A variety of reports are available to home buyers when they are house hunting. Here are four of the most helpful and some quick tips when reading them.
Land Information Memorandums (LIM) are prepared by local councils to give a summary of the information the council holds on each property. Their cost varies, but they are typically around $250.
All sorts of things can be recorded on a LIM; including rates owing, status of resource and building consents, drainage and underground services, wind zones, soil reports, proposed zoning, tree protection, methamphetamine contamination, aircraft noise and historic places trust listings.
Quick Tip: See something you’re concerned about? House in a flood plain or aircraft noise zone? Call your local council to clarify what the implications are. They are usually very helpful and can put issues into their correct perspective.
QV E-Valuer Reports
For around $50 you can get an E-Valuer for most properties from QV.co.nz
An E-Valuer is an automated valuation based on recent comparable sales. These reports are ideal when preparing for negotiations, going to auction or looking to get a ballpark view on how much your property is worth before selling, without incurring the cost of a full valuation. An E-Valuer also gives you:
Recent, nearby comparable sales The property’s rating value Additional property details including floor and land area and construction materials.
They are tested every week for accuracy and, according to QV, E-Valuer estimates consistently value properties within 10% of the actual selling price over 69% of the time, and within 20% of the selling price for over 93% of properties.
Quick Tip: Do drive-by inspections of the addresses shown in the comparative sales. They may seem similar in terms of section and house size on paper but may be considerably better or worse in the flesh. That needs to be taken into account when estimating what is fair value for the house that you are interested in.
Building Inspection Reports
A pre-purchase house inspection, using a qualified building inspector, is an essential part of most buyers’ due diligence investigations and is a common condition in sales and purchase agreements.
The house inspection report should point out any items that are defective and require immediate attention and those that are marginal and may require attention in the medium term.
Quick Tip: Don’t expect a perfect 10. Every building inspection will reveal faults. Call the inspector to clarify defective issues. Most of us are better at communicating verbally than in writing and builders are no exception. If something is truly dire you may decide to walk away, but if a problem is solvable you might want to use the information to renegotiate an acceptable price with the seller or adjust your auction budget accordingly.
The most common document you will see when you attend open homes is not strictly a report, but it does contain some very helpful information for buyers. A Certificate of Title is a document that identifies the owners of a property and contains key facts such as land area and any restrictions on the property (eg, mortgages, covenants and right of ways).
Is it Freehold or Cross Lease? If the legal description refers to the property as a “Lot” it is the preferable freehold (fee simple) title, if it calls it a “Flat” it is a cross lease, shared title.
- Check the title’s encumbrances. You don’t want to buy the place and find out later that your neighbour has an ancient right to herd sheep over your lawn every Michaelmas Day!
For more home buying advice from Stephen Hart of Hometopia and Auckland HomeFinders, go to BNZ Good Home.