By Tim Stokes
Whenever you buy or sell a property, there are always a multitude of different property professionals to deal with. Choosing the right property professionals is absolutely essential, as they can make or lose you thousands.
The agents show you the properties, the valuer provides you with a report so the bank will finance you, the inspector checks the whole thing won't fall on your head tomorrow, and so on and so on...
Who are these people? What purpose do they play? And dearest to our hearts... how much are they going to charge me?
Click on the links below to learn more about each of these property professionals.
Who?...Why?...Where?...How Much?
Registered Property Valuers provide an impartial, expert appraisal of a property's value. They are university qualified and must undertake an additional three years of postgraduate working experience before they can sit a further examination to become a Registered Valuer.
In most instances, banks and lending institutions will only accept a valuation for mortgage purposes from a Registered Valuer. In addition to valuations for mortgage finance, Registered Valuers can be of great assistance in the following:
Appraisal of property prior to sale.
Estimate of a property's likely value upon completion of improvements.
Valuation for insurance purposes.
Valuation for tax and trust purposes.
Completion of depreciation schedules for tax purposes.
Estimate of values after proposed subdivision.
Valuers are listed in your local Yellow Pages under "Valuers" or "Registered Valuers". Alternatively, you make get a recommendation from a bank or real estate agent. Valuers form part of the professional body known as The Property Institute of New Zealand.
Make sure you have a definite aim and set of instructions when you call a valuer. You should be able to have a no obligation telephone discussion, where you will want to be sure that the valuer is experienced in the valuation work you require.
You should tell them when you need the valuation by. It will also help the valuer if you can inform them of your bank or financiers' details, as an original report will normally need to be directed to them.
The cost of a valuation report varies quite significantly, depending on what part of New Zealand you are in. Generally, a report that can be used for mortgage purposes ranges from $400 to $600 plus GST. Many valuers offer their services on a consultancy basis. You can expect to pay anywhere between $75 to $200 per hour depending on the complexity of the work and the overall experience of the Valuer.
Mortgage Brokers are an intermediary between you the borrower, and the bank or lending institution that ultimately loans you the money. A mortgage brokers job is to get you the best deal on a loan.
This will ultimately be dictated by both your own requirements and how well you "shape-up" as a good security to a potential lender.
A mortgage broker can save you a lot of time hunting for the right mortgage. They have access to a large amount of data from many banks. Think of a mortgage broker as being like someone who could run around all the banks and come up with the right mortgage for you.
Many mortgage brokers advertise in local, daily papers, and also suburban papers. They are listed in the yellow pages under "Mortgage Brokers". Many of your friends or associates may have used a mortgage broker in the past. Don't be afraid to ask them who they used and if they recommend their services.
The most important thing is to make sure that you get a mortgage broker who is committed to working in your best interest. That is to get you the best mortgage deal, based on your criteria, and hopefully for the lowest cost in relation to the loan interest rate and any application or ongoing fees.
Look for a mortgage broker who is a member of the Mortgage Brokers Association of New Zealand. This means that they are a member of professional body, and thus are subject to rules and standards in relation to their service provision and ethics.
Remember that the broker does not get paid until the deal is done and you have signed on the mortgage document. Do not take the easy way out by immediately adopting their first suggestion. Ask why, how, how much, and as many other questions as you feel necessary until you are completely satisfied that you are getting the best deal possible.
This is the best part! A mortgage brokers service normally costs you nothing. They make their money by charging the chosen lending institution.
Unless you're pretty handy with a hammer or a tradesperson yourself, how do you know that the property you are purchasing is structurally sound?
How do you know that you will not be faced with immediate repairs, ones that might not seem apparent when you're negotiating to buy, but soon become obvious when you've lived in the property for two or three months.
A building inspector's job is to thoroughly check the integrity of the building structure and all its components, informing you of necessary or likely repairs in the short or medium term. The inspector should also be able to give you a reasonably accurate estimate of the cost to carry out these repairs. In this regard you are then able to negotiate these costs into your offer for the property.
Building inspectors are listed in the Yellow Pages, community newspapers, or they often have flyers posted in public places such as supermarket noticeboards and the such like. There is no central, governing body for building inspectors, so if you can get a good referral from a friend, this will definitely help.
Your building inspector has a great deal of responsibility to spot defects and problems with the dwelling structure. Do they have suitable qualifications and experience in a building related industry? Check their qualifications by calling the applicable professional institute if you can.
Ask if the inspection will only cover obvious and visible defects. Many inspectors will not comment on or cover items which are hidden or not immediately obvious such as internal wiring, plumbing and the such like. If these areas are suspect, it may be wise to get an electrician or plumber to have a look for you.
