[mikewalkerfrom]

Hiya,

How much below the asking price is it acceptable to offer and how much would you expect to pay?

I've read a couple of places that you should pay the asking price minus 10% which seems a bit hopeful. If you offered 360k for a 400k house (10% off), would that be normal or insulting? Or would you offer less and work your way up to 10% less than the asking price?

Thanks everyone!
Mike

[kiwi_tmc]

Hi Mike,

The market in NZ is very similar to the UK in terms of making offers etc. The difference comes when you have an offer accepted. You can stipulate a period of time (usually 10 days) in which to ensure you get the necessary paperwork and finance in place. If for any reason you cannot get the necessary paperwork or finance, the deal can be pulled.

The whole process is a hell of a lot quicker than the UK and people can make an offer and be in the new home within 5 weeks. Having lived here for 18 months the whole process from what I can see is a lot simpler, more transparent and easier than the UK

Tony

[benandclare]

The whole process is a hell of a lot quicker than the UK and people can make an offer and be in the new home within 5 weeks.

Tony

One of our friends out here viewed on a Sunday and moved in 3 weeks later :clap :clap

[gpbenton]

I have just read "The Streetwise Home Buyer" by Stephen Hart, which seems like a good explanation of the house purchasing process in New Zealand. Of course, I haven't bought a house yet, so it may be all wrong.

However, this seems like a good quote
'Your first offer should be below the asking price but still be realistic. The maximum figure you are prepared to pay should be based not on what the vendor is asking, but on what your market research shows the property to be worth'

and

'..remember, negotiation isn't just about price, its about egos'

[cathgates]

Hi gp, where did you get the book from - checked Amazon - no luck

Cath X

[Nick88]

'Your first offer should be below the asking price but still be realistic.

This is the main crux of the issue, you need to know what a realistic price is for the property. This takes time, and knowledge of the market in a given area, and this only comes with research and experience. As long as you have intimate knowledge of the values in an area you will know how much to offer. This is why I always advocate renting in an area for at least 6 months and watching the market. So many people seem to be in a real hurry to lumber themselves with a mortgage almost as soon as they get off the plane. Thay won't have had enough time to really know how much to spend, and this puts them in the hands of vendors and agents.

I realise this is a bit of a generalisation, but there have been alot of posts on this site that have shown just this mindset.

[Milliemoo]

Also bear in mind that house prices are starting to fall, sales are crashing and it's definitley a buyers market..... if you do want to buy....personally I'd leave it a few months to see what happens in the market :nice1

Milliemoo

[Tia Maria]

Nick88 wrote:

As long as you have intimate knowledge of the values in an area you will know how much to offer. This is why I always advocate renting in an area for at least 6 months and watching the market.

This is good advice, each area will be very different and whereas 10% under might be a reasonable offer in some areas, other areas will still have many properties going for over asking price. After a few months in an area and looking at open homes you will get a clearer picture of a house's value. This will be particularly useful if a house is up for tender or auction.

Milliemoo wrote:

Also bear in mind that house prices are starting to fall, sales are crashing and it's definitely a buyers market..... if you do want to buy....personally I'd leave it a few months to see what happens in the market

I assume you are referring to 'Barfoot & Thompson's, 7.5% decline in Auckland' headlines:

http://www.nbr.co.nz/home/column_article.asp?id=20103&cid=16&cname=Property

I'm not sure a one month decline in prices & sales, after years of rising prices is enough to declare a buyers market, especially as some areas are still seeing pretty steep growth.

The next couple of months is prime house selling time in NZ (up to April), so its a good time for people to do research. But do keep in mind that as winter approaches there will be less properties on.

Other interesting reads on the current market:

www.nzherald.co.nz/section/8/story.cfm?c_id=8&objectid=10488986

www.realestate.co.nz/blog/are-house-prices-falling.html

www.nzherald.co.nz/section/8/story.cfm?c_id=8&objectid=10487751

The general gist being that you always have to be wary of 'headline statistics as this will not necessarily show the true picture in the area you want to buy in.

