Buying a home in New Zealand can be a daunting task. Everything seems to be stacked against the buyer. Houses for sale without a price, secret reserves, high pressure auctions, non-permitted alterations
– and just when you thought it couldn’t get any worse, along comes the news that many of the homes built in the past 15 years or so, look fine to the unsuspecting buyer but, in fact, leak like sieves. No wonder buying a home feels like you’re walking down a dark alley with every prospect
of being mugged.
The purpose of The Streetwise Homebuyer is to shine some light down that alley. The chapters are a step-by-step guide containing everything you need to know about buying a home in New Zealand, together with the tips, tricks and traps that you should know about to ensure you buy the right house at the right price.
The Streetwise Homebuyer is designed for all types of homebuyers, from fi rst-timers to old-timers. It’s designed to save you time, stress and money. It’s designed to make you streetwise and nobody’s fool. But the book is a guide, not a magic carpet. If you want to buy smarter than the next guy, follow the
directions I have laid out but recognize that your success will be directly related to the amount of time and effort you put into the process. There are no shortcuts to becoming streetwise, but if you know the facts and the pitfalls, you can concentrate on the important things, namely, finding your perfect home and buying it for a bargain.
Specialise to spot a bargain
To spot a bargain you need to know the market and recognise a deal when you see one. There are no shortcuts to becoming an expert in anything and house hunting is no exception. Consider this as the preparatory work to becoming the streetwise homebuyer and saving yourself some serious money. Once you have developed knowledge and expertise you will be ready to take on the market with a new level of confidence and ability.
The most important thing to undertake is comparative market analysis. Any city or town actually constitutes a mass of ‘mini-markets’ and, like any expert, you need to choose your field of specialisation, that is the area you want to live in and the type of house you want to buy.
Don’t choose just one suburb or you will wait forever to unearth a bargain. On the other hand, don’t choose such a large catchment area that there are vast differences in the neighbourhoods and houses. Ideally you want to select three or four adjacent suburbs that you feel are right for you, with similar demographic characteristics and housing styles.
Now you need to get out into those suburbs and thoroughly familiarise yourself with how they are made up, the characteristics of various streets, where the schools and shops are, and what you consider to be the best streets and locations. Each weekend you need to view open homes in these areas. In the same way that you created a geographic area of specialisation, you now need to select the characteristics of homes that you will concentrate upon. Again, don’t be too specific (neo-gothic villas circa 1915) or too broad (anything with two to four bedrooms). A good selection might be say, character homes with a minimum of three bedrooms and off-street parking, that do not require extensive renovation. I wouldn’t even specify a price range too strictly at this stage, although you might choose not to view homes that are advertised with asking prices clearly beyond your likely budget.
When you drive up to some of the houses on your open home list, your fi rst reaction might be that they are totally unsuitable. Don’t be tempted to write them off at this stage; visit them anyway. In order to spot a bargain you need to identify the market values and relative characteristics and asking prices of good and bad homes within your selection criteria.
Playing the numbers game
To really understand the market place and recognise a bargain, you ideally need to view and have information on between 80 and 100 homes over say, 10 to 12 weeks. That’s a lot easier to achieve if you live in a large city rather than a country town where you might be forced to reduce your viewing list accordingly. However, I think you will understand the general principle: the more houses you see, the more you will understand the market. There is always the very real possibility, of course, that you will stumble upon your dream home while you are doing your 10 to 12 week apprenticeship. What then? Well, if it’s that perfect for your needs and is clearly the bargain of the century, buy it without delay. No point looking a gift horse in the mouth. However, be in no doubt that you will understand the market better after you have viewed those 80+ homes than you do at the present and would probably make a smarter offer than you are about to do right now.
The purpose of viewing all of these homes is to enable you to identify key factors that add (or detract) value to a house and allow you to compare features and how the market has responded in terms of the price achieved. At the open home, get as much information from the agent as you can; how long it has been on the market, whether it has been valued recently, opportunities for extension and alterations, etc. Then follow up with the agent three to four weeks later to fi nd out if it has sold, and if so, for how much. Record all of this and fi le it with other houses from the same suburb. Review all of the homes you have made notes on and look for common characteristics of the ones that have sold quickest and attracted the highest prices.
All of this research takes time, but don’t be put off by that. Think how much money you can make in the process. I estimate that the knowledge you gain should enable you to save at least 10% of the home’s value. If a typical Auckland home sells for $600,000, that’s at least $60,000 for
10 to 12 weekend’s light work. You will also be absolutely assured that no-one is ever going to take you for a mug.
At the end of the period you will be viewing properties and fi nd yourself visualising a price that you feel represents fair value and recognise that anything significantly below that number is bargain material.
You will still need to use building inspectors, valuers and other professionals to complete a successful house purchase and you may have to bypass homes
based on their findings, or because an intransigent vendor does not recognise that they are asking too much. However, you are now a formidable, streetwise homebuyer and your newly found knowledge will put you head and shoulders above your buying competition in the search for the perfect home at the best possible price.