Do the checks before the cheques

BY BINA BROWN

Before making an offer on a property, buyers need to make sure they cover all their bases.

Few financial decisions are as big or emotional as buying property, yet it is possible to spend less time looking at a potential house than a dishwasher that might go in it.

Often the half-hour property inspection is the only time potential buyers will spend in a place that may well become their home for the next 20 years.

Sure, it is possible to get the feel of a place just by walking in the door but don't assume that the initial vibe extends to the neighbours, the local shops or the underlying condition of the property.

Unfortunately you can't believe everything the real estate agent or vendor tells you about the premises or the area, so it is important to do some research into both.

A keen agent will be available to open the property as many times as you like, during which time you can do some of your own basic checks and take as many friends and family members through as you want.

Some of the preliminary investigations might include running the taps to check the plumbing; probing the walls for damp; lifting the carpet for rotting boards - although these shouldn't replace the job done by a professional pest and building inspector.

Walking around the neighbouring streets and shops and talking to neighbours are good ways of getting to know the sort of people attracted to an area.

Across the Tasman, Australian Property Monitors (a company owned by Fairfax Media) can help, for a fee, with the information needed to work out how much you should pay for a property, including recent sales in the area.

Of course, not everyone has the time needed to put into making a properly informed decision, which is where buyer's agents come in.

A buyer's advocate with Melbourne's Keyhole Property Investments, Melissa Opie, will do everything from searching for a property according to a buyer's criteria to negotiating the purchase price.

If a property is going to auction and she thinks that is the best way to buy, then she'll do the bidding.

"A lot of people are time-poor or they don't live in the country or they just recognise they are not buying a pair of shoes and so need to understand the value of what they are buying," Opie says.

She applies the same basic principles whether she is helping someone find their principal place of residence or an investment property: look at it as a business opportunity.

"People should buy with the same mindset regardless of whether it is their home or an investment property," Opie says.

"One day they might want to use the equity in that property to continue their wealth creation. I believe in capital growth."

Property consumer advocate, Neil Jenman, says buyer's agents will set fees differently but everything should be negotiable.

He says most buyer's agents charge a couple of thousand dollars to search for a property as well as 1 to 2 per cent of the purchase price.

Opie charges an engagement fee and a purchase fee, both of which are negotiable.

"A good buyer's agent should be able to save you money ... possibly on the purchase price but also by avoiding a poor decision based on emotion," she says.

To do list

There are several checks that every purchaser needs to arrange, starting with finances.

Anyone borrowing money to buy a property should be sure of their finances before they start searching or make an offer.

It is easy to get carried away and make an offer, only to find out from your mortgage broker or lender that you can't get approval to borrow that much.

Having to withdraw an offer can cost any deposit that may have been made.

No property should ever be bought without the help of an independent solicitor or conveyancer. Before you make an offer, a good solicitor will ask a lot of questions about your finances and property, as well as what they will need to help you with searches and investigations after the offer, according to Queensland-based solicitor with O'Dwyer and Bradley, Tim O'Dwyer.

He says the solicitor may also make some recommendations about what searches may be necessary before the offer is made; and on what conditions you may want to include in the contract.

If you are buying into an apartment, there may be relevant body corporate documents to inspect and additional questions to ask such as the prospect of strata levies increasing or special levies for building maintenance.

A building report provided by a qualified and accredited builder is the best way to answer crucial questions like whether the roof is sagging; are there termites in the floors; is there damp in the wall; is the wiring safe; is there asbestos on the property; and whether any alterations have met council approval. It may also tell you how much any necessary repairs would cost.

A pest inspection on the property may or may not form part of a building report but is another must. It would be far better to discover before you bought whether a house was infested with termites or had previous termite damage that needed to be addressed.

- © Fairfax NZ News