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If you have been to an Open Home recently, or been browsing the ‘For Sale’ advertisements, you might have noticed that some sellers put together information packs for potential buyers.
These sellers will know that researching a property takes time and money, and they don’t want this to be a barrier to a successful sale.
They believe that providing information like a LIM (a Land Information Memorandum from the Local Council) and a Building Inspection Report can help busy people get an offer on the table.
This is great in theory, but you need to tread carefully all the same.
About LIM Reports
If, for example, a Real Estate Agent or seller gives you a LIM for the property, check carefully when it was prepared.
A LIM is a summary of all the current property information held by the different departments at a Council at the time.
It contains details of Council consents for any work done, how much the rates are and information on any geographic hazards that might have an impact on the property, such as subsidence.
Bear in mind that this information can be reasonably general – the LIM for most houses in Wellington will say, for example, that they are located in a high wind area, for example.
If the LIM is dated a couple of weeks ago, it is safe to assume that it is reasonably up to date. If it is dated a year ago, it is a good idea to make further enquiries.
Getting a LIM costs money in most areas (prices vary from Council to Council).
You can also ask to see the property file held by the Council, which holds other information about a property, like a site map and original house plans.
About Building Reports
Building Reports are a bit trickier.
Using a Building Report provided by the seller (or the Real Estate Agent working for them) may seem like an easy option in the short term.
However, if you buy the property and then find problems with it that cost a significant amount to fix, you are not protected by the building report because the inspector’s contract is with the seller, not you.
The Real Estate Authority (REA) recommends using an Accredited Property Inspector who complies with the New Zealand Building Inspection Standard 4306:2005.
Their written report will identify any current defects as well as highlight any urgent and long-term maintenance required. Look for someone who has a good level of indemnity insurance, as this will protect you if you buy the property and then find you need to fix something that wasn’t in the report.
Worthwhile Cost
Building inspections come at a cost, but we think it is worth it to be sure that you are fully aware of what you are signing up for.
Depending on the age of the house you are looking at, do not necessarily expect a thin report saying there are no issues.
Many wooden houses in New Zealand are over 50 years old and there will be things that the Inspector needs to point out. Make sure you that understand what normal age-related matters are (that may not be major issues), compared to significant repairs needed in the short term to fix a problem.
The Report you receive should separate these things out – if it doesn’t, then ask the inspector about the difference.
Opportunity to know
If you end up with a Report with a lot of information about the property, it does not mean that you should walk away. Instead, see it as giving you the opportunity to know what you are buying.
Doing this before you make an offer means that you are fully aware of what the property may need to have done to it and your offer figure can reflect that.
However, if you do not feel comfortable paying for a Building Report before you make an offer, you can make a property inspection a condition of your offer.
Like most things in life, buying a property will go more smoothly if you put in the work. If a short cut seems too good to be true, it usually is.
For independent guidance and information on buying or selling, check out www.settled.govt.nz
Source: The Real Estate Authority, Wellington.
