APT Spec in the News Archives | Apartment Specialists

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What a Sole Agency Agreement can mean for you.

What happens with you sign a sole agency agreement with an agency? Here are 3 examples from owners that we worked with who wanted to sell their apartment. Unfortunately the agencies with whom they signed just didn’t deliver at all or in a timely manner and this is due to the sole agency agreement in their contract.

Summary:

Signing and selling my apartment with a sole agency agreement and what that means for me. This is important to understand as a Sole Agency agreement is legally binding. At Apartment Specialists we don’t lock you in.

It is important to understand and know your rights as an owner when selling your apartment and what it means when signing a Sole Agency Agreement.

This is because it is a legally binding document and sometimes owners don’t realise this and what implications this may have.

The most common clause in an agreement is signing with an agency and being locked into 90 days with the agency. This means if you are not happy or you feel the agent is not working for you, you can’t change until that time period is up.

We trust in that if the service is good why would you want to leave.

The choice should be yours.

In any other industry this would not be accepted, so why real estate?

How much commission is charged when selling an apartment in Auckland? You should know what you are going to be left with after all the costs.

You also should know what’s most important to you, as an owner, to look for in an agent. We’ll bet it’s that they’ll maximise the amount of money you’ll be putting in your pocket. Just because the commission costs are higher it doesn’t mean you’ll be getting less when your apartment sells!

Get insight on what real estate agents in Auckland charge for commission and why, sometimes, it’s better to pay a little more commission to get a lot more value.

SUMMARY:

The commission charged when selling your apartment vary depending on your apartments value. You are charged 4% for a value up to $500,00, 2% for a value up to $1,000,000 and 1% upwards from $1,000,000 plus GST.

It is not always about the sales price you can achieve but rather you want to know how much you are going to be charged in commission and what you are going to left with after the sale has gone through.

Usually you will be charged around 4% for a property with a value up to 500,000. 2% for a property up to a $1,000,000 and 1% for properties sold for more than $1,000,000. This is plus GST unless you living outside of New Zealand and can prove your residency, then you won’t be charged GST.

There is however a minimum cost you will be charged and this applies to properties worth 3,000,000 and under.

These can vary across agencies and Apartment Specialists we charge $11,500 plus GST

When you sell a property below 300,000 there is a minimum fee, at Apartment Specialists ours is 11,000 plus GST (This is subject to change without notice).

However, it is more than just what your commission costs are going to be – you want to ensure the agent you have chosen is going to get the best possible deal for you. Asking your agent for their recent sales and what records prices they have achieved is a good idea to inform you with what price you may get.

We have an advantage in the apartment industry to help you realise your apartments worth as there are so many like for likes, for example the same apartment that has been sold in the building with the same specs and so on.

There are different ways to sell your property and there is not one perfect way to do it. Options are selling with a set price, auction, negotiation or tender.

SUMMARY: 

Best ways vary and depend on what type of apartment you have. For example Auction is not as successful in the Apartment Market as it is in the housing market.

So there is not one answer as different apartments require different methods. This is where working with your agent and figuring out what method best suits you is required.

You can do this by asking your agent the last three sales in your building and what method was used. This will give you a good idea to what approach is best suited to your type of apartment. Ie which sales methods achieved the highest prices.

Ultimately, yes. Tenants restrict access to your apartment, which makes it hard to bring prospective buyers through whenever it suits them. By limiting the times buyers can view the apartment, the number of potential buyers reduces.

Tenants may also have their own furniture and belongings in your apartment, which can clash with or work against the style and design of your apartment. This can make it particularly challenging to attractively market and promote your apartment to new buyers.

Of course it’s not in your best interests to leave your apartment vacant. We understand this. That’s why we have strategies in place to account for tenanted apartments.

Are you worried about tenants affecting the sale of your apartment?

Get in touch to see how we can help you.

Prefer just to listen?

