The facts

Property Ventures Investments Limited v Regalwood Holdings Limited concerned the sale and purchase of a commercial property in Christchurch for $1.5m. The standard form ADLS/REINZ agreement was used. The vendor had warranted that the building would have a warrant of fitness on settlement. There were problems and the warrant of fitness was not issued.

After lots of debate, the vendor insisted on settlement in full. When the purchaser failed to settle, the vendor issued a settlement notice, cancelled the contract and kept the deposit.

The purchaser had offered to settle at a discounted price. It became apparent that the cost to remedy the situation was likely in the region of $500,000.00.

The decision

The Supreme Court decided the purchaser was in the right. The vendor could not insist on settlement in full when in material breach of warranty.

What’s the significance?

• Vendors need to make sure warranties given are correct. If there is any doubt when signing contracts, the relevant warranties should be changed. If contracts are on foot a commercial solution should be explored.
• If purchasers discover a material breach of warranty by the vendor, they need to assess whether to offer to settle for less than the purchase price or use any rights of cancellation.
• The REINZ/ADLS agreement for sale and purchase is currently being updated to deal with this case.

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Work out the feasibility of the project

Before embarking on a renovation project, work out the feasibility of it. If you’re renovating just before you sell (or buying a property to renovate and then ‘flick’) then you will need to start by figuring out your potential sell price.

To get the ball rolling, I recommend looking at a few real estate websites. Have a look to see what other properties similar yours are selling for. Look for properties that are already renovated, are a similar building style to yours, have the same number of bedrooms and sit on a similar size piece of land. You can also talk to local real estate agents and go to open homes to work this out.

Then do a reverse feasibility study on your proposed renovation. This is where you take your potential sale price and subtract your expenses and expected profit in order to work out your renovation budget. Or subtract your renovation costs (if known) and expenses from your potential sale price to work out your expected profit. Note: I usually recommend spending between 5% and 7% of your property’s pre-renovation value on renovating the entire property (less if you can manage it). Let’s look at an example:

So now you have an idea of what profit you’re expecting to make – are you going to go ahead with your renovation? If your expected profit is $10,000 – $20,000, is it really worth the risk?

If you’re happy with the profit you’ve calculated, then the next step is to look at your proposed budget and work out how you are best to spend it.

This of course is the tricky bit. It is a fun process working out the ins and outs of a renovation, but all too often the heart takes over from the head and renovations become an emotional process. Making the property look great is an important factor, but keeping to your budget is even more so. Every dollar you spend over your pre-determined budget is money out of your back pocket and your profit can take a slippery slide downwards from your expectation.

If renovating your property to sell, then you are essentially carrying out a business transaction. Put your business-persons hat on and have it on every time you see or discuss the property until it sells.

BEFORE:

AFTER:

You don’t need to spend a lot of money to create a great looking property – believe me I have renovated the worst of the worst properties. You just need to spend your money doing just the right things in just the right way. It’s great to get ideas from TV shows and magazines, but make sure if you take on their tips, they are relevant to your property. So often I see people renovating parts of their property that simply don’t need it – because they saw this show or that magazine article of someone else’s property who needed that particular sort of renovation. Or they renovate their property using colours, materials and products that are just not appropriate. Researching all the types of materials and products for your reno is essential. And using the right ones for your property style, area, location and value of your property is what makes the difference between a profitable reno and one you just learnt a lot of lessons from.

The trick is in renovating your property so that it offers value to your purchaser. If your property has what they want at a fair price, then your property will be the one they buy. If you over-spend on your renovation (and need to ask more for the property as a result) or if you renovate it in a way that doesn’t appeal to buyers, then they will end up buying another property down the road – not yours.

What parts of the property will you renovate?

