Whatever happened to the old way of buying houses?

by Bill Ralston / 19 April, 2017
RelatedArticlesModule - housing
Just slap a price on it. Like here, in the US. Photo/Getty Images

With, say, a simple asking price.

Not being millennials, we can afford to buy a new house, and we’ve done so. It’s a sun-soaked 1950s bach, a bit run-down, with a two-bedroom sleep-out in slightly better condition and a rusting double garage on a stony beach with a splendid view of Hawke Bay and Cape Kidnappers.

It is what a real-estate agent might describe as a “handyman’s dream”. Sadly, I’m not much of a handyman, so the Bay’s builders can look forward to a huge boost in work.

Buying a house sounded an easy thing to do: we have equity, we have incomes, we see a property and we buy it. Not quite so fast. The property was for sale by tender.

There is nothing tender about that process. It is brutal on your psyche. The council’s rateable value was clearly less than people would be prepared to pay, so we consulted an online valuation service. It gave a price range that we would happily have been guided by. But after canvassing owners of recently acquired neighbouring properties, it seemed the real price could be expected to be higher than the computer-driven one.

Knowing all that, how do you avoid offering twice what other wannabe buyers might tender? Whatever happened to vendors simply putting a price on a house and buyers trying to talk them down? What about auctions, where at least you can hear what price is being bid by others and see who your rivals are? Curse the vile tender process.

Anyway, as you’ll have realised, ours was the “winning” tender. But that was only the beginning of the process. Enter, stage left and right, real-estate agents (again), insurance brokers, lawyers, bankers and tenants. Yes, the house has tenants, who I am sure are very nice people, to whom we must issue the statutory 42 days’ notice to move out so we can move in.

The insurance brokers noticed that 1m at the front of the section fell within a coastal erosion zone. Having seen from aerial photos of the site that there had been no change in 50 years, I felt confident in taking the risk on losing or having periodically inundated a single metre of land.

The insurers were less brave and the world’s most complicated policy ensued whereby the company disclaimed all responsibility for the aforesaid 1m of sand, stones, soil and grass.

We stupidly bought the property in the name of the family trust, instead of in our own names, and then later gifting it to the trust. Cue a flurry of activity by lawyers and bankers. Our other trustee was dragged into the process, signing scanned contracts, and my email inbox shows a volley of more than 100 messages lobbed back and forth between all the parties.

To be honest, the lawyers, bankers, insurance brokers, real-estate agent and tenants have all been pretty efficient and pleasant about the process. But it felt like running a marathon with sets of hurdles every 100m, which is exhausting at my exalted age. That is why house-buying should be done only by young folk, except, of course, they usually can’t afford to do it.

The crazy Auckland house market is infecting the rest of the country as property investors look elsewhere for cheaper investments and ageing baby boomers, such as us, flee the city for a quieter life in a nicer place.

Still, I am sure whatever government we have after September, along with Auckland’s mayor and council, will quickly solve the issue.

To quote the beer ad, “Yeah, right.”

This column was first published in the April 22, 2017 issue of the New Zealand Listener. Follow the Listener on Twitter, Facebook and sign up to the weekly newsletter.


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