Will this Make a Difference?

From Stuff:

Government grasps housing thistle

CATHERINE HARRIS AND TRACY WATKINS

Politics

The Government is poised to announce changes to development laws that will make it easier and cheaper to build houses, stretch Auckland’s city boundaries, upgrade existing state houses and transfer state houses to non-government and local government providers.

It may also signal changes to income-related rents and state subsidies amid moves to ensure tenants’ needs match the size and type of house.

The announcements, expected after Monday’s Cabinet meeting, form the nucleus of the Government’s long-awaited response to a housing affordability inquiry by the Productivity Commission – ordered amid declining home ownership rates and house prices that are among the most expensive in the world.

The commission highlighted land prices, council fees and a shortage of developers. It pointed to the need to unlock Auckland’s city boundaries for more development, and improve council consent processes.

 

Well it will be very interesting to see what the government comes up with on this issue.  They’ve had the productivity commission’s report for some time and haven’t really done anything with it as yet.

Now the changes that will need to be made will be around councils, their policies around urban growth and fees etc. , material costs – which are way higher than they should be etc.

So can you see councils changing their ways? Quickly and efficiently? To make developing houses quicker, easier and cheaper? I can’t .  They’ll fight any changes tooth and nail.  Just wait and see.

And can you see material costs coming down?  I can’t, not sure how this could be done at all.  The government can’t just say to Fletchers et al “Make less of a profit!” now can they?

So will be interesting to see what happens.  I don’t think house building is going to get any cheaper in NZ any time soon.  Perhaps the best they can do is stop the price of new builds from increasing too much?

The Housing Crisis

Still no answers really but at least some people are recognising the scale of the problem:

 

Crisis demands mass demolition

By Bernard Orsman

5:30 AM Thursday Oct 25, 2012

Property expert says up to 20 per cent of Auckland’s homes must go for infill and high-rise to cope with growth.

Between 50,000 and 80,000 Auckland homes have to be demolished and replaced with townhouses and apartments to create the world's most liveable city. Photo / APN

Expand
Between 50,000 and 80,000 Auckland homes have to be demolished and replaced with townhouses and apartments to create the world’s most liveable city. Photo / APN

Between 50,000 and 80,000 Auckland homes have to be demolished and replaced with townhouses and apartments to create the world’s most liveable city, says a housing expert.

Martin Udale, ex-chief executive of McConnell Property, yesterday said that up to one in five of the city’s 385,000 existing homes had to be replaced with infill housing to accommodate an extra 1.2 million people over the next 30 years.

The figures are based on the Auckland Plan, which calls for 300,000 of the 400,000 new houses it expects the city will need to be built within the existing urban boundaries.

The challenge of building 10,000 new houses a year to cope with Auckland’s growth was discussed yesterday at a Property Council conference on residential development.

Rest of Article

 

Auckland Transport Already Making Lots of Money

$3 million a month.  Good business if you can get it!

From the Herald:

Drivers fined $3m a month

By Mathew Dearnaley

5:30 AM Monday Oct 22, 2012

AA shocked at rise in amount collected by Auckland Transport for vehicle offences.

The figures detail $36.2 million of fines collected from motorists in the financial year to June 30. Photo / Martin Sykes

The figures detail $36.2 million of fines collected from motorists in the financial year to June 30. Photo / Martin Sykes

Auckland Transport has been slugging motorists with fines of $3 million a month for parking and other vehicle offences.

Figures it supplied to the Herald for its first 20 months have shocked the Automobile Association, which suspects they reflect “anti-car” tendencies of its Auckland Council parent.

The figures detail $36.2 million of fines collected from motorists in the financial year to June 30.

That leaped from $20.5 million for the previous eight months, from when Auckland Transport began business in November 2010.

Although the latest total was for a longer period, the monthly average has risen to just over $3 million from $2.54 million in the organisation’s early days.

The $17 million was Auckland Transport’s half-share of warrant and registration fines. The Ministry of Transport received the rest.

But AA spokesman Simon Lambourne believed an increase in parking fines from $4.4 million for the eight months to last winter, to $7.2 million in the year to June 30, showed too much effort put into enforcement of a flawed system and not enough into education.

