Kiwibuild Problems and Buying From a Plan

According to this story from Stuff and many more in New Zealand news media, many of the Kiwibuild homes, the answer for young people, first home buyers and those with low incomes, are failing to sell.

I don’t know the circumstances as to why people aren’t buying them when there is such a housing shortage. Some people are saying that the prices against market rates are still a little on the high side, others are saying that people want something more tangible than a plan, committing to a property that has not yet been constructed.

The new Suburb of Long Bay under Development

I was surprised that Kiwibuild was building in places like Te Kauwhata, given the main growth in the area is Baby Boomers leaving Auckland, who are looking for a mortgage free lifestyle change. Many are looking at reducing debt and downsizing and while some of these people escaping the city can afford slightly higher than local market rates, that’s not their choice. It’s about freeing up capital to retire on.

Some perhaps paid too much for their country homes, given the evidence that median prices have increased, but that may be lack of experience on the part of the buyer or great Real Estate Agents getting a good deal for their vendors, but buyers are getting a bit more wise to that.

I can understand why country houses seem cheap to someone who has just sold in one of the most expensive cities in the world to live in. That house that is half the price of the one you left, seems cheap, but it has to be seen in relation to other houses in that town.

In my new eBook ‘5 Top Mistakes People Make When They are Buying a House‘ one of the things I wrote about which is intangible, but hugely important and that’s neighbors.

Many of these houses are built so close together with 3 floors and very little land. There are sections under 400 square meters, where once the house is built, you could high five your neighbour from your bedroom window! 

Now unless you really love your neighbors, that’s not necessarily something you want to be able to do. In fact it could be the last thing you want to do. You have know idea who your neighbors are going to be.

In many cases these properties are apartments or townhouses and most Kiwis haven’t experienced that kind of living. They’ve been in hotels and motels, but if they have a bad experience with noise, they know they are going home afterwards. You can’t go home from your home.

Now buying in a new subdivision isn’t anything unusual, but there are differences between buying on paper, to buying in a subdivision that you can visit and where some of the houses have already been built. You are usually buying from a group home developer with a long track record, where you get advantages from their volume purchasing power when they are building many houses on a larger piece of property that they invested in.

They can tell you something about the people who have already bought the houses being built next door or over the road. It’s not typically something people ask about, although I have often heard sales people talk about things like whether the people next door have kids, pretty important if you have kids yourself and want them to be able to have local friends to play with as well as more people looking out for their safety.

Long Bay in the image above is at the higher end of the market so you at least have an idea of the income bracket of the owner, although a lot of them are also rental investments. These are renting at $800-$1,000 a week, but many have 5-7 bedrooms so shared amongst flatmates, that’s cheap and many people without kids would jump at the chance of renting a new home with built in audio systems, fibre and modern appliances.

“I want to live next door to people like me” is a common catchphrase, yet it is remarkable (but no surprise to me) that when I did a pulse survey of people, asking if they had talked to the neighbors prior to buying their latest home, over 90% said they hadn’t. Several did say they now wished they had!

There are obviously benefits of buying a house that has yet to be built, IF you have some say in the plan. You might want more storage, you might want one of the rooms set up as an office. For me as a musician and also recording training courses, I’d want one of my rooms to be soundproofed. That’s a lot cheaper to do during the build than after. It is a benefit that you can at least to some degree customise the building plan to the way you wish to live in the house, that way you have zero renovation costs afterwards.

It’s something that always amazes me when I go back ‘home’ to Holland. You will see rows of houses that look almost identical on the outside, but inside they are all totally different. Some might be traditional and relatively unchanged from what they might have looked like 50 years ago, others are open plan and ultra modern in every way possible. Many people spend a fortune gutting the inside and starting again. 

Ironically, many Kiwis leave the renovations until they are going to sell, to make the house more attractive to a buyer. Personally I’d not spend that money and invest a little on bringing in a staging company instead who can make the existing house look a million bucks, but that’s another story. In fact I’m waiting on one to provide a guest post for me.