Timestamps:
00:07 Tenants restrict access
00:30 Tenants negatively affect your ability to market your apartment
01:05 How do you sell when you do have tenants living in your apartment?

Are you worried about tenants affecting the sale of your apartment?

Get in touch to see how we can help you.

Want to learn more about apartment selling? You may find these useful:

  1. Why sales statistics in your building can mislead.
  2. How do you find out what your apartment is actually worth?
  3. What are all the costs when selling?
  4. What about your tenants? Will they move out?
  5. Does having tenants affect the sale?
  6. How we value your apartment.
  7. What is the best time of year to sell an apartment?
  8. How long does it take to sell an apartment?
  9. What does the owner have to do to sell an apartment?
  10. What method of sale suits your apartment?
  11. What taxes are involved when selling?
  12. What do I do if I don’t live in Auckland or am overseas?
  13. Do I need to contact my rental agent or body corporate when selling?
  14. What happens if the agent you have chosen doesn’t deliver?
  15. What happens if you want to change agents?
  16. How to choose the best agent to get you the best price?
  17. How much is commission?

How is the value of your apartment calculated? Oftentimes real estate agents will look at the sales statistics for the apartments in your building and base the current value of your apartment off these previous numbers. But how can sales in your building alone be an accurate gauge on price?

SUMMARY:

The value of your apartment is usually calculated by a number of factors including recent sale prices, sales in the buildings and the buildings in similar areas.

Firstly, we look at apartments that are the same, these are usually in the same building. Most agents stop there; we go further and look at other buildings that are similar to help us gauge the real market value of your property.

This is where our expertise are superior, we have the knowledge of all the buildings in Auckland and understand our market well.

Calculating size, carparks, level and so on are all important factors to consider when valuing a property as well as record prices in the building and recent sales in both your building and other that are alike.

We can market your apartment without even entering the building as we have floor plans of all buildings in Auckland and know these buildings inside and out.

SUMMARY:

Planning on how long this process will take is an important aspect to consider when selling your property. We can’t say exactly but we can estimate due to averages that a freehold property takes around 30 days to sell including the campaign and then another 3 weeks to settle from there.

Leasehold properties are different, and typically take double the time to sell (around 60 days) but the same time for settlement, 3 weeks.

Bearing in mind that if your property is tenanted (Periodic) in both situations you are legally obligated to give them 42 days notice in writing if a purchaser prefers vacant possession.

?find apartment actually worth

What is the difference being a specialist for you, an apartment owner looking to sell? With thousands of apartments in the Auckland CBD and surrounding suburbs and at least 100-150 apartments selling every month, you need the right information so you can make the best decisions for you.

Apartment specialists looks at the value of apartments, not just in your building, but of those in the surrounding buildings as well. The apartment market moves all the time and we make sure we’re aware of it when valuing your apartment.

SUMMARY:

There are over 26,500 apartments in the Auckland CBD and fringes and around 400 buildings which will become up to 450 in the coming years. Each month there are 100 to 150 sales of apartments.

We know this by understanding our market well. This is done by constantly keeping up to date and being in the know. It is not just about being an agent but about being a specialist in the market.

We look at apartments that are the same, these are usually in the same building and look at other buildings that are similar to help us gauge the real market value of your property. Calculating size, carparks, level and so on are all important factors to consider when valuing a property as well as record prices in the building and recent sales in both your building and other that are alike.

By being well informed, we can help you make the best decision that works for you and selling your property.

The buildings manager’s role is made up of two main aspects, ensuring the day to day maintenance and running of the people is happening as well as looking after the culture of the building and that all residents are upholding the Body Corporate rules.

Summary:

The building managers’ role is not as easy as people perceive. They have two main jobs which are the day to day role of ensuring maintenance, cleaning, rubbish and so on is taken care of and the second is being in contact with the residents, owners, tenants, organising and running of meetings and AGMs.

The day to day operations include but are not limited to several task. Cleaning is an important aspect of this, including the inside and outside of the building. They also ensure the building Warrant of Fitness is up to date as well as certifying the security is up to scratch.

