Buying a house - Real estate agents

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throbb

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#181261 8-Oct-2015 12:20

Hi All,

So I'm looking at buying a house in Auckland..........

Here are a few annoyances I have encountered and think there must be better ways of doing things.

Auctions:
Telling the Agent our price range and being told the price expectations in well within our range, turning up at the auction and finding the reserve being set well above our price range.

I've just wasted time on doing my due diligence(this does sometime uncover the true price estimate)
Money wasted on due diligence
wasted time turning up for the auction

I know agents want as many people to turn up as possible to an auction but it just seems really dodgy to get people to turn up that have no chance of winning the auction. I'm not sure what legally they can tell me, but if they can tell me its in my price range, they can also tell me its not

General WTFs

Lim Reports, these are provided by the seller for Auctions, why don't they be compulsory to provide them for tender sales as well? 10 buyers ordering a lim v 1 seller
Offers above $699,000etc - When you advertise that you want offers above a certain amount but reject those offers because you really want offers above a higher value

Sorry Just venting :)

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#1402320 8-Oct-2015 12:22

i think its quite hard to get into the auckland market, for a decent home you want around 850k pre approved.

throbb

675 posts

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#1402342 8-Oct-2015 12:43

sep11guy: i think its quite hard to get into the auckland market, for a decent home you want around 850k pre approved.

The $$$ issue is not really the issue, it just the agents giving realistic information

MikeAqua

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#1402346 8-Oct-2015 12:48

Price expectation and reserve are two different things.

Expectation should be set by market conditions and personal circumstances (e.g. urgent sale would reduce the price expectation).

Reserves are tactical. Sometimes higher than expectation, sometimes lower.

Edit: And the agent (supposedly) works for the seller, not the buyer. Her/his obligation to you are pretty minimal. In hot market, they can/will/should treat you as just another buyer to come to the auction, even if you are just 'room meat'.

Mike

Geese

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#1402353 8-Oct-2015 12:56

throbb: Hi All,

So I'm looking at buying a house in Auckland..........

Here are a few annoyances I have encountered and think there must be better ways of doing things.

Auctions:
Telling the Agent our price range and being told the price expectations in well within our range, turning up at the auction and finding the reserve being set well above our price range.

I've just wasted time on doing my due diligence(this does sometime uncover the true price estimate)

Money wasted on due diligence

wasted time turning up for the auction

I know agents want as many people to turn up as possible to an auction but it just seems really dodgy to get people to turn up that have no chance of winning the auction. I'm not sure what legally they can tell me, but if they can tell me its in my price range, they can also tell me its not

General WTFs

Lim Reports, these are provided by the seller for Auctions, why don't they be compulsory to provide them for tender sales as well? 10 buyers ordering a lim v 1 seller

Offers above $699,000etc - When you advertise that you want offers above a certain amount but reject those offers because you really want offers above a higher value

Sorry Just venting :)

I missed out on my first house in 2005 from trying to buy a house on "deadline treaty". I didn't understand the process until afterwards. I made it quite clear I could and would beat any offer they received - so they would get top dollar, but what I didn't want to do was pay a record price by doing a king hit offer 50% higher than asking price. I was allowed to make an initial offer, and raise it once, then told I lost out, when I said I can raise the offer 10% or whatever it takes to beat other offer, they said no thanks, we have what we want now. Crazy system I thought, they could have made more commission and vendor would get more, but that was it. I felt like they had already made up their mind to sell to other couple and just used me to push their offer up.

Wasted heaps of time and money getting all the info as I thought I would 100% be buying it since I was prepared to exceed all other offers.

Jaxson

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#1402354 8-Oct-2015 12:58

It's common across many sales fields. Cars are similar. Trademe allows you to list a reserve price, but then a separate field for the cars value for use in searches. Suddenly my saved search is returning cars $10 or $20k more than I'm filtering for.

It's that stupid concept of getting looks, or getting numbers through the door, as if magically you're going to have another $300,000 to spend.
Agents are working for them. They'll say whatever to get you there.

The LIMs are also quite frustrating, in that they can only comment on things they know.
It's up to you to do more work to identify that new bedroom that's not on the approved plan etc.

As an aside, I have no idea how you guys do this in Auckland.
My house in Palmerston North would cost approximately $500,000 more in Auckland, but I'd expect maybe $20,000 more for the same job there.
We moved down here, luckily into similar paying roles, 10 years or so ago but into greatly reduced housing costs.
Hoping this doesn't appear rude, but it just makes no sense?