But back to the neighbors. if you invest everything you have and more in a new home, if you don’t get on with your neighbors once everyone has moved in, your castle could become your jail. Whether it’s loud parties, teenagers racing their cars up the street, immigrants who don’t speak English, too many kids, no kids, messy yards, or perhaps you want to have parties and BBQ’s and enjoy an open house environment. There is no right or wrong, it’s about fit.

Once you are in, it’s too late. Plus, when you go to sell, the house now does have neighbors and if they are the kind most people won’t want, you now have a major problem. You are likely to be going to resell at some stage, so best to think about that now. 

As to Kiwibuild, I hope things work out, because we need new housing stock, especially for first home buyers. I just hope that they are consulting with the market and not just throwing money at a problem and expecting that people will want what they offer.

Finally, in case you don’t have a Kindle, or don’t want to buy my new eBook, there is a way to get a free copy. Just point your mouse at www.Firsthomebuyerstraining.com and you can download a free PDF version and get some more useful information from my eList. 

Advertisements
Posted in ageing, Auckland, Buying a Home Research, Buying a House, Buying a House Mistakes, eBook, Family, Finance, First Home Buyer, home, home loan, house hunting, Mistakes Buying a House, Money, mortgage, neighborhood crime, Neighbors, Neighbours, New Zealand, New Zealand Real Estate, Paying too much for a house, property, Real Estate, real estate agent, Selling a House | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Kindle eBook Launch ‘5 Top Mistakes People Make When They Are Buying a House

Finally after a little bit of work every day for months, loads of revisions and “that’s not what I thought I said” from the haze of pain medications because of a back injury, my latest book has arrived at Amazon at the end of November 2018.

So, WHAT COULD GO WRONG when you buy  house? What mistakes do people make? How can you reduce the risks?

Buying a house starts with a sense of excitement, awe, hope and is probably the biggest investment you are going to make in your life.

In the good old days, the bank used to share the risk with you but since the GFC, most banks have become risk averse and loans tend to be structured so that if things go wrong and you can’t keep up the payment, THEY WON’T BE OUT OF POCKET. Why, because they were, banks lost billions on real estate loans, in some cases people just walked out of their homes.

You’re probably aware that it still happens. Do you find it interesting that there are websites dedicated to helping people get great deals through foreclosure?

Why do you buy a house? For us, it was about security, pretty much the only thing they can’t take from you (as long as you can make the payments). A safe place for our family and probably the only asset you can own that will increase in value.

Did I say increase in value? Well in the long run that is true. In many countries, if you go back in history you will be able to see that over say a hundred years, properties double in value roughly every 10 years. But what happens in between?

Real Estate markets fluctuate dramatically in between those long term cycles. Whether you are in the USA, Canada, UK, Australia or New Zealand, property is being impacted by all sorts of things that are out of our control. Politics, lending rules, climate change, urban sprawl, Baby Boomers leaving the cities, migrants from other countries, property flippers and more. 

What hasn’t changed fundamentally?

  • Most houses are sold on behalf of the vendor by a Real Estate Agent
  • Real Estate Agents are highly trained in how to sell
  • Home buyers typically have little or no training on how to buy
  • Banks want to lend you money, but they don’t want any risk
  • You need to borrow money and without training are carrying all the risk
  • Everyone around you has an ‘opinion’ and if you dig in, many people offering opinions have made similar mistakes and possibly won’t get it right next time either. 

I am a big fan of Dan Ariely, a famous writer who says that humans are predictably irrational. I agree with him. He talks about financial decision making in this TED video.

When you buy furniture or a car, how much of the decision is rational? 

Dan suggests that we have an illusion of making a decision, but most of the decisions are made for us by external influences. Making decisions, like buying a house, are complex, so complex that we don’t know what to do

In this eBook I provide one ‘SECRET’ that alone is worth tens of thousands dollars to you. I say it’s a secret because almost no one uses this, or even thinks about it probably until long after they have bought a house. Chances are, if you have bought 2 or 3 houses, you still haven’t used it. It took me four.

You would probably rationalise and say “I had too much on my mind, so much information coming at me, Real Estate Agents pushing FOMO at me, the bank, the mortgage broker, the lawyer, my partner, his or her family…..”