 

Doesn’t really need much comment does it?

Time to Make Some More Money

The Police bosses just love holidays, it’s money gathering time:

Police reduce speed tolerance to avoid Labour Weekend carnage

By Nikki Preston

5:30 AM Friday Oct 19, 2012

Police will be watching motorists closely this Labour Weekend in a move to reduce the worrying road toll, which is eight deaths higher than this time last year.

Police are targeting people who are not following at safe distances and the speed tolerance of 4km/h either side of the speed limit is being enforced again for the long weekend.

Rest of Article

It’s all done in the name of safety, but that’s just BS, it’s all about the mula.

And the Housing Shortage in London

From the Guardian:

Homeless families and the B&B crisis

Despite guidelines that say bed and breakfast accommodation is no place for children, the number of families having to live in hostels is soaring. Some of the people trapped in them talk about their plight

    • Amelia Gentleman
    • The Guardian,
    • Jump to comments (230)
family in a west london B&B

A family living in a bed and breakfast in west London. Photograph: Christian Sinibaldi for the Guardian

These are the reasons why nine-year-old Rana does not like her new home. The bedroom she shares with her mother has no window. The room is too small to fit two beds, so they have to share, and there’s only room to do her homework if she clears all her mother’s housing documentation from the tiny square table, squeezed between the bed and the wall. During the night, she can hear the occupants of the bed and breakfast’s other rooms stamping up and down the stairs, occasionally followed by the police, so she lies in bed wondering who they are and what is going on.

Most worrying is the woman in the room next door who attacked her mother a few weeks ago, after a quarrel about leaving the doors open to go and use the kitchen. The assault was so violent (scratches, hair torn out and slaps to the face) that her mother had to spend the night in hospital, accompanied by Rana. The neighbour remains in the bed and breakfast, and Rana and her mother have responded by no longer using the communal kitchen. Instead they buy food from KFC and McDonald’s.

Rest of Article.

Interesting to see the same stories in most westernised cities of any size.  Anywhere smart growth policies have taken hold…

NSW Housing Shortage

A line of tenants around the block? Bolding mine.

From The Age:

NSW needs 140,000 new homes in four years: minister

Date

Jimmy Thomson

Aerial shot of Sydney.

The housing shortfall in NSW has gone beyond a crisis with 140,000 additional homes needed by 2016, the Fair Trading Minister, Anthony Roberts, said.

Launching the fourth edition of the Tenants’ Rights Handbook today Mr Roberts said the extent of the housing shortage was brought home to him at the weekend when he passed a line of prospective tenants queued around the block to view a one-bedroom unit in an old three-storey brick apartment complex.

“This is the reality,” he told guests at the State Library for the launch of the handbook. “We need 140,000 additional roofs over people’s heads in a hurry. This is a problem that will require a whole-of-government solution.”

Julie Foreman, chief executive of the Tenants’ Union of NSW, told guests that statistics show 30 per cent of NSW dwellings are now rented – the highest figure since 1958.

Funding for the union’s services needed to rise to meet growing demand, she said.

Union representatives said privately that while they were lobbying for additional finance, they were concerned at the Queensland government’s recent decision to cut funding to its tenants’ advisory service, forcing the federal government to step in in the short term to continue funding until June.

Jimmy Thomson writes the Flat Chat column in the Saturday Domain and edits the advice website flat-chat.com.au.

What a Good Article

On the Stuff website, they’re doing a thing called Stuff Nation, which seems to be everyday people writing articles.  Which is quite savvy of the Stuff owners (Fairfax) really since they’re getting people to write articles for their website for free.

But anyway, some of the articles are quite good.  Especially this one.  It’s called “The Sad State of NZ’s Economy” which is not a catchy title at all.  A subeditor would rename it something like “How the Whole World is Ripping Us Off!” or “NZ Naked and Defenseless as Ruthless Neighbours Prey on Us!”

Essentially it tells the story of how we are playing the international trade game following all the rules 100% completely, 100 of the time and virtually no one else is.  They’re either state run countries with no free market at all, using nationalised assets, controlling the value of their currencies (we let ours float), destroying their environments to produce stuff cheaper, and the same with their people etc. etc.

