Month: December 2021

If you’ve ever thought about selling your home, you will probably have heard the term ‘appraisal’. But what exactly does an appraisal entail? And what can a first-time seller expect when they ask an agent to come around and appraise their home?

Even if selling your home is a distant, far-off future venture, and you don’t want to start a serious sales talk yet—or commit to anything—a home appraisal is an excellent way to uncover your home’s value in the current market. Knowing this will at the very least help you plan and prioritise any future renovations or improvements.

How does an appraisal work?

Essentially an appraisal is just an informative chat with a licensed real estate agent. An agent will come to your home, at your convenience, and talk you through a few points about your home and its place in the market. This is a great time for you to:

• Find out the value of your home.
• Discover ways to boost its value.
• Learn about the future of your suburb.
• Find out what selling method best suits your property.
• Get all your home selling questions answered.

Lastly, an appraisal is a chance to get to know a local agent and decide if they are someone you could work with in the future.

What information will I be given?

The value of your home

To start off your home appraisal, the agent will provide you with an estimated value of your home. This likely won’t be an exact figure, rather a price range that your home might sell within in the current climate­. This price range is based on comparable properties and relevant market statistics (see below).

Remember: if you aren’t looking to sell immediately, this figure may fluctuate with the changing market.

Comparable properties

The agent will also show you comparable properties that have either recently sold or are currently on the market. These properties will be similar to your own in a number of ways; location, size and condition for instance, and can further guide you on the value of your home.

Market statistics

You’ll also receive property statistics relevant to your area to back-up the information the agent shares with you. This can include:

• Number of homes for sale in your area
• Average sale price for your area
• Auction clearance rates
• Exclusive clearance rates

Different home selling methods explained

Next, the agent will explain the various selling methods to ensure you know what your  options are, should you decided to sell. A few commonly used methods are auctions, tenders and exclusive listings. The agent will discuss the pros and cons of each method and recommend the best one for your property.

How to market your property

Options to market your property may also come up, but if you aren’t close to selling yet, you don’t need to discuss marketing at this stage. The agent may show you some differently priced packages that could suit your home, but don’t feel pressured to make any decisions this early on.

Information about the agency and agent

Lastly, the agent will tell you a little bit about themselves and the agency they work with. You’ll learn what their agency strives for and why they believe they are the best candidate to sell your home. Here at Lodge, we also provide a number of resources to help you get to know us.

Can I ask for advice on how to prepare my home for sale?

Absolutely! In fact, we encourage you to. A home appraisal is an excellent opportunity to ask an agent for help to get your home ready to sell. As an expert on property value, they’ll know the best ways to increase the amount potential buyers are willing pay. Simply ask for some pointers and they will outline areas that could do with some work.

Moreover, in asking these questions at an appraisal, you’ll also have time to implement the recommendations before listing your home on the market.

What other questions should I ask the agent appraising my home ?

Whether you’re a first time or experienced home seller, you’ll always have questions or worries weighing on your mind. Agents are available to address all of these. Remember, there is no such thing as a silly question when it comes to selling a home. It’s best to know all the facts up front, so always ask about any points you are unsure of.

Here are a few questions to get you started:

• What properties have you recently sold?
• Do you specialise in my neighbourhood?
• How will we communicate? And how often?
• How do you handle potential buyers’ questions?
• Do you have any testimonials or reviews from past clients?

What should I do after the appraisal?

You (and any joint owners) should look over the information the agent has shared with you. Consider how you felt about the agent and their approach to your property. If you are ready to sell and feel comfortable with the agent you spoke with, then contact them to discuss the selling process in more detail. Remember, this doesn’t have to be an immediate decision and any good agent will be perfectly happy to give you all the time and space that you need.

Key points to remember:

1. An appraisal is not a commitment and you should come away feeling informed, not pressured.
2. Ask any questions you have, no matter how trivial you think they may be.
3. Take things at your own pace; if you aren’t ready to start the selling process let your agent know you want some space. Good agents work to vendors’ needs and will still be happy to sell your home years down the track.

Nothing can derail your buying and selling plans quicker than a sale and purchase agreement mishap. To keep your plans on track, it’s important to be aware of a few caveats that can catch sellers and buyers out.

Important note: A sale and purchase agreement is a binding document. Always run this agreement past a solicitor before signing it.

