource for house buyers in New Zealand. Find out more about house buying in New Zealand here.


Should I Get a Valuation, Building Inspection, and LIM Before Making an Offer?

There is a cost to getting all of these reports prior to making an offer on a house - so why should you get them done?

Advantages of Getting Your Due Diligence Done Prior to Offering

The main advantage of having your valuation, building inspection and LIM done prior to offering is you have a full understanding of the house and its worth to you.

Another major advantage is that getting a valuation, building inspection and LIM usually means you can get unconditional finance approval for that house and can then choose to make a cash (unconditional) offer – this sort of offer is very appealing to vendors.




When a cash, unconditional offer is agreed and signed it is binding, the house is sold! A cash offer can give you bargaining power and you can often buy a house for a lower price with a condition free cash offer.

The Disadvantages...

The main disadvantage is the cost. Altogether, these reports will cost well over $1000 – just how much depends on the house itself. This money is potentially being spent on a house you may never buy.

In normal house negotiation situations (not a tender, or auction) putting your building inspection, valuation and/or LIM as a condition in your offer is standard. If a price is agreed on – then you get the reports (do your due diligence).

Houses for Sale By Auction or Tender - Due Diligence

In the case of an auction, if you want them, you need get your valuation, building inspection, LIM and unconditional finance prior to the auction as when you are bidding you are making an unconditional offer for the house; if you are the winner bidder – you have bought the house.

In a tender situation – adding a building inspection, valuation and/or LIM to your tender puts you well below a cash offer in the rankings. Your offer will need to be significantly higher then other tenders to be seriously considered in this situation.

So if you are serious about your tender – try to make as close to a cash offer as possible – this usually means doing your valuation, building inspection and/or LIM prior to the tender date and getting an unconditional finance offer so you don’t have conditions in your tender.

Due Dilligence You Can Do For Free

No matter what you decide to do, we recommend you read our before you put in that offer section, here we have 4 things you can do at minimal cost (free even) that will let you get to know the house you are thinking of buying. You may find that what you discover changes your mind, saving you the cost of hiring the professionals altogether.

Building Inspection Property Valuation and LIM Before Making an Offer - Due Diligence
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The Propertytoolbox Home Buyers Guide

Want more info and advice? Head to the Propertytoolbox Home Buyers Guide for all you need to know about buying a house in NZ. We have comprehensive information about property valuation and building inspection that can help with those pre-offer decisions.



Does The House Need Repiling? Repiling NZ Style…

What are Piles?

Piles are wooden or concrete posts under a house that form the foundations and are what many New Zealand houses sit on. The job of the piles is to distribute the weight of the house evenly across the soil underneath, and the house construction distributes the house weight as evenly as possible over the piles, ensuring the house stands straight and square.




Over time piles can rot away, causing them to fail, uneven distribution of house weight over piles can cause uneven settling, or movement of the ground under and around piles can cause piles to move.

Repiling a house NZ Style - Not a Firm Foundation

Not a Firm Foundation

Repiling a house NZ Style - 100+ Year Old Totara Piles

100+ Year Old Totara Piles

Has the house been repiled?

If the house was built in an era that used totara piles, an a examination of the piles under the house will soon determine if repiling has happened. New piles are either concrete or tanalised (H5) pine and are easy to spot.


Make sure to check out that all the piles have been replaced. It is quite common to see that only a few piles are new, often these are the piles around the edge of the house.

Why repile?

Sometimes all the piles move, but more often different piles move to different extents. This causes the house to twist, bow, and crack, resulting in damage. The piles may have stopped moving, or may be continuing to move - this all depends on the cause of the movement. To halt ongoing damage, re-piling is necessary. If you are planning renovations, it pays to start with firm foundations or you are going to end up with an inferior result.

About repiling

Repiling involves digging new piles down to a firm base and attempting to re-align the house on this new foundation. Sometimes it is obvious that repiling work is necessary. You may find yourself walking up hill and down around a house! Usually it is a lot more subtle.

To establish if the piles are a problem and to what extent, you will need to ask the experts. A house inspector is a good start. Make sure you get a good idea as to what is caused the need for repiling – it this likely to be an ongoing issue? i.e. poor soil, ongoing subsidence, risk of landslide. Can the cause be fixed? i.e. leaking pipe, drainage issues causing water to run under the house.

Repiling - The process

Repiling is a major job and different repilers repile use different methods - some cut holes in the floor to access under the house and some lift the entire house up. The technique used depends on a variety of factors with access being a big deciding factor and personal preference and tools and equipment available to the repiler having an influence too.

Repiling a house NZ Style - Lifting up the House

Lifting up the house

Repiling a house NZ Style - Cutting the Floor to Place House Raising Jacks

Cutting up the floor to place jacks


I am repiling - What else can I do?

Repiling opens a lot of opportunities to do other things to a house, it can be moved, lifted up and another level added underneath, or shifted somewhere else completely! The access that is gained under the house is also an opportunity to do things underneath that in usual circumstances are quite difficult - like underfloor insulation and working with the plumbing and electrical systems.

Repiling a house NZ Style - Access Under the House During Repiling

Access under the house during repiling

Repiling a house NZ Style - Moving a house during repiling

This house was moved across 1m during repiling

Repiling requires a building permit - other additions and changes to the house can be added to the same permit so it pays to plan in advance exactly what you want to do with a house before you repile so all your permissions can be gained at the same time - saving money - and also allowing you to organise access under the house for other works while the repiling is happening.

How much for a repile?

If you need to repile get a repiler in for a quote. Re-piling costs vary hugely and depend on many. Repiling costs start at around $12,000 - 15,000 (for a very small house, on the flat with fantastic access) and quickly climb when you start getting into soft soils, erosion problems and difficult access.


What is a Pre-Purchase Building Inspection?

A pre-purchase building inspection is a visual, non-invasive inspection of a property. A building inspection is also known as:

  • A house inspection
  • A building survey

The inspection attempts to identify significant defects, overdue maintenance, future maintenance issues, gradual deterioration, inferior building work, and/or other areas of concern. The building inspection takes into account that you are doing the inspection with the intention of buying the house, and the inspection focuses on details relevant to this decision.

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Will The Building Inspector Spot Everything?

Building inspectors can't guarantee they will find everything wrong with a building. They are limited to a visual inspection of a building unless the owner agrees to remove such things as wall-linings or floor boards. That is unlikely, so the building inspector will only check areas of the building that have safe and unobstructed access.

An inspector can't guarantee the building meets the Building Act and/or local regulations so will not check to see if the council has issued any resource consents, building consents, code of compliance certificates, etc for any work carried out to the property. But they can identify building work that is likely to have needed a building permit.

Information about permits and consents can be found by searching the council records or ordering a Land Information Memorandum (LIM) from the council. For an additional fee, some inspectors will look at the property records held by the council and prepare a special report on the findings.

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