So this whole globalization thing is working out really badly for NZ.  We are losing our assets, we are losing our talented people and basically just getting poorer and poorer day by the day.

And yet we’re chasing more free trade agreements.  With anyone really, Russia (what a fantastic open, non-corrupt, peace loving haven of a country this is), India (not so bad but very big), the USA (money printing like a lizard drinking) and so on.

And we’re supposed to sit back and thank our masters for selling our country down the gurgler and repeat the free market mantra, over and over again.

Well I’m a business owner and a right winger.  I don’t mind free trade if everyone plays by the rules.  But they don’t.  They never have and never will.  Including bastions of trade like the USA.  We have to learn this once and for all.

I hate to sound like a 1970s protectionist, but we have to look after NZ, our assets and our people.

What we are doing right now is lying back like a whore and saying to the rest of the world “Treat us Nicely”.  We have surrendered.  And we’re being screwed for it.  And not nicely.

Auctions

I friend of mine is thinking of taking a property to auction.  And like most people she hasn’t done this before i.e. been the vendor deciding to sell her place via auction, tender or the normal process (which is hardly ever seen these days) whereby you put a price on the property and sell it that way (this is usually called ‘private treaty’).

And over the years I’ve posted on various forums what I think are the good and bad points about auctions.  So I thought I’d put it here so that it’s in a place I and others can find it again for reference.

OK, so it’s my contention that auctions primarily benefit agents.  Not buyers, not seller, but the agents themselves, and here’s why:

Why Auctions are Good for Agents

1) Time frame: The auction process normally runs for 4 weeks leading up to the auction and then 2 months afterwards (yep they tie you up for 90 days, exclusively).  So this means all going well the agent gets an unconditional sale in 4 weeks.  NO more mucking around for months and months taking people through a property, it’s wham bam thank you mam.  So this means agents just sell more properties, 4 weeks sold, on to the next one and so on.

2) Unconditional Sales: All the bidders are bidding unconditionally to purchase the property, so as soon as the reserve is passed, wahoo, the agent earns a commission.  No mucking around with conditional agreements that go on and on for weeks or months and then fall over for a million and 1 reasons.

3) Payment: At the end of the auction, the winning bidder sits down and pays 10% of the purchase price to the agent then and there.  This is more than enough to cover their commission, so again it’s all about saving time and hassle for the agent.  They don’t have to spend their time running around collecting a deposit on multiple agreements that may or may not go through.

4) Tying up the property: If you own a real estate agency, what you want to do is control the vendors and their properties, and if you can do this, then all the buyers must come through you.  So listing these properties for auction (which is automatically a sole agency) is a huge step towards getting paid.  This is because the vendor can’t accept an offer via anyone else within 90 days without having to pay the agency a commission.

5) Advertising: Under normal auction terms, the vendors pay the advertising fees! Yep, so good for an agency, no more money wasted advertising properties that may or may not sell!  Goes straight to the bottom line.  And of course, they charge you $x but it costs them less than that, so agencies make a profit on the advertising.  Of course they’re not supposed to, but they do.  Another spin off of this for the agency is that the vendors are paying for the agents to advertise themselves!  Brilliant really, the agency gets miles and miles of advertising copy, promoting their agency, at no cost to them!

6) Vendor Motivation: This comes directly from the point above.  If a vendor has just spent say $4000 advertising their property (not to mention paying for the auctioneer, and an admin fee, all plus GST) then they are very motivated to sell.  So this works on 2 levels, firstly when as an agent, you have them signed up to go to auction, you know they are serious because they are going to be spending their own money to get a sale and then when the auction is undertaken you know you have a committed vendor when it comes to setting the reserve etc.