My rule is to first and foremost renovate or ‘trick up’ the exterior of the house including the garden and fences. Why, I wonder, do people spend tens of thousands of dollars on renovating their kitchen and bathroom areas but then do almost nothing to the outside? It’s completely natural for people to judge a book by its cover – in this case judging the house from the road – so why not give them the best first impression you can. When selling a property, you generally have only one chance to impress potential buyers. The interior photos on the advert only do half the job. If a potential buyer turns up to a property that does not reflect on the outside what the photos say is going on inside, then they are very likely to drive on by. Again, you don’t need to spend a lot of money to create a more appealing exterior. Renovating just a few key areas can often totally transform it – so make this a priority if you’re planning on selling the property at some stage.

The next most important areas are the entry (or the first area you see on entry to the house) followed by the kitchen and lounge areas, then the bathrooms and bedrooms.

Again you don’t need to spend an arm and a leg to get a really great result. Spend a bit more on the kitchen and bathrooms (say .75% – 1.5% of the property value for each area) to trick it up whenever possible. Giving an overall cleaner, fresher appearance will create a very appealing property so using clean colours and crisp looking products is essential.

BEFORE:

AFTER:

Who is your target market?

The next thing to consider when working out which parts of the property you’ll renovate, is what your target market wants. Who is your target market and what do they place value on?

Look at the area your property is located in and make sure it fits with the needs and wants of the sorts of people who live there (for example, retirees, young families, students, young professionals etc…). If it doesn’t currently suit your target buying market, then do whatever you can within your budget to create that.

For instance, a retired couple will see value in a low care garden that they can nurture and add to. They will probably want a decent amount of storage to keep their life time of treasures in and perhaps a shed for gardening gear and hobbies.

Young families will see real value in (among other things) a fenced off yard for children to play in, so consider creating a secure yard area if that is possible. They’ll also want a bath for bathing the children and perhaps a suitable ‘play’ area near the lounge or kitchen areas.

Young professionals will value low maintenance properties, so at least simplify fussy, high maintenance garden areas. They’ll no doubt want all the mod cons too – so in the kitchen, make sure there is space for a dishwasher and microwave (and probably a coffee machine too!).

Students will value study spaces in their bedrooms and locks on their doors, so buyers of investment properties for student accommodation will look for these types of things. Create a property that is especially user friendly and your buyer will see that downtime during holiday periods will be minimized – tenants will be reluctant to ‘give up’ the property for fear of not finding anything as good when they come back from their break.

So spend a bit of time thinking about who these people are and what they place value on before you begin your renovation. Also do some research on what else is on offer. Again, look on the internet and visit as many open homes as you can in your suburb and those surrounding it to see what your competition is. You may find that there are 10 other properties similar to yours – and this is when you really have to think about what your point of difference is going to be. Why will someone buy your house and not the one down the road? Partially the reason will be price, but like in business, price is lower down the list when it comes to the reasons people buy. If it suits their needs, they are likely to spend more money and buy more quickly.

Do your research first. You should be able to justify absolutely every thing you do and every decision you make during your renovating project. Don’t make it up as you go along and don’t just do something because it will ‘look nice’. Aesthetics are very important, but you must aim for a perfect balance between good looks, practicality, reasonable cost and availability of products.

Keeping to your budget

So you know that your renovation is feasible from a profit-making perspective. You’ve worked out your approximate renovation budget in order to make the profit you want. You know who your target market is – and generally what you’re going to do to your property in order to meet their needs and wants. Now you come to the crunch – the exact details of what you will do to the property in order to meet those criteria (profit, budget, needs and wants of your target market).

The most common question I am asked at this point is – how can I possibly renovate my entire property for under (say) $28,000? The most important thing to know is that it IS possible to renovate your property for such a small amount of money – even if you don’t have all the freebies they get on the TV shows or the ‘behind the scenes’ trades-people carrying out all the work. I have many clients who have renovated entire properties for between $10,000 and $15,000.

