What are your options?
Before you decide to sell, here are a few things to think about first
- could you get the home you want by renovating or extending instead?
- how much more will you have to pay to get the home you want – can you afford it?
- would it be a good idea to keep your current home as a rental investment?
- if you’re selling so you can retire do you have any other options?
Should you do up or move?
Selling and moving can be an expensive business. So if you like the area but the home no longer meets your needs, renovating or extending may be a good option instead of selling.
On the plus side
You save the cost of moving and selling your home. Estate agents fees could be up to 4% or more of the price you sell your home for – and moving could cost you several thousand dollars. There’s more about costs later on, and a list of costs in the guide Tool kit.
On the other hand
You need to be careful that you don’t overcapitalise and spend more on your home than it’s worth. If you alter your home would this make it better than other homes in your street or area? If the answer is yes, you may not get all your money back when it’s time to sell.
It’s not for everyone
Doing up a home is not for everyone. It can be hard living in a home during renovations, and if you have to move out for a while it can add quite a bit to the cost of the project.
There’s more about renovating in the ‘Building and renovating’ section, and some advice on what may or may not add value to your home.
What will it cost to move?
The main costs you will have when you sell are the real estate fees and your moving costs. But you also need to be prepared to pay some one-off expenses for your new home, for instance if you need to make repairs or buy new appliances and furniture.
Real estate fees
The real estate agent is paid by the seller when the house sale becomes unconditional.
The fees and costs can vary quite a bit from company to company. Some companies charge a base fee plus a commission based on how much your home sells for. Others charge just a commission and some charge a fixed fee no matter what your home sells for.
Base fees are usually around $500 plus GST. Commissions are usually about 3-4% (plus GST) of the sale price, but may work out less for more expensive homes – or you may be able to negotiate a fixed fee. You may also have other costs such as advertising (which you pay even if the home doesn’t sell).
You may be able to get a better deal, especially if you sign up with just one agency, so be prepared to talk with several agents and negotiate the fee. However, the fee is not the only thing you should think about.
Moving costs and insurance
Moving costs vary considerably. You could expect to pay anything from $1,000 to $3,000 to move within the same town or city. It also depends on how much of the packing you will do yourself.
Most contents insurance policies don’t automatically cover your belongings during a move, so you’ll probably need to ask your insurer to give you extra cover for the day. Or the moving company may be able to provide the cover. If you’re planning to do any of the packing or moving yourself, it would pay to check what the insurance will cover.
Should you keep your home as an investment?
Many New Zealanders own a second home as an investment. It makes sense to do the sums and think about the possibility of keeping your current home as a rental property before you decide to sell. It could be one way to start or expand your investment portfolio.
On the plus side
If owning a rental property is something you have in mind for the future, keeping your current home when you move could be a practical way to achieve it. It means you’ll save on the time it would take you to look for a suitable rental property to invest in, you won’t have to pay a real estate fee to sell your current home, and you should have a good idea of what maintenance might be needed.
On the other hand
Not all homes are suitable rental properties. You need to be sure the home will be easy to rent, and that you can get enough rent to cover the costs of keeping it. We can help you work out how much you might need to borrow, and what your loan would cost.
Will the rent cover the costs?
To get an idea of the rent your home might fetch, check similar places listed with local rental agencies. The Department of Building and Housing website provides information on average rents for homes around the country.
You could also ask a rental agency, or property manager, to give you an opinion about how easily your place might rent and what rent you could expect to get.
Ideally your rent should cover your loan and all expenses for the property. You need to allow at least 25% of the rental income for running costs such as rates, insurance and maintenance – and more if you use a property manager.
Would it make a good rental?
You need to try to think about your home in a detached way (which is not always easy).
Ask yourself
- is the home in a good, safe area?
- are there good facilities nearby, such as shops, medical centre, sports grounds?
- is the home close to public transport?
- is it in good condition?
- is it easy to maintain?
- are the grounds easy to look after?
- is it sunny, sheltered and not damp?
- are the living areas a reasonable size?
- does it have 2-3 bedrooms?
- does it have a modern bathroom, kitchen and laundry?
- are appliances and fittings in good order?
- is there a garage or off-street parking?
- is there private outdoor living space?
- how much rent could I expect to get?
- would the rent cover the loan, rates, insurance and upkeep for the property?
If you’ve answered mainly ‘yes’ chances are your home has reasonable rental potential. But you also need to check with local authorities to see if there are any plans for major changes in the area that could affect the property’s future value, such as zoning changes or plans to build a motorway nearby.
