Changing Properties

Changing Properties

While buying your first home is difficult enough in this climate, many buyers are finding changing properties, whether moving up or downsizing, even more daunting.

From my discussions with buyers, I know that many have given up trying to find a new home. This might help explain, in part, why the Dunedin market is experiencing some of the lowest listing numbers in its recent history. To move, many homeowners need to rely on the proceeds of their existing home and, sometimes, a bigger mortgage. Offering subject to house sale seems almost a rarity these days. For many buyers it has become an offer that they believe is hardly worth making.

Faced with competition, often from multiple buyers who are in an unconditional position, it seems a near impossible task in this market to move from one property to another.  But there are steps you can take to improve your chances. It’s also worth noting that the real estate environment has much more protection in place for consumers. So how do you change properties in a market that is desperately short of the kind of home you want?

First, keep a close eye on the market. Form relationships with some prominent salespeople you trust and who will keep you well informed. Next, if you need finance to buy that next home, talk to your lender or mortgage broker. Brokers are very useful and even if you haven’t used one before it’s worth asking for a recommendation and having a chat. Often, they will find terms for you that you couldn’t get yourself.

When you have that discussion, it’s worth raising the subject of how you are going to offer on that next home. Ask if you could offer without making it subject to house sale but with a slightly longer settlement than normal, say eight or 10 weeks rather than four or six. See if they are receptive. What will help is if you have a written appraisal from a real estate salesperson and a professional opinion on how long your property might take to sell. It’s worth remembering that the average days on the market now before a sale is around 26. Another helpful piece of information is a professional rental appraisal of your current property. If your house did not sell within the timeframe allowed, the bank can be reassured that there is income available to cover the costs of temporarily owning two properties.

Once you’ve successfully passed that hurdle, work on simplifying any offer. If you need to make it subject to finance (and check that you do), see if you can reduce the number of days to three or five rather than the seven or 10 normally suggested to confirm that condition. Help your lender or broker by providing them with lots of information about your situation that will make their job easier and quicker.

Before offering do as much due diligence, that is “homework”, into the property as you can. Practically, it’s a tall order to pay for full reports on every property you might offer on. (Some buyers have to offer on more than five properties before they are successful). Salespeople should be supplying LIM (Land Information Memorandum) reports and copies of title so you can have a lawyer check them. If you need a building check, is there someone, a friendly builder or building inspection service, who could do this before you offer to advise whether a full report is needed? Is there someone practical who can give advice about wiring and plumbing?

Armed with all this information, you can make an informed decision on whether to offer unconditionally.  It’s not a bad idea, too, if you are in serious competition, to offer a bit more than you think the property’s worth. This might just be the break you need to come out on top and get that new home.