You will be giving your mortgage broker your personal financial details, and your mortgage broker will be helping and advising you as you buy your home – a very large purchase. Therefore choosing a mortgage broker should be done carefully. Not sure what a mortgage broker does – check out our mortgage brokers guide.

There is currently no requirement in NZ for a mortgage broker to belong to any group or to have any financial qualifications – there is also no requirement for a mortgage broker to tell you about their background, experience, and/or qualifications - it is up to you to find out. But a good mortgage broker will be open about their qualifications and memberships - so ask!

Preferably you want your mortgage broker to have a relevant banking or finance background. This background can be in the form of work experience prior to becoming a mortgage broker or from education. You mortgage broker should at least a few years experience in the job of mortgage broker (and evidence of up to date and ongoing training is a plus).

Some mortgage brokers are members of the Professional Advisors Association (PAA). This body has a code of ethics and rules that members must adhere to and all members must have indemnity insurance. The PAA also encourages their members to keep up to date with training available. If the mortgage broker you choose is a member of the PAA – this is great!

Ask the mortgage broker how many lenders they deal with, just a few is not good enough – in excess of 20 is great! Always check if there is a fee! You should be able to find a mortgage broker who will do the work at no charge to you.

Ask the mortgage broker what they can do for you. They should be offering to:

• Assist you in finding the lender that most suits your needs
• Save you time by speaking to a number of lenders on your behalf
• Advise you on suitable loan structures – taking into account your personal situation.

To find out more about mortgage brokers, who they are, why you might choose to use one, what they do, and how they get paid, head this way.

In addition a mortgage broker may offer additional services like:

• Providing you with financial advice
• Liaising with you lawyer, property valuer, building inspector, real estate agent etc – effectively providing a ‘project management’ service.
• Insurance

Which of these additional services you choose to use from your mortgage broker will depend on what you want from your mortgage broker, and how qualified you think they are to provide these services i.e. financial advice really should come from a dedicated financial adviser.

Finally, go with your instincts. There are plenty of mortgage brokers out there, and because they are dealing with your personal information, and personal situation, you need to feel comfortable about that. You need to be confident that your mortgage broker is intent on getting the right mortgage for you. If a mortgage broker doesn’t feel right, find another.

Would you like to chat with a mortgage broker.  Fill in your details here, and a qualified mortgage broker will ring you.

It is the eternal question – renting versus buying. The conclusion that is nearly always reached is that over a long period of time it is better to buy a house if you can rather than rent.  If you are all set to give up renting and are off on the house hunt - check out our house buying guide for house buying tips.

We all dream of owning our own home but if your finances don’t allow it, your dream of a cosy bungalow in a leafy suburb may turn into a cold box on a main highway. Often, the standard of living you want for you and your family cannot be achieved by buying, so renting is the only way to go. This may be the only way of getting the location you want, the number of bedrooms you require, or getting into the right school zone. Not sure what you want in a house? We have some info and questions to help you get this nailed down in our 'what do I want in a house?' section - complete with a handy checklist that you can use to both make a list of 'wants' and also for a record of how a house scored when visited.

Many people consider rent as ‘money down the drain’ but the same could be said of interest on a mortgage… The success of your own home as ‘a good place to put your money’ really does rely on the house increasing in value over time.  In a lacklustre property market, house values can stagnate for years, especially outside of the main centres. So renting could be a good option in these times.

Consumer have a handy renting versus buying calculator that you can use to work out the basic 'cost of paying a mortgage' versus 'cost of paying rent' question. If you are not sure how much you can borrow, talk your bank or a mortgage broker. Propertytoolbox makes it easy to have a free chat with a mortgage broker - head this way!

Renting means your house deposit is in the bank earning interest, and any other money saved can be added – the power of compounding interest will mean that you are going to see significant increases in your bank balance! To work out what you can save over time by putting your money in the bank - instead of into buying a house - check out this Sorted calculator - if you calculate saving all the money that would have gone towards paying for the mortgage and the cost of ongoing house ownership (usually a lot more then just your rent) you will be surprised at how this can add up over time!