Try to avoid ‘having to sell’
It’s best if you don’t have to sell in a hurry. So if you’re making an offer on another home, give yourself plenty of time to sell. And make your offer conditional on your home selling at a price acceptable to you. If you can’t sell by the date set and don’t want to miss out on the new home, ask your lender if you can get ‘bridging finance’ (a short-term interest only loan) to tide you over.
If you’re in a position where you think you may have to sell, it could be a good idea to put your home on the market sooner rather than later, to give yourself more time to find a buyer willing to pay the price you want.
May 28 2009 | Buyers and Home Sellers and Buyers Guides | No Comments »
Once you have sold your property and bought another one too many people the hard part is done, but to many the hardest part is just about to begin. Moving home is often quoted as being one of the most stressful experiences we ever go through in our lives and a chore I will be experiencing myself in 4 weeks. The whole process of packing up our belongings, leaving our home and moving to pastures new is bad enough – add to that the fact that many of us have to entrust our possessions and their transport to complete strangers.
The problem is we don’t tend to move often enough in our lives to make it a process we get used to. We’re generally all novices when it comes to moving. But, like any process, moving is all about being smart and knowing what you’re doing. I have decided to use a moving company for my move but I had to do my homework and I thought I would share some of this with you.
Choosing a good moving company was difficult. We’ve all heard horror stories from friends and families about disreputable companies and it’s vital to sort the good from the bad as soon as you can. Wherever you live, you can guarantee that there will be various moving companies just waiting to help you out. Your hardest task is choosing one that’s right for you – it’s vital that you get this choice right. Getting it wrong can cost you time, money and heartache. Choosing a moving company is very much an individual choice and your decision should be tailored to your actual needs.
Nowadays, moving companies can offer you a wide range of services on top of their basic removal competencies. These can include packing, the sale or hire of packing materials, unpacking and storage facilities. Some companies will even pack your possessions, transport them, clean your new home, unpack your possessions and arrange them at the other end according to your instructions. These additional services will obviously cost you more money.
As a guideline you should have chosen your moving company at least 4-8 weeks before your moving day. Leave it too long and you’ll find that the good companies are fully booked and you’ll have less choice in the matter. It’s far better to choose and book your company as far in advance as possible. You should be talking to your shortlist as soon as you have an estimated moving day. Bear in mind that movers are often busy at the end of the month, on Fridays and at weekends and may charge more for these premium times.
To make the best choice, you need to think about what you want from a move – and the first thing you should do before contacting moving companies is to make a quick checklist of what you need them to do. This list will help you get the best quotes, as you’ll be able to be very exact about your needs. Examples include:
- Your preferred moving dates
- Are you looking to move locally, long-distance or, even internationally?
- Do you want help with packing, want to hire/buy packing materials or simply want to pack up yourself?
- Will you need the moving company to transport valuable or fragile items?
- Do you just want to hire a vehicle to move yourself?
- Do you need storage facilities?
- How much stuff do you have?
- How much insurance will you need?
Many of us will simply pick a moving company from a Yellow Pages type directory or from an Internet search. Some of us will simply choose a known name – i.e. a national company – and others may opt for a smaller local company. You can assume from this that they take themselves seriously and you can probably do the same too. They will probably have to adhere to certain standards and you’ll have recourse to action if you do have problems. But you should still beware – if you are at all suspicious, check out their membership. You can even ask them for referrals from previous satisfied customers. You don’t have to follow up on this but, if the company seem less than keen to let you talk to people they’ve dealt with in the past, then you need to start thinking hard about whether they’re right for you.
When you’ve drawn up a shortlist of potential moving companies you need to start the negotiation process. You’ll find a wide variety of costs and services out there and various types of pricing. Some companies will charge you on an hourly rate, some by estimated volume based on the rooms of your current property, some by estimating what types of furniture and goods you need to move and others by the estimated weight of your load.
It’s wise to draw up a quick list before you start talking to people, as you don’t really want to be thinking on your feet here. Write down how many rooms you have, list big items of furniture and try to estimate how many boxes you’ll be packing. The easiest way to do this is to mentally go through every room in your house, list the big items and then work out how many boxes it’ll take to remove the rest of the stuff in the room. Don’t forget to think about garden furniture and the contents of your garage! Don’t worry about it being exactly right – the moving companies don’t expect it. But it won’t suit either of you if you get it completely wrong and they send a mini-sized vehicle for a juggernaut-sized job! If in doubt ask a couple of the moving companies for advice on how to estimate. You’ll be surprised at how helpful they’ll be – many will happily send estimators to your home to put together a quotation, especially if they price by weight.