It can be very helpful if an inspector can provide some indication of likely cost for repairs that are needed. You can then factor this cost into your offer. Written evidence from a building inspector of necessary repairs and costs can prove very valuable when negotiating a final sale price.
Ask to see an example of a previous report from the inspector. Expect a similar standard. You will probably be shown the best one they've got.
A written report from a building inspector can range from $400 to $800. It's well worth the money when you consider what the property is going to cost you and what it might cost you in addition if you don't know about all those hidden defects.
Some inspectors will provide a walk-through service. You follow them through the house, and they will comment on items of interest, necessary repairs, or areas that require further investigation. A good walk-through inspection should take at least 40 minutes, and you can expect to pay around $150 to $250 for this service.
Real Estate Agents and Real Estate Salespeople are out there in the coalface everyday looking at real estate. They should know the market better than anyone else.
The real estate industry is huge and thus has massive economies of scale when it comes to advertising and promotion. Thus it is unlikely you will get a cheaper, or more effective deal when trying to sell your property.
It caters for the lazy-mans attitude in all of us as well. You simply list you property with them, and they take care of all the work from promotion, inspections, negotiation and contracts.
Remember that the Real Estate agent is contracted to the seller. They have a legal obligation to act in the seller's best interest. They cannot offer impartial advice to a potential buyer if they are contracted to the seller of that same property.
This is something that many buyers forget when dealing with a real estate agent - please remember that whatever you tell your real estate agent could be used against you in latter negotiation.
Real Estate agents will know of all the homes for sale in an area, and should be able to match up your requirements with homes available in an efficient manner.
However, once you find a suitable house, make your own enquiries as to its sales history, good and bad points, and true market value.
Alternatively, you can hire the services of a Registered Property Valuer who will act in your interests to ascertain the property's market value and any other issues you may want to know.
You won't have to look far to find an agent! Real Estate offices and agents are everywhere. Look out for signs in your area, advertisements in local papers, local Real Estate offices, and the flyers advertising their services that regularly end up in your mailbox.
Agents will normally specialise in a certain area. Often this is the area where they have their own family home. They should thus have a good knowledge of all recent sales in your area, and be able to accurately predict what your home will sell for.
It doesn't hurt to ask for some references. See if you can ring a couple of their past clients. Were they always efficient, honest, straightforward, and most importantly, did they get the house sold in a reasonable time frame and for the amount that they said they would at the start of the process.
Costs can vary depending on your location, and the value of your property. However, it appears that the typical range is from 2% to 4% of the sale price, plus GST.
In addition, the agent may ask you to pay extra for advertising, although this is often highly negotiable depending on market conditions, and how marketable the agent feels your property is.
It is a requirement of New Zealand law that any contract for real estate must be in writing. Because property transactions normally involve hundreds of thousands of dollars, it is vital that you are aware of your legal rights and obligations when you are selling or purchasing property.
The process of passing property from one party to another is commonly called conveyancing. The lawyers' job is to ensure that your legal rights are protected throughout the sale or purchase transaction. Normally the Lawyer will perform the following duties in the conveyancing process:
Check the title to ensure the seller is the legal owner of the property.
Check that are no onerous restrictions registered on the Title that might limit future plans by the new owner.
Check that all prior mortgages have been discharged.
Check whether any other party (other than the seller) has registered an interest in the property.
Most smaller and medium sized legal firms carry out conveyancing services. There are many small law partnerships or sole operators whose principal business is carrying out conveyancing.
Often a recommendation can come from a friend. Most lawyers advertise in the Yellow Pages Directory, and many now also advertise in local, suburban papers. You could also check with the Citizens Advice Bureau who will have a list of Lawyers in your local area.
A personal recommendation from a trusted friend or third party is well worth following up. You will probably get more personal attention from a smaller firm or sole operator.
Conveyancing services these days are very price driven due to the competition within the marketplace. However, be very careful if you are offered a cheap deal in comparison to other offers. A cheap fee can often mean that there is some corner cutting going on.
It is vital that your lawyer thoroughly researches the Title for any onerous conditions or restrictions with the property, discusses with you the types of property ownership and their respective pros and cons, ensures that there are no outstanding rates or levies due upon transferral of ownership, and basically protects your legal interests throughout the buying or selling process.
As you can see, choosing property professionals that will do the job right is not a guessing game, it just takes time, effort and research. Always remember to take your time and never hire a property professional without doing your home work.
This article is used with kind permission from Homewardfound.co.nz, a resource of free articles and information for first home buyers and newbie investors.
Visit www.homewardfound.co.nz for more information.
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