Some other data on the Auckland & North Island area (this should please you Milliemoo! :D )

Winners: The Real Estate Institute's best performing areas in Auckland and beyond with percentage value increase in 2007.

Auckland: 1, Ellerslie-Panmure 29 per cent; 2, Titirangi 21 per cent; 3, Upper Harbour 19 per cent.

North Island: 1, Gisborne 13 per cent; 2, Tauranga 12 per cent; 3, Palmerston North 11 per cent.

Losers: Worst performing areas in Auckland and beyond with percentage value increase in 2007.

Auckland: 1, Mt Eden-Epsom - 11 per cent; 2, Milford-Takapuna - 8 per cent; 3rd equal, City-Pt Chev and Devonport - 1 per cent.

North Island: 1st equal Central Wellington and Hutt Valley - 3 per cent; 2, New Plymouth - 2 per cent; 3, Mt Maunganui/Papamoa no change.

So if you had been looking to buy in Mount Eden you would have seen a 11% drop, whereas, in Ellersie a 29% rise. However, what the figures don't tell you is what type of properties are experiencing growth/decline - the mansions, the 3 beds houses or the 1 bed units.

So as Nick88 said, research your own area and research it well!

Cheers

Tia

[Milliemoo]

LOL I was waiting for you're reply Tia :D

Watch this space. At least the huge drop in sales and the leveling off and now fall in average prices is actually making the news now. I think there'll be a steady decline over the next few months.

As Tia says, stats can be very misleading and trends in particular areas can vary, especially when you're dealing with somewhere like the size of Auckland.

Local knowledge is a must, even more so in turbulent times like these. The stats don't pick up on how many people take their property off the market because it they can't sell it or the length of time on the market can be very inaccurate as people change agencies, for example.

Of course I could be talking out my ar*e! It could be (as Barfoot quoted) down to the extra week of school holidays, nothing to do with the threat of a worldwide recession, the global credit crunch and the grossly overinflated property valuations. ;)

Milliemoo

[Milliemoo]

And just to show how misleading stats can be:

http://i2.photobucket.com/albums/y5/Milliemoo75/Misc/Picture1.png

:D:D:D

Although you can see where the trend is headed.

Milliemoo

[bartons]

We found the house we liked recently, did some research on house prices in the area (on qv.co.nz), asked lots of locals how much they would consider offering and then offered 10% below asking price. The estate agent (having already told us that two other offers had been made on the house already, but with the buyers stuck in a chain) then showed us the other two offers: both had offered slightly above the asking price. We then offered 2% below the asking price and - being chainless- had it accepted.
We found the list of prices of recent house sales in the area pretty useless actually, as it is so difficult to compare the houses. They vary hugely in size, in age, in standard, in location, in section size - almost impossible to compare, and this was reflected by the huge variation in prices.

[Milliemoo]

The estate agent (having already told us that two other offers had been made on the house already, but with the buyers stuck in a chain) then showed us the other two offers

errrrrrrrr I'm sure they're not suppose to do that :no

Milliemoo

[gpbenton]

Hi gp, where did you get the book from - checked Amazon - no luck

Cath X

I got it from Whitcoulls in Johnsonville Mall. Its specific to New Zealand so may not be on Amazon. The ISBN is 13:978-0-473-11679-8

[Tia Maria]

LOL I was waiting for you're reply Tia :D

Milliemoo

Anyone would think we had a long running disagreement on the way Devonport house prices are heading, each finding the other to be 'well meaning but very misguided'. Our differences usually forgotten by trying to remember who is buying the next round of wine.

Of course this would be utter nonsense, I always drink Tia Maria! :D ;)

Cheers

Tia

[Milliemoo]

Tia darling, you know I'm always right ;)

That reminds me, must stock up on the evil drink that is your avatar. Someone seems to have drunk all ours :D

Milliemoo

[cathgates]

Milliemoo, if the other offers had been disclosed in uk, then it would most definately have been against the law, I would imagine it's the same in NZ, but it seems that the hope of a commission in a competitive market .........

