[jess]

I'm so confused. :confused: We're just starting to look at houses for sale. I'm not used to not having a buyer's agent like in the states, and I've been going to open houses, and listening to the questions other people ask. That's been a help. As has the forum and other sites. I know I can look at the rateable value and that I need to get the inspection and LIM.

The thing I can't figure out is why I go to an open house that says BBO a certain amt. and then overhear the agent say the house will go for at the very least $50,000 more than the BBO amt! I know the O stands for over, but that's quite a big difference! Would you say my experience is common or the exception? I'm trying to figure out whether to start looking at houses listed well below my price range in order to find one that's actually within my range.

The house I like best so far had a tender date that passed, but it's still on the market, because they didn't like the tenders they received. I don't know if that means they probably got offers below the BBO amt they listed or that they probably want a lot more then the BBO amt like the other house listed above. Since it's tender, I have no real guide for what we should offer if we decide on that one. Is it generally a certain amt more than the rateable value?

I'm at a loss trying to figure out which houses are actually in our range so I don't waste all my time looking at ones that aren't. And the agents mostly try to say as little as possible of course. I need to learn a lot more about valueing and what the BBO really means!!! Any ideas about the best way to do that?

Thanks very much!
Jessica

[jess]

:o Well as soon as I posted I saw the 'Value of a House' thread, which I had missed in a search earlier. Still, if anyone has any other advice to offer, I'm all ears. Thanks, J

[k-k]

Hi Jess

We were in the same position, totally confused by the buying terms. We spoke to an ex estate agent who explained the terms. If it wasn't in the other thread you read, BBO is 'buyer budget over', and BEO is 'buyer enquiry over'. Basically we were told the seller will be expecting anything upto 20% more than the BBO figure.

We've been watching house prices for a few months and in the Kapiti area some are going for a bit over their BBOs and some are going way over. Some agents will give you lists of their sold properties and the selling prices but they are only for properties sold over 2 months or so ago.

What has annoyed us is when they put PBN (price by negotiation), that gives you no idea what the seller wants and even the agents don't like to list the property like that.

Hope this helps a bit, you know where I am if you want more details of what we've found.

Karen

[willsken]

This will be interesting. We looked at houses when were over there, just to get an idea and I found the whole thing quite confusing. I suppose this is a taste of things to come for our whole lives for a while! :roll

[jess]

Well thanks to you both - I'm glad to know I'm not the only one who finds it confusing. I am going to go to the auction of a house that we loved in the area we want to be, even though I've been told it will go for about 60,000 more than I want to spend on housing. That way I will at least see how much it ends up selling for. Maybe that will help give me a little bit of a benchmark to measure against.

And thanks for the 20% info Karen. I think I'm going to need to adjust for that a bit more when looking!

What about a house that just lists a price straight out with no BBO or BEO? Anyone know if that means they are usually expecting that much $ or whether they generally expect more?

Thanks,
J

[k-k]

Hi Jess

I'll be interested to hear your thoughts on the auction. We went to the monthly auctions at Harcourts and out of 11 properties only 3 sold at the auction. It's also very strange as in some cases the auctioneer seems to be bidding against himself with no-one in the room putting bids in. This is because the sellers have set a reserve price and the auctioneer bids up to that price. If anyone puts a bid in but not enough for the reserve they have the first chance to negotiate with the sellers after the auction.

More times than not the property is back on the market the next week with a BBO price. It seems such a waste of time to me. It is however a good way of finding out how much the seller wants because if it doesn't sell at auction the estate agents will tell you at what value the bidding stoppped at.

In the UK, a house auction usually means you can pick up a property cheaply, here it seems to mean the sellers are greedy and are hoping for a bidding war to bump up the price.

Good luck house hunting
Karen

[Smiler]

Hi Jess

I'm not buying yet but I'm looking now. ;) Just don't tell OH.

It is confusing. But I have found that when I have emailed agents, they seem to be more free with their info. I ask specific questions, like it says BBO, how much do they want? One agent emailed me after the auction, which I didn't go to but had asked about the property prior, to let me know it didn't sell. The agent said the owners reserve was $$ and they would accept $$. I still passed. :laugh

Good luck with your search.

