When it comes to a mortgage, buying an apartment is not as straightforward as buying a house. In general the banks assess whether to provide a home loan for an apartment far more rigorously. As a result it is not uncommon for sales to fall through because the buyer fails to get the adequate finance in place to complete the transaction.

Buying ‘off the plan’ can be risky
Sometimes a sale falls through because a potential buyer has sought to buy an apartment ‘off the plan’. This means entering into a legally binding contract to purchase a property ahead of construction, based only on the building plans and specifications.
When you obtain pre-approval for a home loan it will be conditional and it will have a time limit. When you buy off the plans you run the risk of the period of time that the pre-approval covers running out before the construction is complete. In that situation approval will have to be sought once more and this time the bank may refuse lending.
Even if the time limit doesn’t run out you have to be careful of the conditions. Just because you met the lending criteria at the time you paid the deposit doesn’t mean you will now. For example, the valuation of the new build may have gone down causing the bank to lend less. There is more that can go wrong when it is ‘off the plan’.

Freehold vs leasehold apartment
A leasehold apartment is one in which you own the apartment itself but rent the land. These apartments are generally cheaper to buy, however it is harder to obtain mortgage approval for a leasehold property as they are secured against the building alone.
Other factors that your bank will consider for a leasehold apartment are how much your annual ground rent is and how often a rent review takes place. If land prices increase significantly a rent review could mean an astronomical rise in the cost of the lease.
A freehold apartment may be more expensive but in terms of getting a mortgage, it’s much less of a headache.

Size of the apartment
Size is a significant factor when it comes to obtaining finance for an apartment: although the exact details vary between banks, the bigger the apartment the easier it is to get a mortgage. There are even some sizes below which banks will just flat out refuse to lend. Carey Brunel from HomeLoan.co.nz says “A bank friendly apartment size is generally anything above 50sqm”.
In recent times, this threshold has increased. For example last year BNZ announced that it would no longer provide standalone lending to people purchasing apartments smaller than 65 square metres. There is no reason to say that such a threshold won’t increase again.
And if you are buying ‘off the plan’ your contract with the developer might permit them to change the apartment size without your consent. It is important to read the fine print.

Other factors
As with any property purchase, but particularly with apartments, the higher the deposit that you have, the more willing a bank will be to lend. Showing that you have 30% or 40% equity may persuade the bank to lend to you.
In addition, the more security you can offer the better. A property investor for example may be able to cross-collateralise the apartment against other property and borrow up to 100% of the purchase price.
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It is also highly recommended to avoid leaky buildings as even large apartments in that predicament can be very difficult to obtain financing for.
And finally, make sure you shop around. One bank might refuse to provide lending but it doesn’t necessarily mean that all will. Sometimes it is as simple as one bank refusing your mortgage because too many owners in the one building have a mortgage with them. In which case another bank may comfortably step in to assist.

For most of us selling a home is something we may do 3 or 4 times in a life time and dealing with a Real Estate agent can be a daunting process. Here at My Top Agent we deal with over 2,000 agents every year and have heard all the FAQ's you can think of. Below are just a few to help you. If you want to download the full 18 page report on How To Interview a Real Estate Agent then click here.

QUESTION TO ASK:

Show me some examples of listings for properties you’re currently promoting?
This will allow you to get an idea of the quality of promotion your home will likely receive? Look at the style of the images, the visual layouts used and if the property descriptions sound appealing.
 
Can you provide tips on staging?
A good agent should be able to look at a home and make a few small suggestions that will help to make the place look lighter, larger and more inviting. It is after all in their best interest to make the house look as good as possible, as it can affect both price and speed of sale. 
For many of us we will deal with an agent maybe 3 or 4 times in a life time, for use we deal with 2,000 each year. 
Here's a list of common questions you should at least think about when listing your property.

​Track Record
How many homes have you sold over the last 12 months?
This question will quickly help you establish the serious professionals from the rest. When it comes to selling your home you want someone with a proven history, who you can trust to get the job done.
 
Over the past 12 months, what has been the average number of days it takes you to go from listing a home to closing the sale?
This question will provide insight into the realtor’s past performance when it comes to listing homes at the right price, advertising them effectively and reaching the right kinds of buyers. The last thing you want is a real estate agent who’s going to drag the process out for months on end.