7) Vendor Motivation 2:  So what happens if the property doesn’t sell on the day? Well agents don’t mind this.  Why? Because they now have a super motivated vendor.  The vendor has spent the last 4 weeks or so imagining what they will do with the money once they have sold.  Buy their next dream property, move overseas, pay off their debts, whatever, they have plans and those plans can’t be realised until the property is sold.  Plus, they’ve spent a fair bit of money, as mentioned above, so they’re are often really crestfallen at this time.  Which puts them in a position of weakness, which is what agents want.  The process has worn them down.  And so, many sales are negotiated in the few days after a property fails to sell on auction day.  The vendor has been put through an emotional blender and just wants it over.  Which leads nicely to:

8 ) Vendor Conditioning: What is this? Surely the agent is getting paid by the vendor so is working in their best interests right? No.  Absolutely not.  They are in business for themselves.  And what they want is sales.  At any price.  That’s worth repeating: At any price.  To them it doesn’t matter if the sale price is $350,000 or $450,000.  They just want the sale because right up until then they are working for free.  The difference in commission between those 2 prices is $2000 – 3000 but the difference between having a sale and not, at those mentioned prices is around $12000 – $15,000.  So what agents do is spend the 4 weeks leading up to the auction ‘conditioning’ the vendor.  This is euphemistic talk for getting the vendor to lower their expectations and set a low reserve, thus making a sale on auction day that much more likely.  How do they do this?  Well they give lots of negative feedback to the vendor of course!  So if say a house is being taken to auction and it’s worth around $400,000, if a purchaser comes through and says “Geez this place is really nice, it’d get $450,000 wouldn’t it?” do you think the agent passes this on to the vendor? No, they don’t.  And if someone else comes through the property and says “Oh man, they’ll be luck to get $350,000 for this.” do you think the agent passes on this information? You betcha they do! And in spades along with other rubbish about the market not being very strong, their not being many buyers interested in the place etc, etc. etc. for the entire 4 weeks of the auction campaign.  By which time, if the agent is good (good in inverted commas) the vendor is so worried about their place not selling and not being worth what they thought it was, they succumb and set a low reserve, and are crossing their fingers they get a sale at all.

9) Removal of Price Objection:  A long long time ago, like say 7 or 8 years, properties used to be advertised with prices! Yep, people would actually get agents around (and perhaps even a valuer) to tell them what their property was worth (and the agents would give an actual answer! Try getting one to do that now) and then they’d decide on a price and sell it on that basis.  So what’s the problem with that? Well it doesn’t work so well for agents.  Why? Well for several reasons, basically it throws a lot of confusion into the whole process, in a number of ways:

a) Removes purchaser’s ability to exclude a property from the list of ones they may consider buying.  And example: Say you’re wanting to spend $400k on a house and they all have prices, you go through the ads in the paper, on the internet etc. and you can just instantly cut out any that are $450k and higher and just move onto the ones that are $400k and below.  So the agency won’t be able to sell this property to that purchaser.  What the agents want is for the purchaser to come through the property, fall in love with it and pay over their budget of $400k.

b) Removes the vendor being able to stick to their price.  Say the agency tells you your house is worth $400,000 and then they bring you an offer of $370k, are you going to be impressed with that offer? No, of course not.  But what if instead of giving you a price they do the whole auction thing, say they will ‘bring you the market, yadda yadda, yadda’ and then the highest bid on auction day is $370k and you the vendor having been beaten around the ears for 4 weeks have set your reserve at $350k, would you be happy then?  Well yes you probably would!  You’d feel like you got $20k more than you were expecting and that man, the agent did a good job!  Just as well you took it to auction!

c) Creates a whole lot of confusion around what houses are worth.  In the old days if you wanted to sell your house, you could have a look through the listings for properties for sale, get some idea of what houses similar to yours are being advertised at and get a fair idea of what yours might be worth.  And the same for the purchasers, they could see photos and descriptions of properties and see what they’d have to pay for a property of a particular standard in a particular area.  They could then decide which areas and which properties to focus on.  But nowadays, there is no information out there, unless you go to the auctions of course!  And see what the places actually sell for.  But even then you often don’t get to see what a house finally sold for or even what the reserve was.  So it’s all murky, which makes for uninformed buyers and sellers –  just what is required by agents.

d) Agents are absolved from any criticism around the sale price.  If say an agent manages to get a bid of $370k on auction day, you can’t really complain.  They never said they’d get you $400k or any price.  They only promised to get you the best price the market would pay.  And no one knows what that is ahead of time, so you can’t say “My house is worth $400k” because the easy counter from the agent is “We advertised it to the whole market and the market is saying it’s only worth $370k.”  Sounds so fair and transparent right?