When it comes to costs, you should be looking to get at least 2-3 quotes before you make a decision. Don’t just look at price but look at what they’ll offer you for the cost. It may be more cost effective to pay a little more to get more services. Don’t be afraid to ask them about how long they’ve been in business, their experience or for customer referrals. Talk to them about how long it will take to move you. DO ask them about their insurance cover and claims protection and how far it extends (and doesn’t!). You should NEVER choose a moving company that doesn’t have adequate insurance. It’s also important to get a quote in writing and to make sure that you completely understand how the quotation works. This is one of the times in your life when it really does pay to read the small print. For example, some moving companies won’t cover you for damage if you pack goods yourself unless they play an obvious role in damaging them. You must make sure that they not only explain your quote to you but that you get a full copy that includes any relevant terms and conditions, bills of lading etc. It’s also good to ask how many people will be assigned to your move – the more there are, the quicker it’ll go. Most people generally find that 3 is an ideal number – this gives you 2 people to do most of the loading/unloading and 1 to sort out the vehicle. It also means that somebody is with your possessions most of the time for added security.
You need to be particularly careful if your moving estimate is based on weight. This type of quotation has specific problems, as it is hard to estimate the weight of goods before you actually weigh them. In these cases, an estimator will generally work out the weight for you before you are given a price. But, your goods will be weighed once they are packed up and, if the weight is higher than the estimate, you might be liable for extra costs. In these cases always check first about how the moving company’s system works and establish how binding their quotation is or isn’t. If you run into problems here, you really will be stuck between a rock and a hard place. Refuse to pay excess charges and the mover will simply hang on to your possessions until you resolve the dispute. It’s vital to spend time here assessing the company. For example, you have the right to be present when your goods are weighed to check the accuracy of the process and you can ask for a reweigh if you aren’t sure – make sure that the company agrees to this upfront.
Once you have talked to your shortlist of moving companies and have read through their quotes, you’ll be ready to make your choice. You may simply choose on cost or may prefer to go with the company with which you feel most comfortable. Once you’ve made a decision you’ll probably be asked to sign some kind of confirmation that outlines your agreement. This is always a good idea, as all parties then know where they stand. All you need to do now is get ready for your moving day. And if you have done everything right the process should be rather stress and worry free.
November 15 2008 | Buyers and Sellers | 4 Comments »
QV’s October statistics for the residential property market report a 6.8% decline in national property values over the past year (calculated over the three months ending October 2008 in comparison to the same period last year), down on the 5.8% decline reported in September. The average New Zealand sale price for October remained steady at $379,290.
“Property values have declined further in most parts of the country. Activity levels remain unusually low, especially considering that spring usually brings an upsurge in the number of house sales. Poor weather across most of the country, plus the school holidays, probably contributed to this” said Blue Hancock of QV Valuations.
“There appears to be uncertainty in the market, with many buyers and sellers waiting to see any impact from the financial crisis, dropping interest rates and the election before committing to property transactions” said Hancock.
Most of the main centres are showing further slight declines in property values. Across the Auckland area property values are down 7.7% compared to the same time last year, declining slightly from the -7.0% reported last month. Hamilton City’s values have also dipped slightly further to -9.0%, Tauranga to -7.9%, the Wellington area to -6.1% and Christchurch to -7.8%. Dunedin improved slightly to -8.2% compared to the -8.5% reported last month.
There is more variability in the change in property values across the main provincial centres. Whangarei (-8.5%), Rotorua (-9.4%), New Plymouth (-8.1%), Queenstown Lakes (-8.1%) and Invercargill (-4.6%) have all declined further. Wanganui (-6.0%), Palmerston North (-9.5%) and Nelson (-4.9%) also declined further, but only slightly. The year on year change in Gisborne remains unchanged at -10.1%, while Napier ( 4.3%) and Hastings (-5.0%) have both recovered slightly.
What’s happening in Taranaki/Taupo/Wanganui?
What does this all mean?
Well from my view the propert market is tough. Buyers are definately holding back from buying as many have been waiting to see what happens with the economy and the elections. This years general elections were held on Saturday just been and the country voted in a change government which saw National taking a comanding position in the polls. This generally has had a positive spin on the property market looking back in history. But we also have to take into account the present state of the economy not just here but all over the world.
