Cleaner, lower offer might be the winning one

WELLINGTONIANS ARE missing out on buying their first homes because their offers include too many conditions, Real Estate Institute of NZ regional director Mark Coffey says.

‘‘First-home buyers are wise to be careful. However, it’s a balance between caution and missing out.

‘‘In multi-offer situations, vendors will go with the highest price relative to the cleanest conditions.’’

Coffey says more buyers are seeking legal help because they’re better educated about doing due diligence.

But because a lawyer’s priority is to protect their clients sometimes they will insist on attaching conditions to an offer that could stymie a sale.

‘‘The certainty of a sale invariably will trump conditions,’’ Coffey says.

‘‘Owners will often accept a lower cash offer over a higher condition offer, even if there’s a $10,000 difference.

‘‘There’s no easy answer to the dilemma for first-home buyers.’’

He says nobody should buy a house in today’s market without first seeking a builder’s report.

‘‘But it can be expensive for buyers to commission a building report for every home they wish to make an offer on.

‘‘They can spend thousands of dollars on building reports and still miss out.’’

The same is true of investing in a Land Information Memorandum, a report on a property provided by the local authority from its records.

It details the zoning of the property, whether the proper building consents have been obtained and fulfilled for additions or alterations to the buildings, payment of rates or public works in the area.

To make a sale easier and quicker, some vendors provide both building and LIM reports.

But buyers can be sceptical of the independence or integrity of a vendor’s building report while some councils will stand behind a LIM report only if it’s been addressed to the recipient, Coffey says.

In other words, for a LIM report to be valid for a home’s new owner, the buyer may have to purchase it separately from the council.

‘‘You can do your own property searches at the council but they’re not as comprehensive as a LIM report,’’ Coffey says.

He said the Wellington market has been slow due to the relatively low number of listings and tight lending criteria but says this will improve.

Over winter the level of inventory in Wellington improved from five to six weeks compared to July 2016, but it still remained the lowest level of inventory across New Zealand.

The number of properties sold across New Zealand over winter fell by nearly a quarter year-onyear.

From a national perspective, this represents the lowest number of properties sold in a nonChristmas month since August 2014.

‘‘The number of sales across New Zealand has dropped significantly in comparison to the same time last year,’’ REINZ chief executive Bindi Norwell says.

‘‘A key reason for this is that the two biggest hurdles to purchasing a house right now are access to finance as the banks continue to tighten their lending criteria and LVR restrictions.

‘‘This creates an intimidating barrier to entry to the real estate market, particularly for those saving for their first home,’’ she says.

‘‘No matter where we are in the country, agents tell us that there are a good number of buyers out there, but that these two issues are impacting both investors and first-time buyers alike.’’