[Yogi]

Looking on the internet at house pricing esp for Wellington it's difficult to try and understand what our budget will buy us at all in NZ.

Anyone got any knowledge of real house prices, initial thoughts on destination prob Jo'ville area.

Cheers,

Yogi.

[pineapplehead]

We bought a house and we still dont understand how it really works. In the end we asked for a professional "valuation" (or appraisal, with comparables in US terminology) as a contingency in the purchase contract to make sure that the price was right. It is not a common contingency, but it is an option if you are not sure. I suppose you could also pay to have this done prior to making an offer as well, but that's an expense with some loss if you decide not to go forward. There is also info on the web you can pay for to get estimates of house values and sales prices, although the info may be dated.

I think its good to go to alot of open houses, and make appointments for private showings as well. Sometimes working with an agent directly, they can show you a range, and may share more info that way. Just tell them upfront that you are trying to learn the market and want to see a variety.

[pineapplehead]

Oh, and that auction should be fun, Jessica. Or heartwrenching... I've caught a few examples on TV, and it seems such a strange way to negotiate. I'll see if I can get more infor from people who have recently purchased and I'll PM you.

[jess]

:D This forum is the best, both for information and also for realizing you are not the only one feeling like you might be in over your head!! Thanks for the great responses. Smiler, I will start emailing more in addition to seeing houses. It's easier to ask from my armchair anyway. And Pineapplehead, I think if I can get over feeling like my questions are idiotic, and start talking to the agents more, they will share a lot more info as you suggest.

I went to an open home yesterday for a house listed with just a price, no BBO. The agent was from Totally Kiwi Real Estate, and she said they try to always list their houses with a price that's pretty much on the mark. Good place to look get a feel for actual prices? They're at totallykiwi.co.nz (http://www.totallykiwi.co.nz/properties.html)

Yet another question... if you go to an auction actually planning to bid, should you have something in hand from the bank that says you are approved for a mortgage up to a certain amount? We only want a small mortgage, so it shouldn't be a problem, but how much do people do before the auction? Have they usually already done their inspection of the home by that point?

Thanks again,
J

[incredible hulse]

Hi Jess, We have just gone throught the whole house buying process in Kapiti after looking at what felt like every single property in Raumati, Paraparaumu and bits of Waikanae ! We had some really interesting experiences as we put in 3 offers on different properties before we purchased ours (which was a BEO). I guess we were looking at the expensive end of the market but we found the sellers were totally unrealistic in their expectations and a lot of properties are not selling or selling for less than the agents want them to. The first property we looked at did not have a price - we offered 20% over GV and the vendors were holding out for nearly 50% over GV. The second property was tender - we were the only people to submit a tender and were about 12% over GV. The vendors turned this down and are actually holding out for a price which is 3 times over GV !! Neither of these proparties have sold. The 3rd property was a non-advertised price and again the vendors wanted over 50% about GV - again this is still on the market. The property we finally bought we got for almost 10% below the BEO figure, and got a valuation done which confirmed we had paid the correct price and that the BEO was totally unrealistic. From what I have seen the agents are trying it on bigtime and don't feel afraid about offering below the BBO/BEO figure. We offered over 100K less than BEO on the first offer we made. Most of the properties are passing at tender and auction and we would quite often get calls from agents on the day after an auction asking if we would like to buy a property at X price.

Drop me a pm if you want some more specific details if I can be of help
Cheers
IH

[Smiler]

Jess

A pleasure! and don't worry, I'll be asking detailed questions on the rest of the process when I'm finally let loose on the real estate agents. :D

[Avalon]

I have to say my opinion of NZ estates agents is that if you assume they are basically all lying snakes - then you wont be too far wrong - and the few that arent will be a pleasant surprise.

An agent is actually in court at the momnt for advertising a property at BBO $380k when the seller had expressed a wish for $400k "in the hand" after all fees had been paid. It may be a good test case and put an end to these horrendously misleading numbers.