On average what’s your list price to sales price ratio?
This question gives an indication of how well the realtor prices properties they’re trying to sell. You don’t want someone who will price too high, then keep dropping the price in order to make the sale. A good general rule of thumb is that listing agents (agents selling houses) should have ratios of around 95% to 100%.
 
Can you provide two or three references for previous clients?
Realtors are sales people by nature, which can sometimes make it hard to believe 100% of what they say. A good realtor has nothing to hide and should be happy to put you in touch with previous clients, so you can get some piece of mind. 

What kind of marketing techniques would you use to sell my property?
In this day and age the internet is key, as it’s the first place people head to when beginning their property search.  You need to make sure the agent you hire is technically savvy and will get your property promoted online via a range of platforms including their website, social media and potentially Trademe. Put yourself in a potential buyer’s shoes when looking at the realtor’s website and make sure it’s clean, easy to use and ranks well when searched for on Google.
Traditional print media is old school but still effective. So getting your home into publications like newspapers and property brochures which are dropped off in mailboxes, offices and cafes is well worth having your realtor do for you.
Also take a look at how other properties in your area are being marketed. You may find some are more suited to flags and signage on the street, like high traffic areas, while others need more print and digital marketing like quiet cul de sacs and rural properties.
 
What is your approach to photography and filming, do you use professional photographers or do you do it yourself? If you do it yourself, what kind of camera do you use?
There’s nothing worse than seeing a property listing that looks dark and dingy, with pixilated images focused on the wrong areas of a room. Make sure your realtor has a professional grade camera with a wide angle lens, so that their photos make your house look large and airy. Also find out whether they prefer to use a flash or natural light. Photos with natural light tend to be more open and inviting, whilst photos with flash, tend to be harsher and prone to over exposure. 



​If you're looking for a top agent don't forget we can help you here.


What method would you recommend for selling my property?
The method the real estate agent recommends for selling your home will vary depending on the market at the time. In a buoyant market they’re likely to recommend auctions, price by negotiation and tendering as these tend to bring in the best results. In most cases the agent will likely want the exclusive right to sell the property, so that they’re not wasting time and money marketing a property that then gets sold by another agent.
Find out how what methods the agent has used to sell similar properties in your area and get them to clarify why they are recommending a particular option for your home.  
 
Approximately how long do you think it will take to sell my property?
Obviously the agent can’t give you an exact date and time the property will sell, but they should have some idea of local demand and how long similar properties in the area are taking to sell.
 
Do you have a database of buyers in the area?
Many agencies represent both buyers and sellers and may already have buyers on their books who have indicated they could be interested in a property like yours. Just keep in mind that having buyers on the books isn’t a guarantee of a sale as many people register then change their minds or are hedging their bets by registering with every agency they come across. So don’t let a list of potential buyers be the primary driver behind your decision to work with an agent. 

Hot Tip: Make sure you ask the agent if they will be doing the open homes himself or will they be using an assistant?

For your first meeting try to allow 90 minutes per agent.  In general 75 minutes will be enough time for you to get to know each other, and for the agent to get to know your property. The additional time provides plenty of buffer room for meetings that run over and for you to jot down some notes and take stock of the situation once the agent has left. Your next appointment can then arrive and if for some reason the agent’s happen to cross paths, then so be it.
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Before you book a meeting, make sure you have a series of questions written up that you can refer to, as in the heat of the moment most people tend to forget the questions they’d thought of. If you don’t have any questions pre-planned get in touch and we can send some to you. In addition we have a downloadable PDF called ‘The Top Ten Questions’ that we send to every person that we recommend an agent to. 

The second meeting is perhaps the most important as this is where the agent will pitch you their proposal for selling your property and indicate the prices they can get for you. So before you bring the agent back, make sure you clearly outline the brief and timelines to them, as this will force the real estate agent to commit to those timeframes in your meeting.

Try not to disclose what you want for your house, as doing so will hand over the competitive edge to them. Your focus should be on finding out what price the agent can bring from the market and if you believe they can deliver it.  

There will come a time in the meeting where they disclose the price range they’re thinking of, so it’s important to make sure you hold your cards close to your chest. Try to keep a degree of separation and refer to the price in the third person.

​For example if the agent says to you: “Bob, we think your property should fetch between $600,000 and $620,000, how does that work for you.” What you do is push the question to back to them. Your response could be; “Well Sue, can you explain why this is the range you’re suggesting and how you derived these figures? Obviously we want to get as much as possible for the property, but we’re relying on your professional opinion to give us the best option. So where do you see the top line sitting?”