Cath X

[Milliemoo]

Residential property became a "buyers' market" last month with low sales and a sharp increase in days to sell figures, the Real Estate Institute (REINZ) says.


http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10492226

Milliemoo

[mikewalkerfrom]

How if I can just get to exchange on the house, get a decent echange rate when sending the money to NZ (dont look) and for the house market to drop by 10% in the next 4 - 6 months, I'll be very lucky :cheers

[mikewalkerfrom]

God my spelling is rubbish today...

[Tia Maria]

Another one for you Milliemoo! ;)

www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10496492

The market kept its slower pace in February with just over 600 sales, down a third on the same month last year, according to data released by Barfoot & Thompson today.

Fewer transactions also translated into a lower average sale price - down 4.3 per cent on January (January $517,613; February $495,272).

Barfoots managing director Peter Thompson says the general picture can only be described as a buyers' market.

"The company experienced a good level of new listings coming onto the market during February (2,049) which means buyers have plenty of choice. Our salespeople also report good levels of enquiry and negotiations, but vendors need to be realistic to achieve a sale.

Cheers

Tia

[Milliemoo]

There's been a few articles the last couple of days. All seem to agree that it's a buyer's market and prices are headed one way (before they rise again obviously).

I think it's happening a lot quicker than people expected as well, so it'll interesting to see what happens in the next 6 months.

Milliemoo

[Milliemoo]

Some more reading:

The RBNZ’s manager for forecasting Tim Hampton said prices were around 20-30% over-valued.The Reserve Bank forecast that house prices would decline, possibly by 5%, through 2008 and were forecast to remain below current levels through to the end of 2011.

http://www.interest.co.nz/ratesblog/

Rates still on the rise:

It would be a brave borrower who took a floating rate loan now in the hope that there will be substantially cheaper fixed rate money available soon.

http://stuff.co.nz/4425148a9101.html

Applications for mortgages were down by more than a quarter last year - yet another sign that the property market has slowed

http://www.nzherald.co.nz/section/8/story.cfm?c_id=8&objectid=10496231

ASB chief economist Nick Tuffley has advised buyers to be patient - prices are likely to tumble in the next 12 months.

http://www.stuff.co.nz/4423121a13.html

Milliemoo

[Tia Maria]

I noticed this a couple of days ago, but very few people seem to have made comment about it.

www.nzherald.co.nz/section/1/story.cfm?c_id=1&objectid=10495917

The Government is not expecting a property crash, Prime Minister Helen Clark says.

Recent figures from the Real Estate Institute (REINZ) suggest the market is now in a downturn with prices dropping slightly in some areas and houses taking longer to sell.

Some housing market commentators have suggested the worst is yet to come, with some picking a fall as big as 30 per cent over three years.

But Miss Clark said that did not line up with the official advice she was receiving from Treasury.

"I haven't seen predictions anything like that," she told reporters.

"In fact the advice we had ... was that a fall of anything like that magnitude was very very unlikely and that the affordability issue was unlikely to be impacted very much at all by what was likely to happen to house prices."

Maybe its not dramatic enough?

Cheers

Tia

[Milliemoo]

:eek::eek::eek:

What planet is that 'woman' on ????

Milliemoo

p.s I see that the goverment's $4.2 billion surplus has disappeared overnight :exit

[mikewalkerfrom]

House prices going down looks good to me. I've just helped load all our belongings into a container, and we leave for Christchurch in 5 weeks!

We'll be renting for 6 months but will probably want to buy towards the end of that (September) so we can really feel like we've arrived... Its hard to feel like your at "home" when you're renting...

[Rusty]

House prices going down would be nice for us when we get there in 6 months.
Now, how to do something about the exchange rate....

[mikewalkerfrom]

it's just gone over 2.51, so fingers crossed it'll keep heading up!

[Milliemoo]

Auckland house prices fall 4% in Feb:

http://www.stuff.co.nz/4428482a13.html

Auckland house prices fell 4 per cent in February, meeting expectations of further slowing in New Zealand's largest property market, real estate agents say

Milliemoo

[Tia Maria]

I wonder what will happen with the CV ratings?

Our villa, (and I imagine a lot of Devonport), are up for review in Sept 2008. I wonder if it will have any effect on the local market?

