For these homebuyers, the real estate market is a completely unknown territory. On one hand, there is the fear of the unknown, and on the other, this may be the largest transaction you have ever made. For many owner-occupiers and investors, 2019 is a particularly important year. After the price fluctuations of 2017 and 2018, the future direction of the housing market is on everyone's mind. Today, we share some advice for investors looking to purchase property in New Zealand to help you avoid common pitfalls in real estate transactions in 2019.
Strengthen Yourself by Saving Money
This is the least technical advice, yet it is something many people struggle to do well.
For homebuyers, you need to have sufficient savings and be able to prove that your financial situation is sound to demonstrate to the bank that you are serious about buying a home. It is not just about saving for a down payment; you must also be able to repay your mortgage on time in the future.
Of course, first-time homebuyers can take full advantage of KiwiSaver, especially the HomeStart grant, which allows for a withdrawal of up to $5,000 NZD.
Remember, if you do not own other properties, the more you prepare for your down payment, the more property options you will have. In other words, the better your position will be when borrowing and purchasing a home.
Clarify Your Financial Situation
Contact a bank (or mortgage broker) and obtain mortgage pre-approval before you start looking at properties. This will give you a concrete idea of what kind of property you can afford.
Clarifying your financial situation before you start house hunting can prevent the situation where you find a property you love, only to realize you cannot afford it.
It is important to note that in addition to potential extra expenses for furniture and moving, you also need to consider costs for lawyers, renovations for your new home, and more.
Generally speaking, setting aside $50,000 NZD for furniture and minor renovations (repainting, upgrading bathrooms, installing gas, etc.) is more than enough.
Understand Your True Needs
Many homebuyers do not truly understand their own needs when choosing a property.
Think about your past, present, and future housing needs, and create a list of "must-haves" and "nice-to-haves."
Many owner-occupiers may impose investment requirements on their primary residence. Generally speaking, owner-occupation and investment are two different concepts; we will discuss strategies for purchasing investment properties in detail later.
In general, "nice-to-have" items usually include the land area of the property, the number of parking spaces, and whether the garden is well-maintained.
Specifically, it is recommended that you communicate with your real estate agent while searching for a home to obtain their professional advice, so you can purchase a property that is both affordable and best meets your requirements.
Finally, since most properties in New Zealand are not standardized commodities, the chance of finding the "perfect home" for most buyers is far lower than winning the lottery, so be prepared to make compromises in some areas.
You Cannot Control Others' Thoughts
For first-time buyers and owner-occupiers, buying a home is generally a necessity. Therefore, you will invest a lot of personal emotion into the home-buying process. It is important to note that whether you are negotiating or bidding at an auction, you need to realize that you cannot control others' thoughts; whether they are competitors or sellers, they will all act in their own best interests.
Therefore, in most cases, it is recommended that as a buyer, you communicate fully with your agent to provide the most competitive offer to the seller.
Of course, if you end up paying a little more to secure your dream home, please do not take it to heart; the most important thing at that moment is to enjoy the satisfaction that your new home brings you.
From a longer-term perspective, the extra money spent will be recovered in the future. The heartbreak of missing out on your dream home because of a difference of just $1,000 NZD is far greater than the happiness of spending an extra $1,000 NZD to secure it.