The building manger is also in charge of the looking after the culture of the building, this term is more commonly known as the Body Corporate rules. This means they are looking out for residents and the living conditions for example ensuring there is an acceptable level of noise or people not hanging laundry off the balconies and so on.

The building manager’s role is not easy and their time taken is much more than we realise. The person who takes on this role within the building deserves a lot of respect and understanding at all times.

TRANSCRIPTION:

Good day, it’s Andrew Murray here from the Apartment Specialists, talking about building managers. Now, a lot of people think they’ve got an easy ride. That’s actually not the case. So, I’m going to talk to you today about what a building manager in an apartment complex actually does, along with their day-to-day task and throughout the year.

Now, there are two main aspects of what a building manager does. One is the day-to-day maintenance of the building. This will be anything from cleaning, to your safety checks for the council – and that kind of thing. The second aspect, which is the most important, is your communication with your owners. For example, owners committees and AGMs.

I’ll firstly go into the first part, which is your day-to-day operations. The first one that comes to mind is obviously cleaning. This is where, basically, if you look at an apartment complex, it’s like a huge house. Where you’ve got one guy who’s in charge or a female in charge of basically making sure all the chores to do with the maintenance of that large building is done.

It’s cleaning and watering the plants. It’s making sure the rubbish is removed, and it’s making sure that all the tests that have to happen each year for the council. For example, the fire checks, the building warrant of fitness – all these kinds of tasks. These things that have to be done every day and weekly. Now, the second part of this maintenance is the long-term maintenance plan. They’re not just in charge of looking after the building at the moment, they’re in charge of looking after the future of the building. So, that’s looking at the long-term maintenance plan.

In three years time, the building may need to be painted. So, they’ll have to coordinate that. It’s also reporting back on when things need to be done, for example, the carpet’s looking pretty good at the moment. It was supposed to be replaced next year, but it’s actually standing up  pretty good. So, let’s push it out a year in the long-term maintenance front.

They’re also responsible for the culture. The culture is what I call it, but most people refer it to as the body corporate rules. For example, the noise in a complex, when it’s late-hour. The music or whether people are allowed to have washing on their balcony. Washing on your balcony often makes a complex look not that nice. So, making sure the tenants or the owners are not having washing on their balconies, is part of the building manager’s job to enforce that.

I see that as enforcing the culture, and up keeping the standards. The body corporate has all agreed to, or the owners have agreed to, and which needs to be obviously upheld. Now, the second aspect, which is the most important part, is you can’t really talk it that much. It’s where you’re reporting to the owners. And that is at any general meeting level as I mentioned before, or an owner’s committee level. Now, if you think of an  apartment complex as one big community, and there’s always something going on. The building manager is the eyes and the ears of the owners.

They live on the ground floor, and they’re there all the time. Apartment building manager know when issues are coming up. They know what’s going well. They know what’s not going well, and they’ll have suggestions on how to improve the daily management of the building. It’s very important that a building manager attends every single AGM, obviously.

Most do, some don’t, but in my opinion, every single committee meeting should be attended by the building manager, to give the owners the feedback they need. Especially, when they’re making decisions on how the building should be managed, that building manager needs to be very efficient. As you can see, there’s a lot to being a building manager, and it’s not as easy as it sounds. They deserve more respect, and I believe in the industry, a great building manager is absolutely gold.

Anyway, Andrew Murray, Apartment Specialists, talking about what building managers do, when looking after an apartment complex.

If you have any questions about the responsibilities of a building manager, flick me an email at andrew@apartmentspecialists.co.nz or call +6421 424 892 and I’ll be happy to help you with your queries.

Cheers. Thank you.

Summary:

An income investor’s main priority is to gain neon from their purchase. If this is your aim, you are often looking at smaller apartments that are generally smaller than 50sqm. And ideally you are trying to find something that is 40sqm, this is due to bank lending. The smaller the apartment you purchase as an investment, the higher the return. Having several investment apartments can allow you more freedom to free up cash without having all your eggs in one basket. When looking at what criteria is necessary for these apartments, size is key and carparks and extra amenities within the building are not.