There are good things coming out of this though. Property prices have come back coming back on from a massive increase over the previous 7 years which saw values multiply by 3 or 4 times. But now with the easing of prices this makes property just that little more affordable for the average person to buy – especially firts time buyers.
There are other factors that come into play which to me are going to have a positive spin on the housing market in New Zealand. These things are the interest rates dropping. The OCR has dropped 1.75% this year and is set to fall even more – although mortgage interest rates may stay steady for longer as the costs to the banks for borrowing overseas is still high. Fuel prices are coming down. Crude oil is the lowest its been for 3 years which has seen our petrol prices fall by 30%. Although they could be alot less our NZ Dollar is also low which has ofset some of this. But exporters are now making more money from the drop in the dollar which will stimulate our economy but there is also less demand for many products around the world as the global economy slows down.
Food prices are still high but in the last few weeks the price of milk and dairy products has dropped by 5% which is a direct saving at home. All these things are now letting families have a little more money in their back pockets. On top of all this we have seen the first round of tax cuts from the outgoing Labour Party and the National Party is promising more within the next 6 months. Thats great news for everyone.
I feel that the property market has still got a fair drop to go. Signals point to a smoothing out of the property market but we are not immune to whats happening around the world. We are not out of the dark yet. It will be some time yet before full confidence is returned to the market but if you are in a position of selling and want to move on this is as good a time as any to do it. Because what you have to remember is the capital loss you may have experienced in the last year have been felt all over and when it comes to re buying you will be buying for a less value. This is a time when you make your own destiny and many people are doing well. Its all about how you approach things and the motivated and forward thinkers are making the most of it. Sellers need to be realistic and price according to where the market is in your area. If you dont its a waist of time and money.
If you seriously need to move realise this and act accordinly. There is no point in holding out for a dream price as you may be waiting for a number of years. As an agent I dont like to see people losing but all you need to do is look at the statistics. Look at my recent sales catalogue and other things and this will compare and reassure you of whatis happening. The only thing anyone can hope for is to achieve a fair market price. And thats in any market.
November 10 2008 | The Market | 3 Comments »
How much is it costing you to survive each month?
I earn myself not a bad income. But I do work very hard for it. 7 days a week on the go do drag out sometimes. But I love what I do. But lately I have struck a bit of a snag and I know it’s just not me having this problem. Over the past few months my cost of living has increased by massive proportions. I can’t give you an average weekly income because I don’t have one but I can tell you how much it’s now costing to survive, now I am not doing anything different in my day to day activities but the cost has gone up hugely.
Every month I analyse my spending and my income and work out a plan for the next month, so you could say I am well disciplined when it comes to money and spending. But I’m now struggling.I will go through some of my monthly spending so you can compare today to yesterday….
Item Last year This year
Fuel $350 $500
Power and Gas $120 $180
Food $350 $500
Work Costs $500 $750
Mortgage $900 $1300
Each of these are in proportion and aren’t the actual figures. But I have used the percentages on each to make it easier to read and understand. But if you read this my personal costs that I am paying have gone up 60% in the past year alone. From my reading and understanding most of this is attributed to the rising cost of fuel and rising interest rates to take the fire out of the Real Estate market. As fuel is the main driver of our total economy if that goes up so does our living and transport costs. But at what extent has this had on our pockets and our condition of living in New Zealand. For myself with the rising costs I have had to get out there and make more money. So I have a lot less time with my family just to keep up with things. But I know I am not the only one in this boat. New Zealanders must be hurting. I know a few of my friends who have good jobs have gone out and got a second job just to stay afloat.
The government is telling us that job vacancies are at an all time low, but how many of those jobs are only a second job for someone. What about the people on fixed wages that aren’t going up at the rate of the living costs? Whats happening to them. We are in a bit of a terrible way here; it’s no wonder the latest poll showed that 1 in 10 New Zealanders are considering moving to Australia to live. The cost of living in Australia is more expensive yes but the wages over there are just that so much better that it is so easy to start saving some money. In the past couple of months I have had former and current colleagues move to Australia to work in the mines. With the promise of jobs offering in excess of over $100,000 AU a year and all living costs included while on the job why wouldn’t you.
Please leave a comment and tell us your situation. I would be very interested to know how other real people like you are fearing with the increasing costs of living.
Many Thanks
Deon
May 01 2008 | Uncategorized | No Comments »
I was today looking through articles online on The Heralds Website. This article hit me in the face. Its sad to see this. But its a fact of where we are at the moment in the market.