It’s a matter of identifying and changing just the components within each area of the property that really need it. Don’t paint the entire house exterior if just painting the trims and tidying the garden will improve it ‘enough’. Don’t replace the entire kitchen if just replacing the bench-top, door handles and splash-back is ‘enough’. And don’t go reconfiguring your bathroom if you can get away with replacing the shower screen, vanity, splashback, toilet and towel rails.

See the idea? Look at the areas in the property and note the best bits. And then leave these as they are. Work around these things when replacing or renovating the other components so that everything ties in together once the renovation is completed.

When selecting the products and materials to renovate or replace the components within your soon-to-be-sold property, you can generally afford to go for a lower quality than if it were a property you were going to live in yourself or hold onto for years to come. You still want a good quality finish but if you have to choose between a $500 toilet and a $150 toilet, you will still get a good enough quality with the latter.

You will get a much better result from your renovation, and a much bigger profit when you sell (or re-value etc…) if you are prepared to do your research and plan your renovation well. Minimise your risk by spending the time up front to plan your renovation based on the facts. Keep your business head on at all times and reap the rewards of your successful renovation.

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If you are like many couples currently experiencing the difficulties of the recession and trying to sell your home you just can not afford to do both this year.  If this is your situation, I have the PERFECT solution: give your home a hug by spending Valentines Day staging your home.  And do it with your lover.

Spend Valentines Day staging your home and reward yourself at the end of the day with a nice bottle of wine and dinner at home. Your house will love it, you’ll like the look once you’re done and with luck you will have increased the value of your home and made it easier to sell

One of the great things about staging your home is that it can be done with little or no money. No matter what your budget is, even if it is zero, you can use staging techniques to increase the appeal of your home.

When it comes to selling your home you want it to really appeal to buyers in a positive way. You want buyers to love your home, to look around and go, “Ooh, look at that,” or “Wow, that’s beautiful.” Your home should have some pizzazz, some sizzle. In other words you want to trick your home out and give it some bling!

Here are my tips for home staging:

1. Get Rid of the Clutter
   One of the most important things to do when it comes to making the inside of your home look desirable is to get rid of the clutter. After living in our home for a while we tend to accumulate stuff. I have heard professional home stagers recommend that the average home owner clear about 1/3 of their possessions out of the house before putting it on the market. Definitely remove any collections of dolls, spoons, Star Wars figures, or any other dust catchers.
   Some sellers put their stuff into storage, which can be a great idea. You could try Kiwi Self Storage in Constellation Drive, we have used these guys before and I recommend them, or Smartbox. Smartbox is a super service; they deliver a storage box on a trailer, you fill it and lock it and they store it in their warehouse ready for you to pick up when you are ready. It will cost less than you think!
2. Windows
   Make sure your windows are clean! Sparkling windows show off your view or garden and let the sunlight in.
   It’s a good idea to have window treatments on every window in the house, if they make sense. A combination of blinds with curtains is best. But here’s the catch, you also want to let lots of light into the house. So the blinds should be raised and the curtains fully open. This creates a nice framing effect on each window.
3. Lighting
   In addition to letting in natural light you want to add plenty of artificial light. The trick that home stagers use is to layer the lighting. They use a blend of light from ceiling fixtures, lamps, wall lights and task lights. You want to make rooms bright, without being too bright and not have any single light source overly stand out.
4. Doorknobs, Switch Plates and Outlet Covers, Oh Boy!
   If you are going to go to all of the trouble to make the walls and doors look great, you should finish the job by replacing all light switch plates and outlet covers with new ones. I also recommend replacing all of the doorknobs if they look at all worn, because it’s so inexpensive to do it. The reason this is a pet peeve of mine is that freshly painted walls with painted over switches and outlets looks like a cover up job to me. Replacing all of the switch plates and outlet covers in your home should cost you about $100.
5. Arranging the Furniture
   If you’ve ever seen a professional home stager in action they seem to have this great ability to take the existing furnishings you have and rearrange them, sometimes into different rooms and make your home look completely different–and so much better. Because the furnishings you have and the layout of the rooms in your home will be completely different for each person there aren’t a lot of general tips I can give you for arranging your furniture. Look in home magazines. It doesn’t cost anything to go to the bookstore and look at them. They are full of photos that can give you great ideas. These magazines share tons of useful tips and tricks for making your home look great. If you run out of ideas, try Homebase, they have a service where they will visit your home and give you a plan, for a few hundred dollars. What I don’t recommend doing is going out and buying whole new furniture sets for key rooms in your home just for staging.
   There are a few commonsense tips I can offer that apply, no matter what furnishings you have and how the layout of a room is.
   1. Don’t leave large dead spaces.
   2. Clearing the clutter applies to too much furniture as well.
   3. Don’t have everything pushed up against the walls.
   4. Add some greenery, nice fresh growing plants in the entry or in a strategic spot add drama.
6. Master Bedroom
   The master bedroom is the ultimate refuge. It is the haven within the home. No matter how large or small your master bedroom is, you want it to appeal to the buyers as a place they WANT to spend their nights. If your master bedroom is cramped, it’s time to move some of the furniture out.
   And please, if your home office and computer are in the bedroom, now is the time to put that office stuff away to help create that restful refuge!
   Also, closets are a big selling point for houses. Clear out your closets out. If your master bedroom closet is jam–packed, buyers will look at it and decide there just isn’t enough room, even if your closets are huge.
7. Bathrooms
   Your bathrooms should be so clean you can eat off the floor (but no need to test it this way!). There shouldn’t be any mildew, soap scum, toilet rings, body hair or anything else that makes the buyers think they are buying your dirt. Make sure the mirrors sparkle.
8. Kitchen
   “Kitchens and baths sell homes.” Pretty much any real estate agent in the country will agree with this. Making your kitchen look the absolute best it can is well worth it when you are trying to sell your home. The beautiful thing about staging your kitchen is that you really don’t have to spend any money to do it.
   Clean out any food that is past it’s “use by” date, and sending old plastic and glass jars to the recyclers. Check that your cupboards, refrigerator, and stove are clean, now is the time to spring clean, don’t wait til settlement day!

These tips will help to save you money while trying to sell your home and allow you to still spend time with your loved one on Valentines Day. A well-staged home that is competitively priced consistently outsells non-staged homes, even the do ups. By the way don’t forget the flowers! If you would like more tips for do-it-yourself home staging techniques call Ariel Levin on 021 528 318 or check out  Wendy Patton’s book  Rent-to-Sell by clicking HERE. she has some great ideas that might just help!

Love your house (and your spouse)
Published with thanks to Tony White and www.movenorthshore.co.nz.

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Of course, being a real estate agent the first thing I’m going to tell you is to talk to an agent in your area and get on therealestate.co.nz as most homebuyers are starting their search on the Internet and realestate.co.nz is the most trusted source for consumer Real Estate information.

However, if you simply can’t afford the commission or have your own reasons for not working with a Real Estate professional, there are some things you can do to make your house more attractive to buyers and to expose it to more of them.

THINK LIKE THE PRO’S – Don’t try to save money by taking photos with your digital camera or putting up a sign you created with a felt pen.

For about $200 you can get a professional photographer to take high quality photos and a good signboard should cost you a similar amount.

CLEAN YOUR HOUSE – Get it so clean your in-laws wouldn’t recognize it.

Polish all shiny surfaces, hardwood floors and granite are especially impressive when they sparkle.

Hardwood and granite polish can be purchased at any standard retail store like Mitre 10, Hammer hardware, Place Makers etc.

Bathrooms and kitchens need to be spotless, no dirty grout, no dirty dishes, no food sitting out, no dirty clothes or towels or dish rags in sight.

Vacuum and mop your floors, no dust bunnies or scuff marks should be visible. Dust displays and trinkets on shelves, a dusty house makes people sneeze and frown.