1. An inconvenient settlement period

If you’re selling and buying at the same time, try to work the settlement dates in your favour. For example, you may ask to extend the settlement to 90 days rather than the more standard 30 to give yourself time to find and purchase a new property without the need to find temporary accommodation.

While it’s easier to negotiate settlement dates on listed properties, you can still request a variation of settlement terms before an auction. If the owner agrees to this variation, you will need to get it in writing before the auction.

2. Conditional on sale of purchaser’s property

Conditional offers are relatively common for listed properties. Buyers use them as a means to register their intent to buy, while giving themselves time to conduct due diligence, get their finances in order and, in some instances, sell their current property. This last instance is known as “conditional to sale of purchaser’s property”.

Both buyers and sellers should keep in mind that these conditions come with provisions. Moreover, breaching these provisions can have serious consequences; one Auckland couple were fined $300,000 for failing to meet the provisions of their conditional offer.

Conditional offers are not applicable to auctions.

Tip: If your buyer introduces additional sale and purchase agreement conditions, ask a seller’s solicitor to review them.

3. The cash out clause

Otherwise known as the escape clause, the cash out clause gives the seller the right to cancel a sale and purchase agreement if they receive a better offer.

 A “better offer” does not necessarily mean better price. A seller might use it to switch to a buyer who offers a faster settlement, or if they tire of waiting on a purchaser to sell their property.

How it works

According to Henderson Reeves Lawyers: “Once the cash out clause is operated, the purchaser is given a few days to declare their offer unconditional or else have the agreement cancelled. The seller can then proceed with the back-up agreement.”

Keep in mind

As a seller:

• If it is a slow market, this clause can make your property less appealing to buyers.
• Be careful not to sell your house twice.

As a buyer:

• If a cash out clause is invoked on you, don’t take unnecessary risks and change your offer to unconditional before you are ready—especially if you are still undergoing your due diligence. Try to expedite the due diligence process, but do not forsake it.

The cash out clause is not applicable to auctions. 

4. “For Auction: Unless sold prior”

While less of a clause and more to do with advertising, this term informs buyers that the seller is willing to negotiate before an auction and could opt to withdraw a property for sale if a suitable offer is made. If an offer is made with an acceptable price and conditions, the seller can also choose to bring the auction forward from its scheduled date. The offer then becomes the opening bid.

 “The seller is in complete control,” says James Walsh, residential sales agent at Lodge Real Estate. “They can choose to bring the auction forward, or accept an offer before the auction. It’s really up to them.”

 The major benefit of moving an auction, as opposed to settling, is that the offer-turned-opening-bid starts the auction off on a strong foot. What’s more, since it’s an auction, the offer is unconditional.

 If you see this clause as a buyer, remember to register your interest in a property with the agent so you can be notified if the auction is brought forward.

Important note: To make a pre-auction offer on a property, it must be an unconditional offer.

5. Alterations

If you make any alterations to the Sale and Purchase Agreement—on the price for example—the change must be initialised by all parties. Failing to do so can cause an agreement to fall through, as GellertInvanson Lawyers report:

“It is not uncommon for an agreement to collapse because in the heat of the negotiations the agent overlooks getting a party to initial an alteration and the party then has a change of mind and decides s/he does not want to proceed with the agreement.”

In the case of a price change, also make sure that the final price is made clear in the Sale and Purchase Agreement.

6. The “sunset” clause

If you’re planning to buy an off-the-plan property, buyers should check that their pre-sale agreements include a “sunset” clause. In the case of a property development, this clause allows contracts to be voided if the development isn’t completed by a certain date.

“The sunset clause is really for the purchaser’s benefit,” says James. “It stops them getting stuck in a contract they can’t get out of.”

Unfortunately, with rising house prices, materials and construction costs, the sunset clause has enabled developers who have missed their deadlines to reprice properties to cover the extra overheads, and then ask off-the-plan buyers to pay the difference.

In several reported cases, purchasers have been given the option to either agree to the higher sum, or have their contracts cancelled. One instance in Auckland saw buyers asked to pay 15 per cent more than initially agreed to. 

Note: Most (but not all) pre-sale agreements will state whether or not the buyer’s deposit is refundable under the sunset clause. Always get a lawyer to clarify this! 

Before you purchase an off-the-plan property, talk to your lawyer about the potential risks, get them to approve your pre-sale agreement and thoroughly research the company managing the development.