TRANSCRIPTION:

Buyer type number one. An investor. You are an investor and your main focus is income. When I mean income, it is income minus expenses. Your major concerns are the rent you are receiving and the body corporate fees, the rates and any other outgoings. Now, if this is what your aim is then capital gain is not as must of a focus. Generally, you are looking at smaller apartments and you are going to be looking, in most cases, below 50 square metres.

Yes, there are some odd cases where you will have a large apartment with lots of rooms in them. But it is often harder to find tenants because you are going to have to have multi-tenancies or find a group of tenants that all want to live together. Generally speaking, you can say your criteria is below 50 square metres and ideally; the highest return is below 40 square metres.

The reason for this is because of bank lending. There are two major banks that will lend at 80 percent on apartments of 40 square metres and above. All the rest are a lot higher. So, if you are below 40 square metres, that takes out all your other occupiers. That lower demographic who are buying to live and cannot afford it.  This means most of the owners of those apartments are investors.

The apartments have not risen emotionally, if you know what I mean. An emotional purchaser is what pushes the prices up and so you will be looking at stock below 40 square metres. But you will be looking at doing it on a 50 percent deposit.

I will give you a bit of a story, this is what I did for my parents. My parents had a house, one of their houses that was $700,000, approximately. Dad was renting it out per room and getting a reasonable income about $1000 a week rent. Yet, the return was horrible. I said, “Dad, what are you doing? Sell, you are not concerned.”

He is not concerned about capital gain and the only person that is going to benefit from capital gain is me. And I am not looking for that. He is as fit as a fiddle, anyway. And, so I said, “Dad, sell them. We will go and buy some apartments. We will get three apartments and we will rent them all out, and I guarantee I will double your income, or your net return.” That’s what we did.

We went and bought three apartments for about 200 odd thousand dollars, furnished them all and rented it and now he is getting double the income.  The great thing now is he has got six that are freehold, just for income and that is his retirement paid for. Every time he wants an injection of cash, he just sells one of them because all his eggs are not in one basket.

In a commercial type arrangement where you have got one large property, with a great return, but you have got to find a tenant. That is one type of buyer.

Just to recap on that, you should start that small. Reasonably large body corporate fees, you should be looking into long-term maintenance plan and location. Car parks are something that are not necessary, because if you are looking generally in the middle of the CBD.

What a car park does is lower your return legally, because you pay a higher body corporate fee and you do not get a very good return for the added cost of the car park and that narrows your criteria.

Now, the next one we are talking about is, you are an investor but you are probably a bit younger. In most cases and your main concern is capital gain with income being secondary.

Cheers.

Summary:

4 conditions that every buyer should have no matter what type of apartment you are buying are as follows.

You must have your solicitor look over the agreement for you – it is crucial you know what you are signing and understand it completely.

Having this within your purchase agreement with a time line is imperative.

The next clause required in your agreement is the purchaser’s solicitor being satisfied with the last two years’ of body corporate minutes and future maintenance being noted if any.

A building inspection is a must and this should be written into your conditions of purchase. Not many people know enough about construction to do this themselves.

The final clause that should be put into your agreement is a small but important factor. The clause is around appliances and should go along the lines of ‘The vendor warrants that all appliances, light fittings and outlets will be in good working order prior to settlement’.

TRANSCRIPTION:

When making an offer, what conditions should you give?  In buying an Apartment, there is a whole host of conditions you can use depending on the circumstance. For example, the price of the Apartment would depend if it is in a hotel or it is a leasehold property. These kinds of things. There are four conditions, I think, that you should always use no matter what type of apartment you are buying. These are the things we will tackle on this podcast.

