As an agent, I sometimes inwardly cringe when some of these questions are asked, but as a buyer, it is always good to ask direct questions if you want direct answers!
Before deciding on whether to offer or what price to offer – here are five questions you should consider asking:
1.How did the vendor come to the asking price for their home? There can be many factors rational and emotional that come into play when owners decide how much they want for their home. In the ideal scenario, they have come to a price decision based on the very recent sales of very comparable homes in the surrounding area. Was the price the agent’s suggestion or because that’s how much they need to buy their next dream home? If the reason for the owners pricing is because they need a certain amount to buy in the next location, just hope and pray that they aren’t moving to Paris or central London! Some sellers are unrealistic and unlikely to come down from their asking price if they have to get a certain amount for a particular reason or if they have lived in the property for a long time. When high emotions are involved, reason sometimes flies out the door.
2.Have there been any other offers made? This lets you know if you have any competition and how serious the vendor is about selling their home for a reasonable price, it will also give you a feel for what other buyers think. If there have been offers, it means that someone else active in the market finds this property attractive too. Competition may be hard when you are buying, but it certainly will help you when you come to sell if your property is attractive to the buying market. It is also good to know if other offers have been accepted but the buyers have pulled out. This can sometimes be for unrelated reasons but it can also raise red flags in terms of the soundness of the house etc. If offers have fallen over on the property, ask why.
3.How long has the home been on the market? If it’s just been put up for sale, the seller may not be anxious to accept the first offer. If the home has been on the market for several months it’s more likely the seller would be ready to accept your offer. Timing can be everything! When a home is first listed, the sellers expectations will be at their highest and they will be the most inflexible in terms of price negotiation unless there are time or financial constraints.
4.Why is the vendor selling and how quickly do they need to move? Are they going through a divorce? Do they have to move urgently for some reason such as a job transfer, illness, financial hardship? Have they already bought another home that would put them under pressure to sell their current home? This will let you know how motivated the seller is. If the agent is slightly evasive on this question it may be because they are trying to guard the privacy of the owners. Don’t push too hard if the agent won’t tell you as they may have been asked not to say by the owner, and they are being professional by not telling.
5. Is there anything about the house or property that I should be made aware of or could influence my decision to buy and what are the neighbours like? Under the Real Estate Code of Ethics in New Zealand, an agent or salesperson is obligated to tell you if they are aware of any issues with the property or anything going on in the surrounding area that could affect your purchasing decision.
Is there asbestos on the roof? Is there a brothel operating out of the house next door? Has the property being used for the manufacture of methamphetamine? Does the neighbour breed fighting dogs? Is there plans for a motorway through the backyard? Has the suburb been built on the site of a market garden that used herbicides which contaminated the soil? Was there a murder or suicide in the house?
Some of theses scenarios are not as far fetched as you might think. Sometimes there maybe nothing wrong physically with the property itself, but there can be things happening in the suburb or history with the house that would influence your decision.
Above all, do the homework you need to do, and ask the questions you need to ask BEFORE you confirm on your contract to purchase a property.