The key to meeting agents is being upfront, direct and clear.

Follow these simple steps and you won’t go wrong. 

In your initial contact with the agent you must be upfront with them about what you’re doing and why.

Trying to hide or dull down the real reason you’re approaching them won’t do you any favours. They hear excuses like, “We don’t have to sell, we’re selling because we want to make top dollar,” all the time and know that in most cases it isn’t true.

You’d be significantly better off telling them the truth. Instead try approaching them more directly with things like “I’m selling our house as we are moving to Wellington in 3 months and I’d like to meet you,” or “Our house is too big and I’d like an appraisal because I’m thinking of selling.”

By being honest and direct you’ll be able to avoid misunderstandings and ensure the agent is aware of key timelines and requirements they will need to work to. This communication method will also help to foster a relationship of mutual respect. Remember, you probably live in the same location as this agent and you want to be able to hold your head high knowing you’ve conducted business fairly, as opposed to running for cover every time you see them in the supermarket.
The second thing you need to do is layout out your ground rules. Strictly speaking these aren’t rules as such, but more the process that you want them to follow until the agent is engaged. Remember they don’t do their job until you engage them, so it’s important that you structure the ‘dating process’ clearly and carefully.

Here’s a good example of how you’re initial call could go. “Hi Jeff, it’s Sue from 19 Brown Street, I was given your details from My Top Agent. I would like to invite you to our property to have an introductory meeting and then if that meeting goes well, get you to come back in 3 days’ time to gives us a pitch on how you would market our property and where you see its value in the market. Just so you know we are meeting two other agents, but we want to be fair and give you all an equal opportunity. Either way you will know within a week if you have the job or not. Is that acceptable to you?”
A call like this gives a clear process, cuts straight to the point and all top agents will respect you for being up front.
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HOT TIP: Believe it or not, what you are really doing is creating ‘demand’ for your property between the agents. This example is what you want your agent to do for you once they’re hired. It’s important to see how they operate under these terms. If they say no, then pat yourself on the back, as they may have too much work on, and can’t be bothered pitching.  It’s better to find out their commitment levels after your first call rather than to wait 3 to 4 weeks into a marketing campaign only to find out they’re too busy…

Before beginning the journey of buying a home, it’s best to get a trusted conveyancing lawyer on board. They will be able to advise you, make sure you’re protected and of course handle all the contracts. Given the financial implications and legally binding nature of real estate purchases, it’s best not to take any unnecessary risks.
When you’ve found a property you would like to make an offer on, discuss it with your lawyer. If that’s not possible then you can put in an offer with the clause that the offer is subject to your lawyer’s approval. Your lawyer will then deal with the real estate agent and other party’s lawyer to handle the Sale and Purchase Agreement (i.e. the contract between buyer and seller).

Your lawyer will review the Purchase Agreement and let you know if there are any legal issues or areas of concern and go through the fine print with you to make sure you understand it.
If you are negotiating a sale (as opposed to buying at auction), you lawyer recommend and set up any conditions and clauses that need to be added to the Purchase Agreement (to make sure you’re properly protected). These conditions are set up to provide you with a legal escape clause from the sale, in case one of the conditions are not met. Recommended conditions include the property passing Title, LIM, and Building Inspection checks. We also recommend having your lawyer add a condition for the building to be cleared for any methamphetamine contamination, as this a growing problem in New Zealand’s real estate market.

Your lawyer will then negotiate and manage the settlement process via the other party’s lawyer. Once all of the added conditions and clauses have been met, the sale process will move from conditional to unconditional, which will make you legally liable for buying the property.
When the sale becomes conditional you lawyer will manage the transfer of funds, as well as the handing over of keys and the final move dates. The lawyer will also notify your local council of the sale and ensure the appropriate allocation of rates between the old and new owners.
If your conditions are not met, then the lawyer will inform the other party and have the contract dissolved, ensuring you are able to walk away commitment free.
In addition to making sure the paperwork is correct and that titles are transferred correctly, lawyers can also advise on your property ownership options and assist with creating the will and power of attorney documents your mortgage provider may require.

In summary it’s extremely important to have well experienced conveyancing lawyer on board throughout the entire sale process. Their expertise in the area could save you hundreds of thousands of dollars, if not more.