My best advise is a/ not to rush into anything and do LOTS of research. Talk to as many people as you can who know the areas you are looking at. It may look great - but is it? You need to find out what the specific concerns are in each area - especially any sunlight issues - because if the sun doesnt get onto your property for part of the day or even year - you are going to be VERY cold!

b/ Get a valutaion on any property you are interested in. It will cost a couple hundred bucks - but it tells you what its really worth - from someone who works for you not the seller.

c/ DONT use any companies recommended by an estate agent. Chances are they are paying "Commision" aka Kickbacks - to the agent and are therefore NOT independent.

d/ Check out some auctions and see what happens. Watch out for "Vendor bids" where the agent bids the price up on behalf of the Vendor. Its totally legal to do that here. We went to one auction where we had been told the house was expoected to go for "top 400's". The bidding started at 600. There was only one guy bidding (and lots of interested watchers). He bidded against the agent only - and ended up paying $780K. I cannot for the life of me work out why he didnt just stop. But ho hum - not my money.

Also - a worthwhile read - especially if you want to understand the Auction process - a Book called "Dont Sign Anything" . The associated website is:
http://www.jenman.com.au/index.php

HTH

[Debbie]

I am now distinctly worried.
OH has been in charge of the property research (and has been using realenz to access agent sites) the property that he's been looking at hasn't had BBO or BEO next to the prices on the internet ads. Do agents always list that the price as BBO or BEO in the ads next to the price (if it applies) or do you only find this out when you make enquiries. From reading this thread and the suggested links it seems that most houses have the BBO or BEO and yet we are not seeing it in the net ads, are we looking in the wrong place?.
We have based our financial plans on being able to pay the price listed for the property. It sounds as if we could have undercooked this by between 20% and 50% .
Debbie

[katandbob]

I am now distinctly worried.
OH has been in charge of the property research (and has been using realenz to access agent sites) the property that he's been looking at hasn't had BBO or BEO next to the prices on the internet ads. Do agents always list that the price as BBO or BEO in the ads next to the price (if it applies) or do you only find this out when you make enquiries. From reading this thread and the suggested links it seems that most houses have the BBO or BEO and yet we are not seeing it in the net ads, are we looking in the wrong place?.
We have based our financial plans on being able to pay the price listed for the property. It sounds as if we could have undercooked this by between 20% and 50% .
Debbie

yeah this thread has given me a headache!....I think I will act like an ostrich till we arrive then look at houses when I have the help of friends that have done this before to take me under their wing and come with me as an interpreter!!! :o You now who you are guys... :cheers :nice1
Kat

[Debbie]

yeah this thread has given me a headache!....I think I will act like an ostrich till we arrive then look at houses when I have the help of friends that have done this before to take me under their wing and come with me as an interpreter!!! :o You now who you are guys... :cheers :nice1
Kat

I would like to be able to do the same but feelling decidedly wobbly about the whole thing at the mo and this could end up being a deal breaker. We don't want to get to NZ and find we can't afford a family home. Any one with info re my previous post please come forward.

P.S sorry the standard of spelling and grammar in my posts has disintergrated beyond repair. I blaim estate agent induced stress and all the gin. :cheers
Debbie

[incredible hulse]

Debbie - I have found that most houses are not advertised with a BEO/BBO figure. There are only a few agents who seem to use this way of marketing - I think this is because they do not have valuation skills and also they are trying to look for the mug buyer. This has the added effect of giving vendors unrealistic expectations of the price they will receive and houses at the top end of the market are just not selling it appears to me. Most houses are not selling at Auction or Tender at the moment - I am not sure if this is because of vendor greed or lack of buyers, but an example I have just found out about in the last couple of days was a house I looked at in Raumati Beach which I think this sums up the current marketing by agents and market. The plot of land was superb - total beachfront, big section (with subdividing potential), etc but the house was grotty to say the least ! It had been bought 2 years ago for 815K and the agent was trying to invite bids of 1 Million+ (it was due to go to Auction). It didn't sell at auction and is now on the market at 830K (not BEO/BBO but a for sale price). I suspect if someone offered 815K they would get it.

Agents will try and direct you to a price but this is normally in excess of what the property is worth. My advise would be don't worry about offending agents and play hardball. From some info we have just received on the past 3 months worth of housesales in the Kapiti region it would appear that houses are going for on average 5-15% above GV. There are always examples of this not happening and some things going for 50%+ above GV but this would appear very rare at the moment. There are sometimes cases of things going for GV value or even below this.