Also, in migrant popular areas, I wonder if there will be more house sales if the exchange rate improves? I know a few people who just can't bring themselves to bring money over at this rate, so they are staying in rented accommodation.

Cheers

Tia

[Milliemoo]

Good point :nice1 If the CV in Sep 08 reflects the market accurately (which I think will be around about a 10% drop by then) I think it will put people off buying for a few months, but when the NZ$ starts to plummet, there will be a lot of people queuing up to take advantage, which in turn will level off the housing market before it starts to rise again.

A very, very simplistic view of my local market, but that's the way I see things happening. I won't pretend to be bright enough to understand what role the Yen, Gold, US Stock Markets, Carry Trades, world wide recessions etc will play in my theory :p

Milliemoo

[Tia Maria]

Good point :nice1 If the CV in Sep 08 reflects the market accurately (which I think will be around about a 10% drop by then) I think it will put people off buying for a few months, but when the NZ$ starts to plummet, there will be a lot of people queuing up to take advantage, which in turn will level off the housing market before it starts to rise again.

A very, very simplistic view of my local market, but that's the way I see things happening. I won't pretend to be bright enough to understand what role the Yen, Gold, US Stock Markets, Carry Trades, world wide recessions etc will play in my theory :p

Milliemoo

I have no idea how they adjust the CV on a general level, (land value as opposed to property improvements), but as its only assessed every three years wouldn't it go up, even if the market has gone down, as the overall three year trend has been upwards?

Its quite common for estate agents to say that the CV is old and doesn't reflect the true value, so I guess it will be a lot harder for them to say that. So maybe the CV will become more meaningful in the 6 months following an assessment?

Any estate agents/longer term house owners, on here know how its worked in the past?

Cheers

Tia

[Milliemoo]

No idea how they work it out to be honest, but I was thinking along the same lines that whatever they come out at, they should reflect the current market and not be as over inflated as if they'd done them say last year.

Just re-read my post.... sorry, didn't mean to suggest that the CV's would actually be lower than what they are now. As you say, agents for the last couple of years have just harped on and on about how you can't use the current CV as a guide, but I think after the next round, it should hopefully give buyers a better indication of worth.

I think as prices continue to drop after the CV's come out, you'll see a lot of people marketing their properties as "selling $$$ under the CV".

Milliemoo

[Tia Maria]

Hey, this is turning into a Tia Maria/Milliemoo conversation - perhaps we should just take it down the pub! :cheers

Cheers

Tia

[Milliemoo]

mmmmmmm scampi fries :p

Hang on..... there's something not right when the first thing I think of when the pub is mentioned is scampi fries and not booze! :exit

Milliemoo

[mossum]

CV & RV now no longer used ..

instead we have RV or rateable value - this is nothing more than a cunning plan by your local council to charge you more rates !

looked at a property this week that had a $750k rv - but will most likely sell for $580k .

research research research market value & rv can be waayyyyy apart .

Buyer beware

vic

[speckythecky]

Do your research, if you have a good financial person, they will get you the prices of all the houses in the street that you are looking at, plus recent sales prices of houses in the area. do lots of open homes to get a feel for the property - asking price comparision, and go to auctions. they are facinating and you can learn a lot.
Do not go to your first auction with the intention of bidding.

[Tia Maria]

It interesting reading everyone's view on a possible slump:

http://blogs.nzherald.co.nz/blog/your-views/2008/3/11/your-views-expert-advice-hold-on-tight-for-the-housing-crisis-sales/?c_id=8

But they seem to fall into two categories, house owners thinking it can never happen and first time buyers insisting there are going to be 30% drops.

We have a lot of houses on the market in Devonport at the moment, it will be interesting to see how many sales the month of March creates.

Cheers

Tia

[RussandViv]

Hi everyone, I have read with interest the various posts on house buying tips. There is one other area that has caused us much frustration which we would like some advice on. This is in the area of Council permits for works done on houses.

