Buying a property is probably the biggest financial transaction that most people will ever enter into. But how do you ensure that the property is safe to buy?
1. Builders report – These come in many different varieties, but most commonly involve a suitably qualified builder going through the property to check its structural integrity and the quality of construction. These reports can also cover wiring, internal moisture levels (is it leaky?), plumbing and roofing.
2. Obtain a Land Information Memorandum (LIM) report from your local council – You can order a LIM report from your local council. A LIM is a report for the property from the council – compiled from the council’s records.
This will tell you whether consents have been granted for any building work, and also whether the work was signed off with final compliance.
It will also provide useful information as to where the underground services are located, an aerial photograph of the property and details as to any historical hazards that may have affected the property in the past, such as flooding or subsidence, and where they are located o familiarize yourself with the market. Ask questions, compare ideas and gather first-hand accounts of the possibilities, pitfalls and benefits of buying a property.
3. Have your lawyer search the title to the property – the lawyer acting for you will search the title and advise on any matters that you need to know about. They are looking for things such as restrictions and other impediments (called encumbrances) on the title. Of particular importance are the contents of rights called easements where there are shared services and rights of way for access – you don’t want to find out after purchasing that your so-called private access way to the beach is used by the whole neighbourhood.
4. Obtain a valuation - You may wish to make your purchase conditional on receiving a satisfactory market valuation report. It is better to know the value of what you intend to buy before being contractually bound to it. These are carried out by a registered valuer – who you can find in the local Yellow Pages – and use comparative values of surrounding properties to find the market value. If you are borrowing funds for the purchase, the lender will often require this report as a condition of approving finance.
5. Make sure you have arranged finance to buy the property – No matter how perfect the property is, in most situations you will likely not be able to follow through with the purchase without borrowing at least a small percentage of the purchase price. You can shop around and find a lender, most probably a bank, that best suits your needs, or get a mortgage broker to do this for you.
Following these golden rules will help prevent nasty surprises before you are contractually bound to purchase.