Jaxson

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#1402357 8-Oct-2015 13:00

Geese:

I missed out on my first house in 2005 from trying to buy a house on "deadline treaty". I didn't understand the process until afterwards. I made it quite clear I could and would beat any offer they received - so they would get top dollar, but what I didn't want to do was pay a record price by doing a king hit offer 50% higher than asking price. I was allowed to make an initial offer, and raise it once, then told I lost out, when I said I can raise the offer 10% or whatever it takes to beat other offer, they said no thanks, we have what we want now. Crazy system I thought, they could have made more commission and vendor would get more, but that was it. I felt like they had already made up their mind to sell to other couple and just used me to push their offer up.

Wasted heaps of time and money getting all the info as I thought I would 100% be buying it since I was prepared to exceed all other offers.

On the flipside, they are pretty heavily controlled as to how they can proceed in a multi offer / tender scenario.
Only auctions allow the ability for buyers to keep making new offers repeatedly as they slug it out.

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andrew027

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#1402358 8-Oct-2015 13:00

I've recently sold a house in the greater Wellington region, and bought another one after looking at two others (including doing due diligence). We found that by phoning and talking to people in the Hutt City Council, they gave us so much information about consents that had been granted, easements, etc. that we ended up not getting a LIM.

Regarding the "offers above" business, our agent recommended we set it lower than we were really prepared to accept as it would bring in more interested parties, and the more interested parties we had the better price we were likely to end up with. You expect to go back with a counter offer with a higher price anyway. I understand your point thoug - if the property is advertised as "buyer enquiry over $699,000 it feels odd to reject an offer of $705,000 because the agent said you should be able to get $715,000.

At the end of the day, if you're buying, just remember that selling agent isn't on your side and will do just about anything legal (and sometimes possibly not legal) to make a sale.

throbb

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#1402361 8-Oct-2015 13:03

Jaxson: It's common across many sales fields. Cars are similar. Trademe allows you to list a reserve price, but then a separate field for the cars value for use in searches. Suddenly my saved search is returning cars $10 or $20k more than I'm filtering for.

It's that stupid concept of getting looks, or getting numbers through the door, as if magically you're going to have another $300,000 to spend.
Agents are working for them. They'll say whatever to get you there.

The LIMs are also quite frustrating, in that they can only comment on things they know.
It's up to you to do more work to identify that new bedroom that's not on the approved plan etc.

As an aside, I have no idea how you guys do this in Auckland.
My house in Palmerston North would cost approximately $500,000 more in Auckland, but I'd expect maybe $20,000 more for the same job there.
We moved down here, luckily into similar paying roles, 10 years or so ago but into greatly reduced housing costs.
Hoping this doesn't appear rude, but it just makes no sense?

That's the other thing I have noticed, houses adverticed as 2 bathroom, where the second bathroom is unpermitted, pretty sure that's a no no

trig42

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#1402363 8-Oct-2015 13:07

Jaxson: It's common across many sales fields. Cars are similar. Trademe allows you to list a reserve price, but then a separate field for the cars value for use in searches. Suddenly my saved search is returning cars $10 or $20k more than I'm filtering for.

It's that stupid concept of getting looks, or getting numbers through the door, as if magically you're going to have another $300,000 to spend.
Agents are working for them. They'll say whatever to get you there.

The LIMs are also quite frustrating, in that they can only comment on things they know.
It's up to you to do more work to identify that new bedroom that's not on the approved plan etc.

As an aside, I have no idea how you guys do this in Auckland.
My house in Palmerston North would cost approximately $500,000 more in Auckland, but I'd expect maybe $20,000 more for the same job there.
We moved down here, luckily into similar paying roles, 10 years or so ago but into greatly reduced housing costs.
Hoping this doesn't appear rude, but it just makes no sense?

To carry on your aside (sorry OP, but I RE Agents do work for the vendor, supposedly, they will cheat and bend reality to get you in the room).

I don't know how people can afford to buy in Auckland now.
Luckily for me, I own a house here, and bought it a few years ago before prices went stupid. I will hold on to it until I retire, then I will sell it and move somewhere that I can buy a freehold home and have a wad of cash left over.
That's what a lot of people are doing in Auckland now (my Parents just did it, sold up, bought in Thames, have nearly a million dollars change and a bigger house).

Disrespective

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#1402426 8-Oct-2015 14:04

I would add a little here that you can get a lot of the LIM information yourself without having to pay the council to do it for you.

Either calling the council or looking through the district plan will get you any regulations that have effect on the property. And if you call the council's archives dept. you will have to pay about $55 to get them to search and scan for any historic plans/consents/documents on file for the property. Combine the two sources of data and you can tell if something has been done illegally, whether the house has any environmental issues, etc.