We are looking to buy a house and have done our research on the local markets, but whenever we start to dig deeper - well thats when the problems start. For example, we are interested in a house at the moment, but the council file which has the original house plans shows a plan of a house that is quite different in many ways to the actual house we viewed. Examples are - the chimney is in the centre of the house on the plan. On the house its on an outside wall. There are windows on the house that are in different places than shown on the plans. Looking at the house, it seems that the changes were 'probably' made when it was built, and the plans were not updated at that time (in the 60's).

So where do we stand with this. The rules in NZ are that any structural works must have plans and permits submitted and approved by the council. However this house (and there have been many others) does not match the council records. Should we just walk away, should we ask the owners to get an engineers report and new plans submitted to the council, or should we just stop looking at the council information - it seldom seems to correspond with the houses!

Any advice would be gratefully received as we keep coming up against this stumbling block.

Kind regards,

Russell and Vivien

[Nick88]

My impression of the council permits are just to make sure that the building won't fall down. Since the leaky homes fiasco councils are being very wary of signing things off as it puts them in the legal firing line of anything goes wrong. So if changes don't have council permits then it is caveat emptor. Unlike the UK they won't make you tear it down.

If you get a full structural survey done and it all checks out the house should be fine.

We have come across this just recently when getting a garage I built 6 years ago certified. The council doesn't care that it is there, but they are wary of signing it off if they are not 101% happy with it. It is just a liability issue.

[boatieman]

Hiya,

How much below the asking price is it acceptable to offer and how much would you expect to pay?


Thanks everyone!
Mike

I would have thought an acceptable offer would have really been one that suits you.
How much are you prepared to pay.
What are you prepared to loose?.

Its your money.

Most real estate agents are in a world of their own and quite often do not really tell the whole truth. They will be more interested in their commission not your money.

I would expect to pay as little as possible as its my money.

If you go in high then is harder to reduce your offer.

DO NOT BE SCARED TO OUT IN A RIDICULOUS OFFER, you can always go up.

Always put in a "Due Diligence" Clause in your contract, then you can just walk away from the deal for any reason.

If you can wait then wait a little longer, Property press is showing some real reductions $200,000 off a $750,000.

Don't be afraid to haggle or you will be ripped off.


5 years time values will be booming again.

Hope this helps

P.S NZ lost a lot of money recently and they don't seem that bothered another case of "Careless Clueless Clark" She'll be right strikes again!

[boatieman]

P.P.S lose any English accent you have turn up in a clapped out toyota or nissan, when meeting your agent!

[Smiler]

If you can wait then wait a little longer, Property press is showing some real reductions $200,000 off a $750,000.

oh oh oh Which areas please Boatieman?

[boatieman]

Smiler,

Try Papamoa or the mount

[boatieman]

Try this as I have the details

Lj Hooker prorerty id 6emgeg Price slashed by $150,000, now $539,000 CV. $590000

[boatieman]

Them you could try mount propperty shop 203 papamoa beach road.
This was on for $995000. Agent said an offer would have to be in the $950000 reg as contract in... We offered $850000. They didn't accept. Now on for $850,000 agent keeps phone us as they are also open to offers!



8 or 9 Bermuda Key, original asking price $850,000. Vendor would'nt take less than $800,000. Took property off market. Now back on for $650,000.


Both now with mount property shop.

[Smiler]

Thanks Boatie, I couldn't find them on the site but they sound like good deals.

I wish there was a similar reduction in the lower North Island Manawatu, CHB etc. I've seen the market slowing and houses sticking. I don't think anyone one wants to take the hit just yet.

[Super_BQ]

The smart home buyer doesn't set their heart on 1 house. I would pick 10 houses in different areas and give out insulting offers. Real estate agents in the past have been known to overly inflate insulting prices to buyers so feel no shame for the 30 - 40% less price offers. I've heard the practice of real estate agents adding another 10% on top of the price for overseas buyers.

Housing market is gonna get nasty here in NZ. What other developed country in the world offers 10% mortgages (from primary bank lenders) than NZ? Watch the unemployment rate figure. Once that starts rising then we're in for a good fall!

BQ

[Paul Blears]

I have been told by a NZ valuation firm that 5% would be the norm, however you pay what the place is worth to you. I've just put my Tauranga property on the market, and was advised to add 5% to the valuation!
Paul Blears.