Feeling the pressure
Panicking buyers skip the paperwork.
A busy property market is prompting more people to make offers on houses without doing enough due diligence.
Valuation firm QV warned this year that it was seeing more ‘‘panic buying’’ and risky behaviour, driven by a fear of missing out.
Spokeswoman Andrea Rush said that was still happening.
‘‘QV homevalue registered valuers continue to see unconditional offers being made in order to secure a property without buyers completing adequate due diligence,’’ she said.
‘‘This behaviour is driven by a growing fear of missing out which is rife across the market as well as due to the cost involved. To carry out thorough due diligences on a property it can cost upwards of $1000 once you take into account the cost of a registered valuation, building report and a P-test.
‘‘This is a cost that many people are hesitant to spend especially if they have spent the money on these reports and then missed out on multiple properties.’’
But she said people needed to remember that they were spending hundreds of thousands purchasing properties. ‘‘Making sure you have done adequate due diligence can save you a lot more than $1000 in the longer term.’’
Lawyer Thomas Biss said it was one of the risks of an overheated market, as would-be buyers cut corners.
‘‘There is a lot to be said for a compulsory vendor information pack which would include a LIM and builder’s report. Of late the better real estate agents have got a lot better at gathering information for buyers,’’ he said.
Rush said it was particularly an issue for apartment buyers.
‘‘With an increasing number of issues with deferred maintenance apartments built prior to 2011, and with major repairs creating issues for body corporates, we also strongly recommend completing adequate due diligence before signing a contract to purchase an existing apartment,’’ she said.
‘‘For those purchasing an apartment off the plans, we also recommend due diligence not only into the value level of the property, but also into the background of the developer, paying particular attention to the quality of their past developments, financial stability and scale of the company.’’
But Bryan Thomson, Real Estate Institute spokesman, said it was simply a side effect of the market conditions.
He said the market had been in sellers’ favour for many years in Auckland and that had spread throughout the country over the past 12 or 18 months.
To secure a property buyers had to make their offers as attractive as possible.
‘‘They have to do their due diligence as quickly as they can. The more due diligence you can do beforehand, so you can put in a cash unconditional offer, the more attractive that is to sellers.’’