The first one is regarding your solicitor. When you go and enter into a sale and purchase agreement and you are with a real estate agent, they need to write it up with you. How often have you done a sale and purchase agreement before? Unless if you are buying a property on a regular basis, very few of us are, it is a very fine issue. You should make sure your solicitor reviews the contract and make sure it is all in order, because real estate agents get very anxious about it. They get very lazy about it because they are doing it so often. You really need to understand what you are entering into and that is why your lawyer’s approval is an absolute must.

You can say this agreement is conditional on the purchaser. Being the buyer, a purchaser’s solicitor being satisfied with all or any aspects of this contract including title and the conveyance of this property. If this clause is not satisfied by 4:00pm on the fifth working day, then this agreement will be at an end. Now, what I am talking about is, if this clause is not satisfied by 4:00pm on the fifth working day, then that means you have got five working days. For example, Monday to Friday not including Saturday and Sunday, your lawyer can only give the sale and purchase agreement the thumbs up. So it is plenty of time.

The next clause I will talk about is about the reviewing of, I suppose it is a health check of the building. Looking at the annual general meeting minutes – if any. Very few people ask about is your extraordinary general meeting that is called the EGM. I will just take a quick look in here so I can show you what I am talking about. Now, this one is really important and very few people actually put it in. They will put in minutes but not the EGM minutes, so I will just read it out.

“This agreement is conditional upon the purchaser’s solicitor being satisfied with the last two years’ of body corporate minutes including any extraordinary general meeting minutes – if any.”

I put if any because extraordinary general meeting minutes are generally, if something has happened that is out of your area. One good example is, when there is leakage, or best case scenario, there is a change of body corporate rules. It is one where a meeting has to be held in-between the annual general meetings to deal with a particular amendment. Obviously, if this order is not satisfied by 4:00pm on the fifth working day, then this agreement will be at an end. Hopefully, that one helps and I hope every single one of you is using that one. That is an absolute must.

The next one is, this is about getting a building inspection and very few people actually do. It is quite surprising, because very few people actually know much about construction. How Apartment complexes are built? This is one that when I bought one of my first apartments a long time ago I wish I did because now it leaks. If I had this clause in it, it probably would have put us off. This agreement is conditional upon the vendor obtaining and being completely satisfied with a building inspection report. If this clause isn’t satisfied by 4:00pm on the seventh working day this agreement will be at an end. Pretty self-explanatory and It means you have a building inspector come in and look at the apartment in the building.

Give you a report on the condition of the building; the materials and all that kind of thing. It will also give you an insight into the building and some confidence with your purchase. At the end of the day you are spending a lot of money. As soon as you do this you could save thousands or tens of thousands of dollars later on. The final clause is a small one, it’s actually not a condition. It’s a warrant because it’s about the appliances. This is one most people get caught out in, because we will go and look at the apartment. But how many of us actually turn on every appliance? How many of us actually put the washing machine through a cycle, I’ve never seen it?

It actually happened when my parents bought one. They just learned the hard way and I learned from my mistakes I suppose we could say. It was a while ago now, but anyway.

“The vendor warrants that all appliances, light fittings and outlets will be in good working order prior to settlement.”

What that means is you go into the agreement, by the time it settles and you actually become the owner, all the appliances are working. And that means if you missed one, when you are looking at it, it is in the chattels list and you didn’t check that and it still has to be working.

if you did not check it at the time of inspection, which most people do not; and if it breaks down in-between the time that you have gone unconditional to the time that you own the property, which is generally about two, three or four weeks’ time, your appliances should still be in working order. It is very very important and it is a pretty simple one, but it can be really frustrating when you move into an apartment and you find that things do not work. Especially things like light fittings and maybe the plumbing’s wrong. Things can get quite expensive.

Anyway, I hope that helps. Obviously, there are a lot of other clauses you can put into a sale and purchase agreement, but these ones I think are standard ones. I think everyone should put these in. I hope that helps.

If you have any other questions, just give me call or book an appointment below and I will answer it.

Cheers.