Also if you are not sure you are in it for the long haul – for some reason you feel you may only own a home for a short period of time, or may move often – renting could be a sensible choice as there are significant costs to selling. Often selling uses up any monetary gains made by the house increasing in value if it has only been owned for a short period of time. If the property market has been flat - then you can easily lose money!

Maybe buying a house is not for you right now, but that does not mean that it is not in your future. Keep saving towards a deposit and keep an eye on the property market. When your circumstances, money, and the state of the property market suit your house buying goals - go for it!

When you make an offer, or place a tender, on a house it will either be accepted, rejected, or you will start negotiations with the vendor. If you start negotiations you will presented with your original sale and purchase agreement countersigned. This countersigned agreement is usually the original contract you submitted with some changes made by the vendor, signed by the vendor. They may have changed anything on the agreement including the price, the settlement date or the conditions.

It is usual for these negotiations to be handled by the real estate agent and you should have any amendments to the sale and purchase agreement approved by your lawyer before signing - especially if the amendments are changes to the conditions of the contract, or parts of the standard contract have been crossed out. You may choose not to accept the changes made by the vendor, and can either countersign the agreement again (making your own changes) or end the negotiations.

Every time the sale and purchase agreement is amended and submitted to the other party it is, in law, the rejection of the previous offer and the making of a counter-offer. This amendment of the sale and purchase agreement is often referred to as countersigning. All changes to the agreement need to be initialled (this can mean a lot of signing!). Only when the countersigned document is accepted without any amendment and signed is a legally binding contract formed.

Just because you have countersigned and countersigned and finally agreed - this does not mean that the house is sold - you may still have conditions to work through before the contract goes unconditional - find out more about going unconditional.

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.

|

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.

The real estate Complaints Assessment Committee (CAC), part of the Real Estate Agents Authority (REAA) has made its first decision. A North Shore real estate agent was found guilty unsatisfactory conduct.

The daughter of a recently widowed woman complained after her mother received a condolence card from a real estate agent soon after her husband’s death that included a business card and a valuation of the mother’s house.

As a result of this solicitation, the real estate agent was found by the CAC to be in breach of the authority’s Code of Professional Conduct and Client Care for the manner she approached the complainants mother.

This is first of many assessments and decisions to be made by the CAC – there are another 200 complaints currently in the pipeline!

If you are buying or selling a home you should be aware that real estate agents are required to comply with the Real Estate Agents Act 2008. This Act introduces changes into the real estate industry that will benefit the buyers and sellers of houses.

One more obvious change brought about by this new Act is that buyers and sellers (before signing a sale and purchase agreement) must get a copy of the New Zealand Residential Property Sale & Purchase Agreements Guide from their real estate agent! This guide has all the essential info that you must know before signing a sale and purchase agreement.

This act also saw the creation of the REAA. The REAA launched in November 2009 with a focus of high standards of service and professionalism within the real estate industry, and to provide increased protection for buyers and sellers of houses. The REAA provides independent oversight of the NZ real estate industry and in conjunction with the Act hopes to promote public confidence in the industry.

The REAA replaces the Real Estate Institute of NZ (REINZ) and now handles licensing of people and companies working in real estate, investigation of complaints from consumers (the CAC), disciplinary action (the Real Estate Agents Disciplinary Tribunal), setting industry standards, and providing information to buyers and sellers of houses.

Want to know what to expect from a real estate agent – check out the Code of Professional Conduct and Client Care . This code was published as a result of the Real Estate Agents Act 2008 - those working in the real estate industry must follow this code and it is a reference point for discipline.

You can even check a real estate agents license details here, including checking whether they are licensed, finding out how to contact them, check the history of their licence and check their recent individual disciplinary record.

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.

|

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.

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.

__________________________________________________________________________________

If you are putting in an offer on a property, you should make a satisfactory LIM report a condition of the sale. A LIM is very useful in helping you decide whether the land is worth purchasing. From a LIM you can determine whether the property has permits for all its building work, what zoning it has, whether it is free from any restrictions, what proposed local developments may affect the property, and whether the intended use of the land is feasible.

A LIM may contain all sorts of information that can impact significantly on your perception of a house's value. For example, resource consent may have just been issued for a building that will block your view, there may have been a history of flooding or subsidence, the land was previously a landfill site, or alterations to the house may not have a building consent.

 ___________________________________________________________________________________________