Most adverts should give GV details - it will give a rough idea of prices and is a start to looking, but the only real way you can get a feel for the market is to be here, do the open homes and see the market. You'll soon realise there is a lot of rubbish houses here, but also find something you like as there is a lot available

IH

[jess]

As IH said, they are not all BBO. And I had an agent tell me today that any agent who's expecting more than 10% over a BBO/BEO is being misleading. They should take 5% over for a cash offer that can close in under 6 weeks or 10% over for a conditional offer or more than 6 weeks to close. Maybe like Avalon said the recent attention given to cases of agents being misleading will help a bit?

The rateable value has been only somewhat helpful to me, because we visited one house where they were asking for the RV because it was in awful shape, whereas at another house down the street they wanted way over the RV because they had put in a garage, refinished the floors, and redone the kitchen. So the RV is helpful, but it doesn't factor in all the improvements.

IH is right about needing to be here and go to open homes. I went to the auction of the house that is right size in the area I want, and I saw what the bidders were willing to pay - unlike most, it actually sold at auction. That's been the most helpful thing so far. Once you see what buyers are willing to pay for a few of the right properties in your area, then you start to feel more confident about what a house like that should go for.

I'm at least starting to feel slightly less at sea. Soon we will have the money from the house sale, and I want to be educated before we do anything silly. :roll

[Avalon]

I'm at least starting to feel slightly less at sea. Soon we will have the money from the house sale, and I want to be educated before we do anything silly. :roll
Trust me - the research now is going to pay off in heaps when you come to buy. :clap

[Avalon]

Do agents always list that the price as BBO or BEO in the ads next to the price (if it applies) or do you only find this out when you make enquiries. From reading this thread and the suggested links it seems that most houses have the BBO or BEO and yet we are not seeing it in the net ads, are we looking in the wrong place?.

Debbie,

Many properties dont have any prices on them. In that case - all you really have to go on is the GV/RV (Government or rating values). Thats the value on which the rates are worked out.

The Prices are set as:

BBO/BEO
GV / RV - well yeah - but how does that help - it may have been from 2-3 years ago, and still doesnt tell you how much people want for the place.
A Set Price - my prefered option - tells you just what you need to know.
Or No price as its going for Tender or Auction.

If the ad says tender or auction - your only way of getting a guide price is to phone the agent and try and get a number out of them. I found that this was in no way helpful - even if they did tell you a number. Often they are trying to just get you interest with a silly low number which the seller would never accept adn is often nothing like what the agent told the seller the house was worth.

Thats why we got a valuation before we made an offer. This place was advertised with a price (I stopped going to see houses without prices). They wanted $650K, but the valuation came in at $606. So we knew ahead of time that if we could get it at that price - we would not be overpaying.

You do also have the option of getting reports of sites like QV and Terranet. They can sometimes tell you what the house last sold for, as well as giving you heaps of other useful info about the house and the area.

[Debbie]

:clap :clap
Thanks everyone for your help, (good forum this).
I still don't understand how the housing system works but I do at least feel that we can afford to buy a home I will like there.
Crisis of confidence adverted now it's back to $ watching.
Debbie

[Oregonkiwi]

Avalon mentioned this court case -

http://www.nzherald.co.nz/section/story.cfm?c_id=1&objectid=10389991
A real estate agent has escaped conviction in a groundbreaking case over how close the advertised price guide to a home must be to the price the seller hopes to get.

Agent Timothy Whitehead advertised a home in the Wellington suburb of Northland at "buyer inquiries over" $380,000 though he knew the owner's bottom line was $400,000.

He was charged by the Commerce Commission under the Fair Trading Act for making misleading representations.

But Judge Bridget Mackintosh ruled that the advertised price was close enough to the amount the owner expected so as not to be misleading.

"In my view an advertised price guide of not less than 90 per cent of an expected sale price is clearly a price that is close to, or in the vicinity of, the expected sale price," her written decision said.

Consumers Institute chief executive David Russell said the ruling was "disappointing".

"You can be sure if it was a retail shop that advertised its price at 10 per cent less than they were actually going to charge, then they would breach the Fair Trading Act," he said.

"The only difference here is that it is a bidding situation so the sale price is not known.