$375k house – costs $900 a week
Soaring interest rates will see Kiwis fork out almost a billion dollars extra in mortgage payments this year.
GE Money home lending director John Grant said an average interest hike of two per cent will affect about $45 billion of home loans rolling off fixed rates – a total of about $900 million.
The revelation comes as housing affordability continues to fall.
The latest quarterly report by Massey University’s Property Foundation shows a 6 per cent decline in the past year.
And financial pressure is being felt even by high earners, with one budget service giving food parcels to a family with a six-figure household income.
Grant predicted the increase in interest rates would cause more misery for cash-strapped Kiwis and warned unexpected changes in income could see some lose their homes.
“It’s one heck of a lot of money being channelled out of the pocket,” Grant said.
“It’s not just those with 100 per cent loans. They could have borrowed 60 per cent and be facing exactly the same predicament.”
Banking industry experts estimate there are about 600,000 mortgages in New Zealand.
Based on that figure, senior analysts say about $155b is owed, with the average mortgage about $250,000.
That’s a massive jump from 10 years ago when there was $56b in mortgage debt with an average of about $100,000.
The change is hurting huge numbers of average Kiwis with mortgages, among them first-time owners Lee Potter and Lori Clearwater.
The west Auckland couple both work 50 hours a week, with a combined annual income of $120,000, but are crippled by weekly mortgage payments of over $900 for a $375,000 house. Starting a family is out of the question, while holidays, Sky TV and a social life are also off the agenda, as the couple budget down to the last dollar.
They are weighing up a move to Australia where, even if they lost money on the sale of their home, Potter estimates they could double their income and quickly end up better off. Sick of forking out “dead money” in rent, the couple approached banks for a 100 per cent $375,000 loan when the Sunnyvale house next door to Lori’s mum came up for private sale.
“They welcomed us with open arms. We were quite surprised when they said we qualified,” says Potter, an engineer.
“We would have needed a $32,000 deposit and it was just too hard to try to save that amount.”
Before becoming homeowners, the couple had money to spare, but the mortgage has put a stop to that – and their social life.
“We always had that bit of extra cash. Now, we only buy what we need.
“Then again, it’s not dead money any more, I’m not paying someone else’s mortgage.”
Potter says he’s sickened to think about how much he and Clearwater, an electrician, have paid in rent.
Now they also have to cope with a $1400 rates bill, which had risen more than $100 in the eight months the couple have owned the house.
They’re on a fixed 9 per cent mortgage for 24 months and are hoping interest rates fall by the time it ends in the middle of next year – if they haven’t already decided to cut their losses and cross the ditch.#”We are in a better position than most because we pay a slightly higher interest rate anyway,” says Potter.
“I know some people who are really freaking out at the moment.”
Grant told the Herald on Sunday it was becoming harder to secure a 100 per cent loan.
GE Finance had again tightened its lending criteria in the past few weeks to offset the economic downturn and more homeowners were struggling to meet repayments.
“We are getting three times the volume of those types of enquiries.”
Many families facing mortgage misery are seeking free financial advice.
Darryl Evans from Mangere Budget and Family Support Services said 15 per cent of the organisation’s clients had mortgages – treble the figure three years ago.
Families on middle and higher incomes were increasingly needing help and some asked for free food parcels.
One client had a combined income of $140,000 but were grappling so hard with a huge mortgage, holiday home, leased car and two sets of private school fees that feeding the family had become an issue.
Mandy Paget, A mortgage broker for New Zealand Mortgage Assignments, said those hurting most were first-home buyers who had borrowed 90, 95 or 100 per cent.
With property prices slumping, the capital value increases families were relying on for security were neglible. “There is hardly any equity there. They are in no position to sell, and even if they do, they won’t make the money back.”
The reality was, once you included lenders fees and insurance, 100 per cent loans often ended up being 101 or 102 per cent.
She said rises in living costs were adding to financial hardship but assured sacrifices made now would pay off sooner rather than later.
“If they can get by for the next year or two, then they should be okay. They will need to restructure their life and really budget, but houses will come back in value. In five years time houses will be much more expensive than they are now.”
There was also a glimmer of hope from Hayden Atkins, New Zealand economist for Macquarie Capital Securities. He believes interest rates may drift slightly higher but are “close to their peaks” and should ease at the end of this year.
But there is little comfort for people saving to join the property ladder
April 22 2008 | The Market | No Comments »
