selling apartment Archives - Apartment Specialists

Tag: selling apartment

i worry about tax

There are commonly 3 taxes which can be charged when property is bought or sold.

These are:

  • Goods & Services Tax (GST)
  • Capital Gains Tax (CGT)
  • Stamp Duty

There is no Stamp Duty in NZ (but it is charged in Australia).

CGT only applies if you bought after November 2015 and sell within 2 years.

GST applies when an apartment is on a commercial lease.

Summary:

When selling your apartment, it is important to know what taxes you may or may not have to pay as this effects the outcome.

There are three main taxes involved when selling your property/apartment in Australasia but not all or any will apply to you necessarily.

New Zealand is a great place for property as the taxes charged are lower than any other first world country.

There is no Stamp Duty which is a tax charged on purchasing a property in Australia or the UK.

Capital Gains Tax only applies to you if you bought after November 2015 and sell within 2 years.

However, the one tax to look out for which many owners forget or are unaware of is GST.

Goods & Services Tax or more commonly known as GST applies to you if the apartment is bought with the intention to be used for what is called a taxable supply.

I.e. for a commercial capacity.

For example, a guaranteed rental, commercial lease or an apartment in a hotel lease.

The important thing here is if your apartment was intended to be used as a taxable supply make sure you talk to your accountant, as there is a good chance that when your sell your apartment a 15% tax will be applied or passed onto the next purchaser both effectively reducing what you are left with.

As an owner, you might be wondering what YOU need to do, or help with, in the process of selling your apartment. After you choose the agent that you feel will best represent you and get a good price for your apartment in the time frame you need, what else needs to be done on your part?

Surprisingly little. We do the leg work for you. From the time you sign the listing agreement to the time your apartment goes on the market and we start getting offers, we are there for every single step of the process. And, we’ll keep you up to date on each step, too.

Summary:

As an owner you have to find an agent that best suits you and your needs when selling your apartment.

Finding an agent and building a relationship and setting expectations that both parties are happy with is the first and most important aspect of selling your apartment.

Once you have found an agency the rest is fairly simple. You will need to sign a listing agreement and as this is a legally binding document we suggest you get a lawyer to look over this for you. The difference with Apartment Specialists is that we don’t lock you in. You are in control.

The agent will advise you with all the details of the campaign, marketing, the current market and so on.

The final step is making sure you are kept up to date – setting these expectations and how much involvement you would like is up to you and we tailor these to suit you as an individual.

When selling your apartment, did you know there are more than just commission costs? We know, at Apartment Specialists, that, at the end of the day, you want to know how much you’ll be getting in your back pocket when your apartment has sold. You might be surprised to know that you may even get money back. We’ll help you to get a broader picture of what these other expenses are, understand ALL the costs when selling your apartment,  so you can take them into account.

SUMMARY:

The knowledge of what costs you will incur during the process of selling is so important and it is more than just the agent’s commission.

The costs involved are more than just the commission. There are several others involved but don’t let that deter your choice to sell.

Marketing costs generally are around $600 when a property is selling for under a million and around $2300 for property over and above that price.

Lawyer’s fees can range from anywhere between $800 and $1000 for a property with no mortgage and up towards $1300 for a property with a mortgage. Where there is a sale that is more complicated for example a building that may need more due diligence due to building issues these lawyers’ fees may be upwards to $2000.

Lastly, a cost that is overseen when your property is tenanted during the decision of sale being made, your tenants may leave before settlement date leaving you with no income for several weeks. This is where you need to ensure you are prepared for this and/or bring the settlement date forward if able to.

And the good news; you may sometimes be eligible for money back. If you have covered your Body Corporate fees for the year and sell part way through the year you will receive the overpaid amount back upon settlement. Rates are the same deal and will be reimbursed if any are overpaid.

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.

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 most important like for like 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.

This is probably one of the first questions you ask yourself when you make the decision to sell. You want to know how long it can be until you make the sale to have the money to do what you need to do.

In this quick video, find out what the average rate is for selling freehold, leasehold, and high-end apartments.

SUMMARY:

On average freehold apartments take 30 days to sell and 3 weeks to settle. Leasehold usually takes double that time.

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.

When to sell, when not to sell.

If you’re looking to sell your apartment in Auckland, although there’s no real ‘right’ time there is definitely a period you want to avoid which. If you sell during this time, it can cost you anywhere from $20,000-$50,000.

In this quick video, Andrew Murray at Apartment Specialists tells us exactly when to avoid a campaign to sell your apartment and why! Listen in to find out when the sweet spot is to get your apartment on the market. Apartment Specialists knows… that’s why we’re the specialists.

SUMMARY:

Apartments are different to houses and can be sold most times of the year, we recommend the only time you avoid is December through to early January.

Selling at the wrong time can end up costing you more than you may have anticipated. However, apartments are very different to houses and most of the year is a good time.

However, the only time to avoid would be the December, early January period – the holiday period, this is due to a lot of events happening in people’s lives, end of deadlines, holidays, family commitments and so on.

Apartment Specialists Podcast No: 150

Summary:

What do you need to know in order to get the best deals when buying apartments off the plans? In this podcast, Andrew Murray will explain the intricacies of buying and selling off the plan, how units are priced and the steps you need to take to get the best deals. Watch this video to know all the details.

TRANSCRIPTION:

Good day, Andrew Murray here from Apartment Specialist, talking about buying off the plans and how they price the units. As you can see here, you’ve got a building that just came up today on TradeMe and in the papers.