"The real estate agent knows bloody well they are not going to accept the lower price."

Mr Russell said the case had established a clear precedent.

"If you see 'buyer inquiries over', or whatever silly term they use, you can add 10 per cent to it and if you pay much more than that, then it's off to the Commerce Commission."

Mr Whitehead said he was pleased the court had found he did not engage in misleading conduct.

"Negotiation is integral to real estate transactions, and that is a different sale concept to buying food or clothing where you expect to pay the price asked," he said.

The president of the Real Estate Institute, Howard Morley, said there was often not an exact price on a property and some were hard to put an exact figure on.

He believed the industry had been more careful about "price banding" in the last couple of years but the practice allowed parties to negotiate where vendor expectations were much higher than buyers wanted to pay.

"The Commerce Commission has been saying for some time the gap has been too big so now there is a ruling it's quite legitimate."

Property valuers could be out by 10 per cent on the worth of a property and that was considered to be reasonable.

It would not be acceptable for an agent to use "buyer inquiries over" if the gap was more than 10 per cent and in most cases it should be much less.

At the time he was charged, Mr Whitehead was working for Harvey Group member Celestine Realty in Wellington. Ross Barraclough, a director of Celestine and Harveys, had defended Mr Whitehead, saying he was trying to sell a house initially advertised at $450,000 which drew little buyer interest.

A disgruntled would-be buyer had complained about the price advertised.

Kensington Swan senior associate Hayden Wilson worked for Mr Whitehead in the initial stages of the case and said the judgment provided clarification.

"Assuming that it doesn't get appealed, I think it will set a precedent in terms of that it tells real estate agents what they can and can't do," he said. "It also tells buyers who are looking at adverts, when they see a 'buyer inquiry over' they now have a clear signal about what price they can expect."

The Commerce Commission said it was too early to comment.

[jess]

Thanks Oregonkiwi! I didn't know that case had been settled. We are on the verge of possibly putting an offer on a second house (our offer on a first house came in 2nd out of 3 offers presented at once). The agent this time literally sat down with us and said the value of the house is somewere between the BEO and 10% more than that. He wrote out the exact numbers and said bid between them. Of course that's still a pretty wide range to decide on.

This second house --- I called about veiwing it earlier in the week and the agent said, Why not just wait to come to the open on Sunday. My OH worked late, and we got there 5 minutes before the open house ended, but he was already gone. We called. He said he could come back and show it to us before and appointment later. He came back but said he had exactly 5 minutes before he had to leave. We ran through the house getting a quick look while he kept looking at his watch, and then he told us he had to go, but that he had another (conditional) offer, and if we wanted the house we had to draft an offer right then. We said we couldn't move that fast. Needed to think a bit. We offered to take a longer look with more time for questions first thing in the morning, but he phoned us back to say that he couldn't hold the first offer until morning and it was now or never. Again we said we need to know more first. So he presented the other offer that night, and we looked yesterday morning. We want to offer on the house, but he said now we can only make an unconditional offer, and that still gives the other purchaser three days to go unconditional. I have been down to council and a builders report is being done today as well as a title search. But what a nerve wracking business. If we had just had a little longer on our first inspection. Now I feel like I'll be booting the other poor buyer out if we do make an unconditional offer and he can't go unconditional in three days.

Oops! That was a bit of a rant. :o

[David with a dream]

Blimy and I thought UK agents where all snake's. So in general if a house has a price say $400K are you going to be expected to pay say $420 :confused: . As all the folks back in the UK know the asking price is hardley ever paid, it's always under....Having read this post I now feel some what worried that we may end up in a cold over priced shed :wah ...David with a realestate crisis..........

[jess]

David - Yes, it's the same in the US as the UK... you put a sale price on the house that you would take, and people usuallly bid under. But in NZ they're generally looking for more than the BBO/BEO amount - which could make a home listed as BBO $400K cost anywhere between $400K (if you're the only bidder and they need to sell) and $440K. Depends on the owner's situation. But they can and will take offers even higher than $440K if there are a lot of buyers bidding against each other -- this happened to us with one house designed by a well known local architect. On the other hand, the offer we just had accepted by the owner's of different house was less than 5% higher then the BEO even though there were two bidders.