Rely on the fresh smell of a clean house, don’t over-perfume with candles, sprays or plug-ins. Many people are sensitive to perfumes and will wonder what you’re trying to cover up.

MOW THE LAWN – The first thing a potential buyer sees is the view from the street, make sure it’s a nice one.

Mow your grass, weed your flower beds, prune dead foliage and trim the hedges.

Do not leave toys, trash cans, tools or other distractions lying out.

DECORATE TO SELL – You want your potential buyers to see their future home, not your stuff.

Take personalised pictures and hangings off the walls, remove fake plants or sculptures and other personalized art, minimize furniture, get a storage unit if you have to.

Make sure an implied flow of traffic is present so that when potential buyers walk through the front door they feel compelled to make their way through the whole house.

This is achieved by arranging furniture and light in a way that is inviting.

From the 1973 Bloomingdale’s Book of Home Decorating (Source nadja.robot at Flickr)

PUT THE HOUSE IN THE PUBLIC EYE – Advertise your home for sale.

The most effective ways are on well-known and frequently visited websites.

Be sure to emphasize important features like the floor area, number of bedrooms and bathrooms, size of the section the house is on, new additions and benefits (new kitchen appliances, new roof, recent bathroom remodels).

Refrain from wasting readers’ time with long narratives or overly-descriptive “flowery” words.

GET YOUR REPORTS DONE EARLY – Get a home inspection, Then advertise that the inspection has been done.

If any of your report notes a problem with a particular system in the house, get an additional inspection done by a specialist and fix whatever may be wrong (ie If the builder notes missing tiles on your roof or evidence of water damage in the attic, have a roof specialist assess the integrity of the roof and have it repaired or replaced if you can afford it).

Remember, if you have knowledge of any material facts affecting the property or its marketability, you MUST DISCLOSE THIS TO A BUYER.

A LIM report from your local council will be appreciated by prospective purchasers and may save you time in the negotiation and conditional contract periods.

A QV e-valuer (estimate of market value) valuation is an affordable way the may help you underpin your asking price.

I would like to wish you the best of success in your selling endeavors and hope to service you as a buyer when you finally sell.

If you ever need assistance please remember I have helped many private sellers in the past so feel free to contact me.

Good luck with your sale
*********************************************************************************************************
This post is based & adapted with permission from a post by Jessica Murr. Jessica Murr is a Realtor in Far Northern California specializing in luxury homes, ranch properties, real estate sales consulting, social media and networking, first time homebuyers, and real estate investment planning.

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..Finally, we’re priced right, our house looks so good we are considering keeping it and not selling after all, but we STILL don’t have any buyers looking at it!! What gives??….

I hate to say it, but maybe your agent isn’t using the right tools to market your home. Is your home on the agent’s website? Realestate.co.nz? Trademe.co.nz?

Are all the pretty new photos up there? (The more pictures the better!) Is the price correct?

Is your agent writing about your listing in his/her blog? Is your agent using online social media to share your listing with savvy buyers?

YouTube, Facebook, Twitter, Flickr, these are all places you should be able to find your listing. Pictures of it, links to it, descriptions of it, lots of info! Social media is not a trend that is going away.

It is not a “phase” and it’s not a thing the kids are doing.

It is the newest way to connect and communicate and share with the world.

Newspapers around the globe are going broke because people are going online to get their information and news.

Buyers want the newest, latest, greatest knowledge and they want it as fast as a click of a mouse.

They don’t want to search through a dozen magazines and as many newspapers to find their home. They want that information to be accessible and online media is the place they look for it.

So if your agent isn’t using social media to market your listing, he ought to be.

If neither of you is familiar with it and you would like some help, email me.

I’ll be glad to share my knowledge and give you some tips that will help move your property from “For Sale” to “SOLD”.

