Improve Your Chances
In times like these of intense competition for property, with the number of offers received sometimes into double figures, it’s crucial for buyers to put themselves in as competitive a position as possible.
I’ve said this before (OFFERING IN COMPETITION) but the simplest offers are the ones vendors will look to accept or work with first. If an unconditional offer is the highest, vendors will often accept that and not look to negotiate further. If an unconditional offer is close to the highest offered, my advice to vendors is always go back to those buyers first to see if they can improve their offer. The reason is clear, vendors are dealing with a certain sale with an unconditional offer versus an element of risk with conditional offers.
That is not to say that a conditional offer will never be successful. A buyer can certainly hone their conditions to make them more attractive. Finance clauses can often be shortened from an oft-recommended 10 working days to five or even three.
There are many occasions when a conditional offer will be the vendor’s preference over simpler offers, usually because the price is highest. And if a buyer can provide further information about any of the conditions and how they intend to satisfy them, that will offer further reassurance to a vendor. For example, a buyer can advise how much money they are borrowing in percentage terms and whether they have pre-approval. This kind of information will help a vendor make an informed choice.
Buyers also need to be smart when offering (See my Newsletter April-May 2018). Satisfactory information about the building and LIM can often be attained before offering. Having your builder look through the property with a trained eye can be a first step in carrying out due diligence. It can help you decide whether you might risk not getting a full building report. Buyers should also ask the agent for all the information they have. Many vendors are now providing a full LIM report. It’s a good idea to send this to your lawyer to check before offering. Remember, though, there is no recourse to council if an error is discovered in a LIM provided by vendors. Likewise, the title can also be legally checked before offering.
Still a top investment
With sharemarket uncertainty and interest rates at all-time lows, real estate is still a very good investment. If trends over the past half century are a guide, we still have at least two years of price rises ahead (see my Newsletter, January-February 2018).
There are good reasons why Kiwis prefer property. Besides the tax advantages, though these are being eroded, real estate over the long term provides steady capital growth and income is attractive over money in the bank. I’ve noticed an upsurge in interest in property investment recently and will write further on the topic in my next newsletter.