When the risks are too close to home

Nelson’s rampant housing market is driving desperation and risky buyer behaviour.

Real estate experts describe the current market as frenzied, with insufficient listings, low interest rates and keen demand creating unprecedented pressure.

Consequently, prices are soaring. Some houses are selling as soon as they are listed. People are signing offers without taking the recommended precautions.

It’s a situation described by one experienced agent as a ‘‘perfect storm’’.

The sector being buffeted most is the first-home buyer.

Typically, they will have been working hard and saving for years in order to take their first step on to the property ladder.

However, facing competition from property investors and cashed-up owners from other regions or overseas, they find that first rung keeps sliding upwards.

With stocks of suitable houses so low, the usual rules of homebuying have changed.

It is no longer a case of establishing your borrowing potential, checking open homes, making a cheeky opening offer, negotiating until market price is reached, and walking off with the keys.

The more doors that close, the more desperate hopeful buyers become. They lower their expectations, arrange fewer checks and attach fewer conditions to offers.

Many do so on advice that ‘‘cleaner’’ offers are most likely to be accepted.

Who could blame them for opting against a $1000 builders’ report if they expect to miss out on the purchase anyway?

Their desperation creates a perfect opportunity for that other side of the housing equation – owners who are keen to sell. When better to test the market with a property that has ‘‘issues’’?

Valuations, LIM and builders’ reports are among recommended ways to reduce the risk of buying someone else’s problems, even if they are not necessarily fail-safe.

Those purchasers who do buy on first inspection are essentially gambling any problems that do show up will prove easily fixed and prices will continue to rise, securing their investment.

Some will get away with it. But there are too many housing horror stories for complacency. Desperation drives bad decisions. Caveat emptor.