We don’t know what to do and in the end, we just DO SOMETHING and hope we got it right. Isn’t that interesting? Think about it. The most expensive investment we will make in our lives, the greatest risk we make in our lives and we end up so sick and tired of the process, that it almost becomes like throwing a dart on a map and seeing where it lands!

But once you pick up on it, it is so obvious. Why don’t you do it? Because you haven’t read this book yet. 

But wait there’s more! The book covers 4 more mistakes and provides lots of answers to help you make informed decisions before you even start looking at specific houses. 

What’s your time worth? This short book took several months of my time. I just wish someone had written it I bought my first home, or my second, my third or my current one. It’s ironic that I’m writing this from my fourth home. What’s changed?

I had time to think about it, to read, watch videos, talk to people and do research. You don’t usually have that time.

This book won’t take you long to read. The things I tell you to do are easy. Maybe that’s why you didn’t think of them. Sometimes the answer stares you in the face as you run headlong into…………………………..

Posted in Auckland, Australia, Australia Real Estate, Banks, Buying a Home Research, Buying a House, Buying a House Mistakes, Canada, Canada Real Estate, children, climate change, eBook, Family, First Home Buyer, GFC, good books, home, house hunting, human logic, Lifestyle, Location Based Education, Location Based Servces, Market Research, Mistakes Buying a House, New Zealand, New Zealand Real Estate, People, Politics, property, Real Estate, real estate agent, security, Selling a House, UK Real Estate, United Kingdom, US Real Estate | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 1 Comment

Is Google Maps Competing with Waze for Real Time Traffic?

There has been a lot of talk lately about the difference between Google Maps and Waze for optimal commuting. Opinions suggest that Google is better when it comes to public transport while Waze is the Driver’s app.

This article from CNBC is a great primer on how to set up Waze on your phone, and also includes a video about towns like Leonia, which I have blogged about before where locals are sick and tired of Google Maps routing people through residential streets as a ‘rat run’.

This is effectively where the arterial road or motorway is heavily congested, but motorists can gain anything from a few car spaces to several minutes reduction in their commute by dissecting the route through minor residential streets.

In some Californian towns they are combatting this by requiring that those roads are only available for use by residents (identified by authority stickers in their cars) and service providers. Others can be ticketed and fined for using those roads and this is periodically enforced by the local police department.

Rat Runners makr traffic jams worse
Rat Run

The challenge that towns like Leonia have is that unless the app that people use, like Google Maps, know about the restrictions, they will keep recommending that drivers take the rat runs, which is how many people get introduced to them in the first place. 

The argument in the article from CNBC is that you would use Google Maps for commute times via public transport because it has data on routes and timetables but Waze is better for driving because commuters (safety recommendation recommends that the data is entered legally by the passenger in the car) enter information about crashes and traffic jams themselves and others validate it as they drive. 

The story goes on to say that in the area the writer lives in, there are 50,000 Waze users. That sounds great and it may be correct in the US, although research suggests that most commuters are still single occupancy cars, so the majority of those users would not be entering data and anecdotally many of those who do, use it to report speed traps and cameras.

I don’t know about you but speeding isn’t an option anywhere near me during rush hour, so knowing where a speed camera is has no relevance to my route or how I drive it. I also know that where I live in New Zealand very few people use Waze in comparison to the US.

So the story goes that Google (who do display traffic congestion based on Android and Google Maps users) are looking at bringing in similar traffic information curation and other features  to its core product, which could potentially render Waze obsolete as a separate company. 

There have been interesting quotes from Google Vice President Brian McClendon including:


“We’ve all been there: stuck in traffic, frustrated that you chose the wrong route on the drive to work.


“But imagine if you could see real-time traffic updates from friends and fellow travellers ahead of you, calling out ‘fender bender, totally stuck in left lane!’ and showing faster routes that others are taking.


“The Waze product development team will remain in Israel and operate separately for now.


“We’re excited about the prospect of enhancing Google Maps with some of the traffic update features provided by Waze and enhancing Waze with Google’s search capabilities.”