Extra note: If you are in Wellington you can use the WCC ePlan service which will refine all relevant District Plan information for a specific property easily.

Jaxson

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#1402427 8-Oct-2015 14:06

trig42:

To carry on your aside (sorry OP, but I RE Agents do work for the vendor, supposedly, they will cheat and bend reality to get you in the room).

I don't know how people can afford to buy in Auckland now.
Luckily for me, I own a house here, and bought it a few years ago before prices went stupid. I will hold on to it until I retire, then I will sell it and move somewhere that I can buy a freehold home and have a wad of cash left over.
That's what a lot of people are doing in Auckland now (my Parents just did it, sold up, bought in Thames, have nearly a million dollars change and a bigger house).

Yeah I'm not looking to be rude or insulting, but purchasing a new home from scratch in Auckland looks to be financially crippling, especially if you're on a government salary, such as teachers, who don't get paid an aweful lot more based on the regional differences. These differences are epic.

http://www.enz.org/house-prices-auckland.html
http://www.enz.org/house-prices-ni-towns.html

But the salaries in those locations don't factor these differences in.
Seriously I may get paid an additional $15 - $30k more for the role I am in, but that's no where near the tripling of the house value and therefore mortgage value.

The negative sounding bit here is that, on the whole, we're heading towards a situation where only those with parents who leave them a house will be able to own in these locations, especially with a minimum deposit amount, which should be high anyway to indicate you can actually service a loan of that size etc.

Te Atatu South, $499
http://www.realestate.co.nz/2659063

Palmerston North, $475
http://www.realestate.co.nz/2570116

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Jaxson

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#1402430 8-Oct-2015 14:14

Disrespective: I would add a little here that you can get a lot of the LIM information yourself without having to pay the council to do it for you.

Yeah we got everything transferred to a CD for $10, and then had everything they would base the LIM on, short of zoning info etc and if it's in a known flood zone, subject to Maori land investigation or earmarked for a future highway etc.

The bit about the agent working for themselves, is based on their commission:
4% of $500,000 is $20,000 to the agent.
4% of $550,000 is $22,000.

That extra $50,000 for you is only worth $2,000 for them, so they'd far rather make the sale and pocket the $20,000 than jepordise a quick one for your higher price.
They won't admit to that of course, but that's the reality of the game.

When you sell you'll start with a high sale estimate, so you pick that agent, and then the game begins telling you how the market is dropping and you should invest in a bit more advertising etc; priming you to eventually accept a lower offer.

Batman

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#1402461 8-Oct-2015 14:58

Don't get me started on real estate agents.

I've learnt over time that whatever they say that is favourable to you (buyer) may not be true. No matter how trivial the matter they could be lying. If you treat everything they say as a lie you are getting savvy.

Liars

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#1402464 8-Oct-2015 15:03

What i do when i start a new interest in a property is go in with more knowledge than them. When they see that they are less likely to lie. Now i am not racist, but there are certain cultures that are more prone to have higher tolerances on their words. It's just a fact, and everyone could lie and everyone could be truthful, so you don't know.

Eg start your interest by saying this house is built in the 90s and look like monolithic cladding, it's been around for a few months. Has there ever been on offer on it? Why did it not confirm was it becausea building inspection found water tightness issues? And agent would gingerly say, Yes.

Practice. Don't let them barge you around. Just know there will always be another property.

Due diligence is difficult. But i have been in the same boat as you, losing money by believing what agents say. Don't give them that chance, get smart.

Batman

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#1402466 8-Oct-2015 15:07

Jaxson:
Disrespective: I would add a little here that you can get a lot of the LIM information yourself without having to pay the council to do it for you.

Yeah we got everything transferred to a CD for $10, and then had everything they would base the LIM on, short of zoning info etc and if it's in a known flood zone, subject to Maori land investigation or earmarked for a future highway etc.

The bit about the agent working for themselves, is based on their commission:
4% of $500,000 is $20,000 to the agent.
4% of $550,000 is $22,000.

That extra $50,000 for you is only worth $2,000 for them, so they'd far rather make the sale and pocket the $20,000 than jepordise a quick one for your higher price.
They won't admit to that of course, but that's the reality of the game.

When you sell you'll start with a high sale estimate, so you pick that agent, and then the game begins telling you how the market is dropping and you should invest in a bit more advertising etc; priming you to eventually accept a lower offer.

No the best agents get 50-50, rarely, 60-40. Usually 40-60. Of the coMmission. The real estate company gets the other cut. Of the portion the agent gets, depends. Could be shared by partner, or if you buy thru another agent, the cuts are further divided.

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