 

10) Confusion on Auction Day: Going back to the old days again, if you were selling a place and an agent brought you an offer, you’d have time to talk about it, maybe think about it overnight even, and come to a sensible decision. Or as a purchaser, you could think very seriously before putting in an offer, after all there was no fixed time frame, (although there was always the possibility that someone else would move faster and buy a property before you did) so you could think clearly, take advice etc. before making an offer.  But, contrast that with the auction process:  Both parties will have had the opportunity to make up their minds about how much they will accept or pay prior to the auction, but then the auction itself takes place and people are put under all sorts of pressure to make decisions in a loud, confusing situation with almost no time to do so.  Now remember your average person (or couple) buys a house around every 7 years or so.  Whereas agents sell properties at auction every week.  So you’ve got inexperience people put in a highly confusing situation and made to make decisions around what is usually their most valuable asset in a matter of seconds…  Is it any wonder people bid a bit more than they said they would?  Or take a lower figure than they thought they would going into it?  No, of course it’s not.

11) Agents Can Buy Into People’s Greed and Fear: So given that auctions are good for agents, why do people sign up for them?  Why do purchasers play the game, going along a bidding etc.?  Agents use a suite of pre-prepared tools such as dialogues with their customers (vendors and purchasers).  Yep they practice what to say and how, so that they can get you around to their way of thinking:

a) With vendors they tap into everyone’s natural desire to get as much as they possibly can for their property.  All agents have sophisticated and practised (you can take seminars on this) dialogues and personal gestures etc. they use to ahcieve this.  For instance most agents would have a suite of tales (some true, some not) of how they took certain properties to auction and got way above the vendors expectations.  This taps into the vendors greed.  Their property might be worth $400k they are thinking, but they might get $450k wahoo!  That’s $50k more, surely it’s worth a shot!  And the converse of this is fear.  Fear of loss.  Which is actually an even stronger motivator.  Basically the agent does his/her best to instill in the vendor’s mind the idea that if they were to put a price on the property and sell it that way, they could end up giving away a lot of money because someone may have paid a lot more at auction.  How much more? No one knows – unless you go to auction!

b) With purchasers agents again use fear and greed.  And again they have a suite of dialogues and other tools to use to do this.  On the greed side, what most agents do is give a low price indication for the property, so they might well tell people a property might go for $300k (when it would normally sell for $400k say) and the buyer thinks “Cripes that’s cheap, I’d better look into this!” at which point they start spending money on reports, getting the parents along to look etc. and so then they are hooked.  On the fear side agents will do the reverse!  They’ll state how the market is moving quickly, how much interest there’s been in this one and if the purchaser is really interested then they’d better get their skates on or they’ll miss out.  At which point the purchasers (perhaps having missed out on a number of properties at auctions already) start to think “Man if I don’t get my stuff together I’ll miss out on this one too.  And houses seem to be going up in price rapidly!  If I miss out and take another month to find a property I like I’ll be paying another $30k…” Again, the fear of loss…

 

Why Auctions are Disadvantageous for Purchasers

The section above contained a number of reasons why auctions are bad for purchasers but there are a couple of important additional ones:

1) Time and money wasted: Because you want to by a house and because there’s not price to go on (apart from what the agent tells you when you enquire about the property which is usually BS) if you want to buy a property you’re going to have to bid at auction.  But you will be bidding unconditionally so you really need to have various things lined up, like a LIM report, a valuation, finance arranged with the bank, a builder’s report and so on.  All of this costs money and can mostly only be done with a certain property in mind.  So if you go to the auction only to miss out (which could be because the vendor has an unrealistic idea of what the property is worth and so it gets passed in, or someone bids way above what you wanted to pay – an all too common experience these days) you might have just wasted say $1000.  And a bunch of time too. And then you have to start all over again!