Express UK

This is promising because Google knows all about us (because we allow them access through our use of freemium Google devices and applications and it would make life so much easier for users who could run fewer apps to get the same outcome. The average user doesn’t even know about Waze IMHO or how to use it effectively and legally if they do.

Alphabet owns both companies, so merging or sharing data in near real tie would make good sense. 

I’ve just written a new eBook. It is now available on Amazon for a modest $61. But as one of my valued readers, you can get it for free here. That’s good value for money isn’t it? Don’t tell anyone.

Posted in accidents, Android, Apps, Auckland, Buses, Car Navigation, Uncategorized | Tagged , , , , , , , , , , , , | Leave a comment

How Many Houses Should a Buyer See?

IMG_5540I curate quite a few articles as well as writing my own blogs and lately I have been getting frustrated with the number of publications, today that includes The Mirror and the Sioux City Journal, that either hide behind paywalls, or in today’s cases, want you to answer an 8-10 question survey in order to able to view an article. I mean, why would an advertiser in Iowa want information about a reader in New Zealand. Yes I have pets and I want a vacuum cleaner with a HEPA filter that is good at picking up dog hair, but I’m not going to Plymouth to buy one.

Both of them had good articles about buying a house and I would have shared them with you, but I know you would not thank me for putting you through those surveys, or in other cases, giving you Cookie based alerts, limiting you to a very small number of articles in a month before having to either subscribe or give them your email address, so they can send you messages from their sponsors who are probably also in another part of the world.

So in this case, I’m not going to send you to those publications when they come up in my search results, like this one about how many houses a buyer should view. I’ll create my own content because I don’t need their article, even though it might have been a good one.

The short answer to the question is as few as possible. I’ll refer you to my last blog here which was a review of the Auckland, New Zealand Realtor Barfoot & Thompson app and a discussion on how to do your homework before you go looking. You will find more of my blogs on the topic here.

If you prepare really well, know why you are buying, what you can afford and what you need in a home, I think you can probably find the right property by looking at maybe 7-8 homes in total. The more you view and the less prepared you are, the more confused and frustrated you will get.

I would also recommend attending a couple of auctions (at least one where you are not interested in any of the houses) just so you can see how it all works, without getting stressed about someone else bidding for the house you like.

3d (2)I almost forgot. I’ve just written a new eBook. It will be on Amazon in a few weeks time for around US$38. But as one of my valued readers, you can get it for free here. That’s good value for money isn’t it? Don’t tell anyone.

Posted in Blog, Blogging, Buying a Home Research, Buying a House, Buying a House Mistakes, Communications, eBook, First Home Buyer, house hunting, Mistakes Buying a House, New Zealand, New Zealand Real Estate, News, UK, UK Real Estate, United Kingdom, US Real Estate | Tagged , , , , , , , , , , , , , | 1 Comment

House Hunting in Auckland with the Barfoot and Thompson Real Estate App

It’s been 5 years since I last looked at the Barfoot & Thompson Real Estate App. I did a brief review of it back in 2013. That version was a finalist in the Designers Institute Best Designers Award and they continue to impress.

Now I must say that I tried the new app on the same iPad 2 that I tried the original app on and it kept crashing. I don’t have a problem with that because you can’t keep supporting old devices much as you would like to. So if you want to use it on a mobile device, I suspect it will need to be a little more current, than my tablet which otherwise continues to serve me well.

3d (2)In many of my blogs and in my new free eBook 5 Top Mistakes, I talk about things you can and should do from the comfort of your home before you start looking at properties.

The best way to do this is using an app or website and Barfoot did not disappoint when it came to features.

They have mobile app versions for all of the current devices and they take advantage of functionality available. For example, as well as having panorama views and videos of properties, they even have Virtual Reality tools. If you are a geek like me and have  lots of gadgets, you will probably at some stage have bought some VR or Virtual Reality Glasses. Virtual Reality Glasses

VR Box GlassesI’m not a gamer so once I had watched a movie, moved through an aquarium, sampled a game and looked at some other scenery, I put them away and pretty much forgot about them until this morning.

What do they do? You slide your phone into them and strap the glasses on and it’s like a modern version of the old View-Master, which you must remember from your childhood days. I had one with Apollo. NASA 3D photos and my kids had them too. They offered amazingly real looking 3D views of photos.