A few just list a straight forward sale price, especially those listed by Totally Kiwi, and they are looking for around that number. Then you get the ones that are MWP - marketed without price - which leaves you with absolutely no idea - except by comparing it with other houses you have walked through and know more about. The houses listed as Auction seem to be split between those where they are hoping for a bidding war to really drive up the price (if there's no bidding war, they often do not sell at auction - just go on to be listed as BBO or MWP) or those houses they need to sell by a particular date, in which case the house will sell and sometimes at a good price. The trick is an auction sale is unconditional, so you have to do any inspections like a builders report, LIM check and title search before the auction. This means paying hundreds of dollars without knowing what will happen at auction.

[richard]

This is taken from an article in the Christchurch Press that was published after the recent ruling on price baiting:-

Concerns over bait pricing in the property market are not backed by reality, with many houses failing to reach advertised prices, a snapshot survey suggests.

Christchurch real estate agents said there was little evidence of bait pricing -- where properties were advertised at unrealistically low prices to attract buyers.

A snapshot survey by The Press of 20 homes advertised this year and settled recently shows only two of them fetched more than the asking price, with 14 of them falling below the advertised sum.

A further four netted the asking price.

.......


SAMPLE OF PROPERTIES

* Peer Street, Upper Riccarton. Townhouse. Asking price, negotiation over $269,000. Sold for $269,000.

* Springs Road, Hornby. Roughcast house. Asking price $220,000. Sold for $210,000.

* Montague Street, Hornby. Permanent-material house. Asking price $265,000. Sold for $259,000.

* McFaddens Road, Papanui. Weatherboard house. Asking price, over $255,000. Sold for $250,000.

* Rayburn Avenue, Papanui. 1920s house. Asking price, over $329,000. Sold for $335,000.

* Rocking Horse Road, South Shore. Brick and timber unit. Asking price $348,000. Sold for $340,000.

* Hills Road, St Albans. Four-bedroom house. Asking price $283,000. Sold for $278,000.

* Ferngrove Place, Parklands. Four- bedroom house. Asking price, over $439,000. Sold for $435,000.

* Clifton Terrace, Sumner. Four- bedroom house. Asking price $555,000. Sold for $495,000.

* Wilsons Road, St Martins. Permanent-material villa. Asking price $389,000. Sold for $335,000.

* Sawyers Arms Road, Papanui. Victorian cottage. Asking price $269,000. Sold for $260,000.

* Oram Avenue, New Brighton. Three- bedroom cottage. Asking price, over $215,000. Sold for $190,000.

* Trafford Street, Harewood. Three- bedroom house. Asking price $395,000. Sold for $380,000.

* Highfield Avenue, Dunsandel. Three- bedroom house. Asking price $205,000. Sold for $192,000.

* Martin Avenue, Beckenham. Character house. Asking price, over $375,000. Sold for $363,000.

* Lincoln Road, Addington. Brick townhouse. Asking price, over $320,000. Sold for $285,000.

* Gracefield Avenue, central city. Three- bedroom house. Asking price, over $295,000. Sold for $295,000.

* Pimlico Place, Bishopdale. Five- bedroom house. Asking price $335,000. Sold for $322,000.

* Bowenvale Avenue, Cashmere. Brick and tile house. Asking price about $380,000. Sold for $380,000.

* Othello Drive, Rolleston. Four- bedroom house. Asking price, over $379,000. Sold for $380,000.

[Jaideco]

In my experience it is often impossible to tell in advance what a seller would accept, the NZ market is all about negotiation and unfortunately the professionals are often out to get the house to sell as high as possible.

Personally I would recommend getting the property professionally valued as soon as possible (preferably same or next day) and comparing this with the RV. Your offer should fall somewhere between these, any higher, you won't get finance, any lower you wouldn't even be considered. I then arranged my finance with a lender in advance so I knew what I could offer. Finally put in a low offer (but not ridiculously so) to open negotiations, explain that you already have finance (this will get their attention, but don't disclose the figure) and are prepared to negotiate and ask for their counter-offer...

Once you have extracted a figure out of them you are on the home straight...

M

[David with a dream]

Ta for the advice I feel some what better about things now and perhaps we can even afford a shed with heating!!..............David