You can see you’ve got three arrows there. You have got 8,000 meters squared, you’ve got $10000 per meter squared, and you’ve got $12000 per meter squared.

Basically, when a development comes out, they have to do this and it is rough numbers, they are also changing it a bit. They have to consider everything because of the cost to build, but on average, a developer to make money has to average selling all their apartments on a development at 10,000 per meter squared. So, that means they sell ones up the top for a lot more and the ones down the bottom, which attract the buyers in. These units are not as favourable, and won’t have the views or are facing south for a lower price, or otherwise they couldn’t sell them.

We go to straight to TradeMe here, and this is a really good example that shows you how to do it.

What they do is they first introduce you by coming in. First of all, you can see that it is listed today. SKHY High Apartments and this is Newton. This is in the fringe. You can see here they come in and go, “Okay, it has spectacular views.” They will have the same pictures, every single one. This will be the penthouse, no doubt. If you divide 74 meters squared into 615,000, you are left with 7,600 dollars per square meter.

Now, that is extremely cheap. That seems very attractive, but if you go back to this picture, they are going to be the ones that nobody wants. Some of that attracts you to go and inquire and find out about it, because it looks like a fantastic deal. Which is very smart in my opinion. Just understand this, then if you go back to some of the high end listings.

I’ve actually priced it here, which is not normally what they do. If you go this one say, three bedrooms, two bathrooms, you’ve got 175 meters squared. It’s for $2 million and $65,000. If you divide 175 into the $2 million figure you get round it down to four. For $11,000, sorry – its for $11,800 per square meter, right?

You can see the per square meter value is creeping up. And in all of these, there are no car parks.  You can see how they are doing it. Same here, this one is more and that has got a few square meters, it comes out as $11,600 per square meter. Obviously, close to that $12000 figure I was talking about.

Then we go down. We look at another three bedroom. But that is price by negotiation and one’s similar to before. Here, oh this one’s a lot cheaper. Okay, there’s a different square meterage rate, but if you divide 152 meters squared into $1.3 million, you get $8600 per square meter. Again, this will be a unit that’s not as favourable. It’s without the views. If you look, they still all have the same photos, as if it is the penthouse.

That is how they market, so be very aware of when you are looking at all these listings on Trade Me, Realestate.co.nz or in the newspaper. The prices they show are just a marketing tool. Otherwise, there is nothing wrong with buying off the plans.

I think  if you look at these apartments, I actually think they are really good, and the reason why. I’ll just bring it up again and I think I deleted it. I can bring up one of these photo’s and make it larger and its  because they’ve got, what it looks like here they have got views. The company built out, they are large sizes, which is the key.

A lot of these developers are coming up with very small apartments. You know, one bedroom around 40 square meters and things like that. Charging huge money for them, when really it’s just not there in the future, in my opinion.

But yeah, just be aware of when you are looking at all this stuff on Trade Me and realestate.co.nz. While you are actually looking at in most cases, you are looking at prices to attract you in and then up-sell you up.

Anyway, I hope this helped. Andrew Murray from Apartment Specialists and this is all about selling off the plan prices.

Thank you.

Apartment Specialists Podcast No: 140

Summary:

What do you need to know in order to get the right apartment valuations? What questions do you need to ask the valuer? Watch this video to get some insights on apartment valuation.

TRANSCRIPTION:

Good day. Andrew Murray here from Apartment Specialists talking about apartment valuations. Now what I am talking about here is registered valuations. This is when you get a valuer to do a valuation and you pay them a sum of money, generally around about $500, to do a valuation on your apartment.

Now, they are generally wrong. They are generally too high, or too low. Being fair, I am not saying that the valuers are doing anything wrong. But it is what they have to go on to do the valuations.

You see, valuations are always looking backwards especially with apartments. This can be a huge, well, it is a huge problem.

For example, I will see a bank valuer, or a valuer go and do a valuation of an apartment. The sales statistics that he is looking at are two months old. That is because apartments that have sold today will not show up on the statistics for about two months.

Often they will be looking at a building (because there are over 300 to 400 buildings in Auckland CBD and the fringes) where the particular building has not had its movement. Another building that is almost identical just a few streets away, is selling for say $50,000 more. And the apartment complex which the valuer is doing the valuation in – the prices, well there has not been many sales, or the previous sales were under pressure or they were mortgaging options, or something like that.

The statistics they have got to work with do not show the situations under which the apartments are sold. For an agent, it is a very exact science. Because I am dealing with apartments that are exactly the same, if I have got apartments in a building and they all look the same, I know what they are worth.

Where a valuer, they have got to come in and value. I mean there is over 24,000, 25,000 apartments. How are they supposed to know? And then there are very few valuers that actually are very experienced with apartments on top of that. Most of them just do houses.

What I am saying here is just be aware with your valuations. They can come up too high, too low. And just as far as when you are dealing with a valuer, ask them to compare the sales prices in other buildings that are comparable.

An easy way of doing that is to ask an agent or a colleague – the valuer’s colleague – or maybe ring up a property manager, on what apartment complexes are similar. Because size is not always similar because you have ones with different layout. Some buildings are going to be a different quality, that kind of thing.

I hope that helps. It is a bit of insight into valuations and how difficult it is for these valuers to actually know where to value these apartments, especially in a moving market because it is changing all the time.

Anyway, I hope that helps. Andrew Murray, Apartment Specialists. Cheers!