2) Over Paying: Well how do you know that you are not paying too much for a property?  Have you had it valued? Are you familiar with prices for properties in a given area at a given time? Many people paid top dollar for properties in 2007 which they’d be happy if they could sell for that much now.  Basically you just don’t know where you’re at and you don’t want to have to spend your entire life researching properties and going to auctions trying to buy them.  You just want your weekends back!  So you bid a bit more than you should, thinking “What the heck, it’ll be worth that in the near future anyway” or “I don’t want to lose this one and have to start all over again!

 

Why Auctions are Disadvantageous for Vendors

Again, the section on why auctions suit vendors contains many reasons they’re bad for those selling, but here are some others:

1) May get a lower price:  There is quite a lot of evidence to suggest that properties taken to auction actually sell for less than they would if they had just been marketed with a price.  Why is this?  Well see the section below entitled “Why Auctions May Work for Purchasers”.  But in a nutshell, there will only be a limited pool of buyers for your property at any time, many people hate auctions and basically bypass any ads for properties being taken to auction, people know they are bidding unconditionally so they have a lot of fear of overpaying and so on.

2) Vendor Conditioning: I’ve talked about this above, but basically the person you will end up paying very handsomely to sell your property is actually working both ends, in order to get a sale, so you can’t trust a damn thing they say.  And again there is evidence for this, via hidden cameras etc.  So you are being mentally prepared to sell your house for less than you want to by the person you are paying…

3) Expensive: You are paying for everything.  The sign out the front, the advertising, the auctioneer, an admin fee (if anyone can tell me a good justification for an admin fee, I’d love to hear it).  You pay all this regardless of whether the property sells. And then if it does, you pay a full commission.  All plus GST.

 

Now Having said all this, so many properties are being sold by auction (or tender, or price by negotiation and a number of other similar methods) if you want to buy or sell property these days, you will quite likely have to go through the auction process.  So can you turn it to your advantage?  Well actually you can…

Why Auctions May Work for Purchasers

1) Smaller pool of buyers able to or prepared to bid: Several aspects of the auction process mean that oftentimes, if you know what you are doing, you can pick up properties cheaply at auction.  Now this probably applies to investors or other buyers who are buying on a regular basis, know their markets well and have the finances lined up to be able to move quickly.  The reasons you  may be able to buy cheaply are primarily these:

a) At auction you have to bid unconditionally. So this means a lot of people are simply not in a  position to bid.  They might have to sell their house first, be waiting on a settlement (which are not always guaranteed to go 100% smoothly) or have some concerns about the property – is it a leaky property?  What does this bit on the title mean?  Or they may not have their finances sorted to the degree that they know 100% that if they bid $400k for this property the bank will definitely give them the money. So this all just means the number of purchasers is limited.  So if you know this…. then you know you will may be one of only a few people in a position to actually buy on auction day.  There might be many people who could pay more at a later date, or enter into a conditional contract that allows them to get their ducks in row and then buy, but there will often be very few people interested in a particular property who can stick their hand up and buy the thing right now.  So what all that means, if you know what you are doing, you can go along to the auction and bid and basically hope to get it cheaply.  If that doesn’t work, you move onto the next one and try again.  I have personally seen properties go cheaply, and thought to myself “Bugger, I should have looked into that one, it must be worth more than that, they got a bargain!”

b) Time frame Part 2: This is quite a biggy.  As mentioned above the auction process is usually only 4 weeks long.  So what happens if you first see the property with only 10 days to go?  Do you rush around trying to decide if this is the one for you, arranging your inspections, reports etc.?  Or do you say “I can’t be bothered with this one, I’ll have to miss it.”  Or you might simply not quite yet be ready, you might still be selling your place (you might have a conditional offer that you don’t find out about for another fortnight) or still arranging finance with the bank or waiting to hear if you’re keeping your job under your company’s restructuring plans or a million other things.  But all of this feeds back into part a above.  At any particular point in time there will only be a few people in the position to buy unconditionally on the day.  And so if you are one of them, then again, you may be able to buy cheaply.

2) The agent has done your work for you: Yep the agent has spent the last 4 weeks ‘conditioning the vendor’.  So the vendor may in fact be quite desperate for a sale.

