HOUSE AUCTIONS....a note of caution

karltsmith

I just thought I'd share an experience we had this week that might be of interest to those of you contemplating buying at auction.

As you may be aware at auction your bid is unconditional....i.e. you cannot impose any conditions on the vendor once your bid has been accepted and therfore you inherit any liabilities that may come with your new home.

We recently found a house we really liked afer viewing about 100 in the past 3 months. it was to be auctioned and the estae agent (who acted completely professionaly throughout) provided information on the property in the form of a Land Information Memorandum (LIM report).

Before going to auction I decided to get an online valuation to get an idea of the fair market value etc.

I also went to see a solicitor who advised me to check out the property file at the local council......

This was a mine of information and well worth the $20 for the research. The property had in it's life been substancially altered internally and externally without any building consents or changes of use being applied for or filed. furthermore the plan of the property was not up to date. I spoke to a building inspector who was really helpfulin guiding me through the pro's and cons of not having permits and could have spoken to a plannig officer to dicuss further...although time did not permit this.

It was fate I know but I started to feel uneasy about bidding for our dream home and within an hour of returning home I received a phone call from the estate agent telling me that the auction had been cancelled "due to the vendors changed circumstances"........a bit of a bummer after finding such a nice place but ultimately it could have been a whole host of trouble!

I mention all this because it is really worth your while to do your homework before on of these auctions!!!!!!!!

Take care all...when it comes to house purchasing...its a jungle out there (a concrete/plaster/brick/weatherboard/cedar/wottle and daub one of course)

Nice One

Raeven · Posted: Fri Jul 23, 2004 12:55 am Post subject:

Hi, karl,

This is such great stuff!! Thanks so much for sharing your experience. I would add that these are prudent steps to take in purchasing any property in NZ -- at auction or otherwise.

We've been warned repeatedly by relatives in NZ not to purchase property without thoroughly checking it out first as you suggest, getting both valuation information and most importantly, checking it out with the local council. As we understand it, some (most?) estate agents in NZ feel very little compunction to share adverse information with a buyer about such things as impending highway construction affecting the property, etc. They will answer questions if directly asked: "Are the Council planning to build a main road on the boundary of this property to the south?" "Oh!! Well, it hasn't happened yet, has it?" Also, Kiwis do tend to modify their abodes extensively and aren't always as concerned with proper permitting as one would wish -- as your post so eloquently demonstrates! I would also want to discover flood history for the property and even if it lies directly on an earthquake fault. For me, a Yank who is accustomed to the protection of full disclosure laws here in the States, it's a very foreign notion that a seller not be legally required to disclose adverse characteristics about a property to a prospective buyer. But let the buyer beware, eh? falling bricks

Although we have been sorely tempted once or twice to buy before we arrive and have the ability to check all this stuff out, we have resisted it -- to our benefit, I am sure! I have also been told by friends and relatives in NZ that there is a perception that those of us coming from the States are "loaded," (meaning wealthy, not stoned!!) and so no one has any second thoughts about taking advantage of that perception, if they can. Although it would be lovely to have a place waiting there for us when we arrive, we feel it's best to wait and do our homework properly before making such an important purchase... your post totally reinforces this decision, karl!

Thanks as always, Rae

Timbo · Posted: Fri Jul 23, 2004 1:15 am Post subject:

BRILLIANT post. Thanks Karl. That really is the sort of info. that you cannot get from books etc.
I ahve had cause to e-mail and question a couple of real estate agents in Nz , and must say that they have responded very quickly and expalined things in laymens terms (I am an idiot and need leading by the nose).
But like Rae says, ask a direct question or you are not likely to hear the bad bits.

karltsmith · Posted: Fri Jul 23, 2004 1:40 pm Post subject:

CAVEAT EMPTOR indeed!!!!! falling bricks

Macs Gold · Posted: Fri Jul 23, 2004 4:14 pm Post subject:

We had a similar experience regarding lack of permits. The amazing thing was that much of the work was done during the time that a judge lived in the house - most amusing. This was determined by us getting a building survey done.

We got the seller to pay for a report to be done by their building surveyor, to say the unpermitted building alterations done were of an adequate standard. This report was then filed with the local council, in case any issues arose in the future. It wasn't total protection in law (the current owner is always responsible for health, saftety and upkeep of property), but it gave us some comfort and put a marker down that the work had been done prior to us buying. We were also relatively comfortable ourselves with the standard of work done.

It is worth noting that you can make amendments to the contract before the auction, if the seller agrees. We for example, signed a separate contract agreeing to an earlier settlement date, and the seller went along with this.

Anyway, we bought the house at auction, which was all very exciting, but ultimately very fair and efficient compared to the English system.

Regards...

Max

karltsmith · Posted: Fri Jul 23, 2004 8:14 pm Post subject:

Hi Max,

Intersting stuff.......I don't know if it is something to do with "leagal Eagles" here but the owner of the house were going to bid for was a solicitor!!!!!!!!! Hmmmmmmmmmm!

Nutcase