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Real Estate Agents and ‘the truth’

Some people regard real estate agents as a pack of liars and a proposal before parliament which would require real estate agents to tell the truth about properties they’re marketing might just formalise that thinking.

What’s more it would appear the REINZ are against the proposals saying changes to the status quo could open the floodgates to complaints. Now that’s a good look!

Personally I don’t see what the REINZ’s problem is. In my experience most real estate agents will substantiate any aspect of a property before telling you about it and if they don’t know the answer to any specific question, will go find out for you. Don’t believe me? Fair enough. I did say ‘most’ real estate agents not ‘every’ real estate agent!

The reality is this – as a prospective buyer the onus is on you to check out the property and make sure you’re happy with every aspect of it before committing 100% to the purchase. Remember what you learned in 5th form economics – caveat emptor. Don’t rely solely on what the real estate agent says. Even if they are a decent bloke their interests are not the same as yours and you need to make your own enquiries.

Things to check can include

  • Price – consider getting a registered valuation. Yes, it’s an expense but at least it’s an independent opinion. The bank may require one anyway.
  • Property title – Who else has an interest in the property? What kind of tenure is it?
  • The construction – what sort of shape are the buildings in?
  • Council records – is the building permitted, consented? Where do the drains go? Are there any specific restrictions imposed on the site?
  • Collateral – will the bank accept the property as collateral for your loan?

 

Doing these checks could save you from buying a lemon. For that reason we tend to favour sales which are conducted ‘by negotiation’ because they give you the opportunity to make an offer subject to checking the place out. Then if the checks don’t stack up you’ve got a legitimate exit.

 

Mortgage advice

Two interesting scenarios have come across our desks in the last 10 days and I hope they demonstrate to you why you would use the go2guys as your mortgage broker over the DIY approach.

In the first case we suggested to a couple that they tidy up a handful of things (especially their account conduct) before we  bothered to approach a bank on their behalf even though there were some real strengths to their position, not the least of which was a great level of income. The basic problem was they were clearly spending willy nilly and living outside their means. One of them was particularly forthright and decided to totally ignore our advice and approach their bank directly. I heard about the result through a friend of theirs (also a client). Yep, you guessed it – an embarrassing decline. What’s worse, we know that lender is a really good fit for them once they’d tidied themselves up. But they’ve blown their chances in the short term.

In the second case a prospective client had been recommended to us from a friend (again, the friend was a client) and after a quick look at the situation we determined that the current bank was not the right lender for what they wanted to do as they didn’t meet that bank’s lending criteria. Despite our advice the prospect felt stongly that their established 15 year banking relationship demonstrated loyalty and that that loyalty would ‘surely’ be rewarded with an approval. It wasn’t. .

I mention these examples not because I want to say ‘I told you so’ but because they’re a demonstration of the value we provide in helping you get the best mortgage available. We’re trying to give you as many aces as possible so that when your application lands on the credit manager’s desk they can see you’ve got a winning hand.

Although most people think the best mortgage deal comes down to interest rate and various loan features the reality is that the interest rate on offer doesn’t make a skerrick of difference if you can’t get the loan approved in the first place.

Talk to us – we deliver!

Auctions and the low deposit mortgage

 

Of all the methods of buying property, auctions are probably the most exciting. Certainly reality TV has turned them into something of a ‘glamour event’ and stories abound of people going to auction and  buying very well.

If you’re thinking about buying at auction and you have a 5% deposit  there’s two things to consider before you register as a bidder. The bank will require a registered valuation on the property and although they said they would lend 95% they really mean 95% of the valuation or purchase price, whichever is the lower. This has some implications worth thinking about.

Firstly, what happens if you’re the winning bidder but the purchase price is higher than the valuation? Obviously there’s a shortfall you need to come up with very quickly. And because the bank will only go to 95% of the valuation, they aren’t in a position to help you.

Easily solved you say – just get the valuation done before the auction because that way you won’t be tempted to go over that limit. The trouble with that is, if you don’t end up winning the auction you’ve just blown $500 on a valuation. Better than being short by $10,000 I suppose and not something people are keen to repeat.

In our experience, low deposit mortgage clients are better to stick to buying ‘by negotiation’. At least that way you can make a conditional offer, take your time to work through those conditions and avoid the pressure cooker environment of real estate’s glamour event.

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