3) What if it gets passed in?: A tactic used by many seasoned buyers is to go along to an auction for a property that they’re interested in and simply not bid, hoping that there won’t be much interest, no one else will bid strongly and the property will fail to sell at auction.  You then have a totally crestfallen vendor to deal with, as per ‘Vendor Conditioning Part 2’ above.  So then you do what you want with them, like put in a low unconditional offer 2 days later and refuse to budge.  Or put in a highly conditional offer that lets you tie up the property for a fair while, while you decide if you in fact want it or not.

 

Why Auctions May Work for Vendors

As mentioned already, agents are very very good at getting vendors to sign up to auctions.  It’s their job, they are under instructions to do so from their bosses and it pays off personally for them as well.

But of course if auctions worked terribly every time, then they simply wouldn’t be able to get vendors to agree to doing them.  Sometimes they can go well:

1) Hot market etc.: Ok so sometimes, some of the stories the agents tell are true.  This might happen for a number of reasons, like the property is a particularly desirable one, the property market is running red hot with everything selling quickly and prices increasing rapidly, there are 2 bidders who really want the property – at any cost, the property is particularly valuable to someone like a neighbour or relative or perhaps a tenant (in a commercial property).  And there would be many more reasons besides.

2) Timeframe (yet again):  The auction process is quick.  So if you have a desirable property and the market is hot, you may be able to sell your property very quickly at a good price.  And because you’re selling unconditionally, bam, that’s it.  It’s gone. The agent will collect the deposit, forwarding you the balance (which you can then spend straight away) and you can move on with your life.

That’s about it.  So if you have a really nice property in a good area and there is very little else out there for people to buy, then an auction could in fact work very well.

But if you have an average property, in an average area, it’s the middle of winter and buyers are exercising restraint then you will get nailed by an auction.  Now don’t expect agents to tell you this.  They are not going to come along and say “This property is not suitable for an auction” Why not? Because, as per part 1 above, auctions are good for agents.  They work for them in so many cases, so they will apply them to just about any property.  It mightn’t work out well for the vendor or the purchasers, but who cares? They’ll get a sales and move on to the next one.

I know several lots of people who have been put through the auction ringer and come out feeling very sorry for themselves.  So think very carefully about whether it’s right for you and your property.

All the best.

 

 

 

 

Wellington City Charges for Balconies over Footpaths

Amazing, from Stuff:

 

Council plucks $100,000 out of thin air

KATIE CHAPMAN

Last updated 05:00 04/10/2012
Encroaching into council airspace

CRAIG SIMCOX/Fairfax NZ
STANDING OUT: Helene Ritchie sits on the tiled strip of her apartment which incurs a $100 annual fee for encroaching into council airspace.

Rental fees for thin air are adding more than $100,000 a year to Wellington city coffers.

Wellington apartment and commercial building owners who have balconies or building features jutting over city streets and footpaths are being charged for the right to occupy the airspace, Wellington City Council figures show.

Under council policy, airspace encroachments occur when a building has a “balcony, facade, dwelling, conservatory or eaves that encroaches into airspace above legal road”.

Records show there are 519 airspace encroachments in Wellington, of which 467 are by apartment balconies.

The council receives $109,674 a year from airspace rentals, more than half of which comes from commercial buildings with larger encroachments from features such as balconies and some shop canopies.

But apartment dwellers are also being charged for balconies, at an average of $90. Councillor Helene Ritchie is among those charged an encroachment fee and, as a result, she does not take part in council decisions on the fees.

Well this is the very issue I had to fight with Auckland Transport, and won I’m glad to say.  They wanted me to pay around $10k for some leases to be drawn up and then pay them some unknown annual rental (which would have been a lot more than $90 per annum, that’s for sure).

In other matters, I hope to have a good offer from a bank to refinance my property.  I was unlucky enough to fix at quite a high rate 2 weeks before the second Christchurch earthquake.  That 2 years comes up in January next year.

This was one of the main reasons I got the new titles issued.  The bank I’m with had told me that if I got separate titles, they would be able to put the lending over the residential titles and charge me a residential rate.  And then once I got the titles, they said, “Oh actually no, we still think it’s a commercial proposition!”  So I am going to be changing banks, to one that will give me residential rates.

Nothing’s easy with this property!  But I’m determined to do the best with it that I can!