With the recent news of New Zealand being officially in recession and banks increasing mortgage rates, there are many questions for those looking to buy or sell property.
Recession is a normal part of the business cycle and shouldn’t be something to fear. In my own personal experience from being a real estate agent following a recession, the up is carried by the down, and the down will cause the market to go back up. They drive each other. With this in mind, I would expect that within 12-24 months, we will see the market go back up as there will be an increase in demand, production will see growth, and the unemployment rate will also slowly go down.
I often get asked the same questions over and over, so this month a Frequently Asked Questions for our monthly update seems quite timely.
Q: I have $300,000 in equity in my house. Do I sell it now, or hold onto it?
A: If you are planning on living in the home for the next 10 years, and you can afford to continue to pay your mortgage when the interest rate is at 8% or 9%, then yes. Long term, things will come right. If you are only planning to stay in the home another 1 – 2 years, and you can’t afford another $200-$500 a week in mortgage payments, then my advice would be to do something about it now. Take action before your equity disappears and the mortgage payments increase. You don’t want to be in a position where you are forced to sell. Even an increase of just 1% or 2% means a much greater mortgage repayment rate.
Q: In the current market, would you recommend I sell my home at auction or deadline?
A: It always depends on the home. The majority of agents at the moment are selling homes via auction, and that is mainly because they are big companies who have auction rooms and therefore have higher costs. They go to auction as this helps to cover their costs. I would advise anyone looking to sell in this market to be careful who you get advice from and make sure they have your best interests at heart, with no ulterior motive. My recommendation would be to visit the auction rooms, sit in on a few auctions for comparable properties and see what they sell for. Ask the vendors of those properties what their experience was and if they were happy with the outcome.
It really should be a decision made on a case-by-case basis. We always give a recommendation for each home and each situation. This decision is more important than ever, especially in this current market, as properties are a little harder to sell and you want to do it once, and do it right. If you take the wrong route, it could end up costing you thousands of dollars.
Q: How do you choose the right agent to sell your home?
A: When choosing a real estate agent, it does pay to shop around. I wouldn’t make the decision based solely on the cost of the marketing or commission, as the right agent should be able to get you 5% - 10% more for your home. You need to make sure that it’s the right decision and that you are entrusting the best person with the sale of your most important asset. Look at properties that the agent has sold, or has currently listed, attend their open homes, see how they interact with potential buyers, or even call and pretend you are an interested buyer to see the type of service you receive. Get recommendations from friends and family, and read reviews online at places like Rate My Agent. Pay attention to what each agency offers, as often it’s those small details that can make a huge difference to your final decision. You want an agent who will have regular open homes, and communicates with you regularly so that you are kept up to date while your property is on the market. There should be discussions around feedback from potential purchasers, and your agent needs to be able to navigate swiftly through the market. Finally, you also need to be confident in your agent’s ability to negotiate on your behalf to achieve the best possible sale price.
If you have any further questions that you would like us to answer, whether that be around staging your home, how social media can help push your property out to the right people, or about when and how you should market your home, please don’t hesitate to get in touch with our team. We are here to help.
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