This has been adapted with permission from a post by Jessica Murr. Jessica Murr is a Realtor in Far Northern California specializing in luxury homes, ranch properties, real estate sales consulting, social media and networking, first time homebuyers, and real estate investment planning.

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Alright, we’ve gone over the comparable sales, we’ve priced our home competitively, we are ready to be fair and reasonable, but we STILL don’t have any buyers touring our house!

Why isn’t our house appealing to buyers?

Take a look at your photos first. Is there clutter? Are there bright distracting colors? Is there a dead lawn out front, broken or dirty windows, kids’ toys lying around? Those have got to go. Clean your house – I can’t stress that enough. If your version of clean is that everything is stacked in the corner or that the pile of papers is under the desk instead of on top of it, HIRE A CLEANING SERVICE. They’ll come to you; they will clean EVERYTHING (even the nasty crud growing behind the toilet); they get it done in one day; they bring their own supplies. Where’s the down side? For $100 it’s done and your home will now be more attractive to buyers.

But my house is clean! It’s spotless; the cleaning service said there was nothing to do here.
Okay, why else might your house not be appealing? Dated furniture? Questionable paint schemes? Is it just ugly? Maybe not to you, but you’ve been decorating this house and putting things in it that you like, not what a buyer is going to like. Use a critical eye, ask your agent, ask some friends and neighbours, and if no one can give you any helpful tips, call a professional stager.

Stagers will come to your house, take a tour, prepare a quote, work with you to see what you can afford, and get the most important things taken care of first.

To be continued.
This post has been adapted with permission from a post by Jessica Murr. Jessica Murr is a Realtor in Far Northern California specializing in luxury homes, ranch properties, real estate sales consulting, social media and networking, first time homebuyers, and real estate investment planning.

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Well, if you’re selling in Auckland, I can tell you it’s probably one of three things:

1. You’re priced too high
2. Your house is not appealing to buyers
3. Your agent is not marketing your house in the right places.

So, how do I tell if I’m priced too high? I’ve learned from my own experience as well as the feedback from buyers, sellers and agents all over Auckland that houses sell faster when they are priced competitively. Before you decide “competitive pricing” is pricing below comparable properties, understand that competitive pricing is listing for a price near what comparable properties have SOLD for recently.

Look at comparable properties and consider what criteria truly make that property comparable to yours. Basics like floor area, number of bedrooms and bathrooms and geographic proximity. If you have a two bedroom, one bath, 75 square metre home, it is not comparable to a four bedroom, two bathroom, 200 square metre home just because it’s only two houses down. Also, just because you own a 350 square metre home 40 kilometres from the closest town does not make it more valuable than a 120 square metres home in a suburban part of town 5 minutes from the commercial district. You need to ask your agent what features make your home comparable to others and only look at properties similar to yours.

Next, look at the SOLD price of those properties. It doesn’t matter what these people were asking for their houses, and it doesn’t matter what comparable properties that haven’t sold are listed for; all that matters is the bottom line – the sold price. If you price your home near that dollar amount, you are saying to buyers, “I am fair and reasonable” and buyers will be fair and reasonable also.

Lastly, when looking at these comparables, make sure they are homes that have sold recently. You should not consider homes that sold more than 6 months ago because an appraiser won’t and neither will your buyers when they decide what a fair and reasonable offer is. I don’t care that your house might have sold for $350,000 in 2005. You didn’t sell it in 2005, this is 2009. Let go of the past. If comparable properties are selling for $220,000 then your house needs to be priced close to that. Remember, the value of ANYTHING is only what an able buyer is willing to pay. If you are determined to list your home for more than 15% above what comparable properties are selling for, don’t waste your or your agent’s time. Wait it out, hang out for another 5-10 years when things are on a steady rise.

To be continued…
This has been adapted with permission from a post by Jessica Murr. Jessica Murr is a Realtor in Far Northern California specializing in luxury homes, ranch properties, real estate sales consulting, social media and networking, first time homebuyers, and real estate investment planning.

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