Barfoot & Thompson VRWhat the Barfoot Mobile app does is let you look at a 3D walkthrough of rooms in some properties (in some cases inside and outside) by turning your head around. As you can see if you look closely at these images to the left, the photos are offset and with the glasses on, you can see the room as if you are really there. What’s more, you can turn your head around, up and down and it’s just like being there. You can totally get a feel for what the house looks like without leaving the comfort of your home and it looks just as amazing as the original View-Master did. It’s worth checking it out just for that experience. Watch out for vertigo as your brain adjusts to seeing things that aren’t really there.

Now if you don’t have one of these headsets, you can go to your local Consumer Electronics store and buy one for probably between $100 and $200, or you can go online like I did and get the same glasses I have as in the pictures above, shipped to your door for around US$16 by following this link. No kidding, it works great and unless you are a serious gamer, this is all you need.

Anyway, back to the app. The Barfoot & Thompson app is responsive, that means that the features are optimised for the device you use. It knows if you are on an iPhone, an Android, a tablet or a PC and it all works nicely based on their capabilities.

BUT, if you have access to a PC or laptop, that’s where you will get the best experience, simply because it has a bigger screen and most of us can get around and interact better with the computer. I’ll explain a few of the features, but you really need to try it for yourself.

First of all you can look for properties by all the attributes you would expect, suburb, price, Realtor, number of bedrooms, bathrooms, car parks and so on. No need to discuss those, any good RE site or app will have those.

But then there are some cool features. I’m going to share some images, but for the sake of privacy, I won’t show the location of the properties.

Something I noted back in 2013 was that not all of the features were available for each property and at the time it seemed in some cases that it was about the professionalism of the RE Agent, because some Agents had all the features in all of their listings and some had a few or none. It may also have been because it was still pretty new.

Barfoot & Thompson web site

This time when I looked at features I found that whilst some Agents had pretty much all the features on their listing, others didn’t and it didn’t have anything to do with the value of the property because there were multi-million dollar houses that didn’t have a lot of the features. I suspect that customers have to pay extra for some of the features to be included in their listing. I also suspect that some people might be cagey about allowing any random person to view the inside of their house for sale. After all it would be a great way for a burglar to find their way around.

floor planSome of these features are very cool. For example with the floor plan there is a basic architectural drawing, but also a 3D image showing the plan with virtual furnishings.

Another fantastic feature, which I have seen in other tools is the ability to style the property. For example you can change the colour of the floor, countertops, walls etc and visualise it the way you would want to see it. You might (like us in our current house) not like the colours the previous owner chose. Now you can instantly view it the way you might like it.

Style

change styleThis is clearly an optional feature that costs the vendor more, so not every house listed includes it, but where you can do it, as shown above, it can totally change your perspective. By default you can save, print and share these views to get other people’s opinions.

Another great feature is that in the floor plan (but not the 3D view which I thought was a shame), you can populate the house with furniture. You can choose from 517 items, from a rocking horse or a bookshelf, to the bed and place them into the floor plan of the house.

bedYou can see if the California King bed set will fit in the master bedroom, change the dimensions, move furniture, turn it around. There is a measuring tool so that you can see if you can reuse the custom bookshelf or if it is too big. You can add walls and even create your own text boxes and enter information into them to remind you what you were thinking at the time.

Of course it also has all the standard information like being able to see it on a Google Map, including satellite view, check the all important school zones and much more.

As per the previous version, you can in many cases also access documents like the LIM Report (In New Zealand this is the Land Information Memorandum, which includes a lot of really important information such as whether it is in a potential flood plain, risk of erosion (some of our coastal beach cliff properties are losing the fight against nature) as well as things like planning consents. In my FREE eBook I talk about things like alterations that a previous owner might have made without the required council consents, which is common all over the world. Whether you choose to purchase the property knowing they have made unapproved changes (that could impact on insurance claims or require additional work to be done, or even have council tell you to remove the modifications, you need to know about them. The reports have different names in different countries, and in NZ it is a LIM.

There are often lots of other reports available, like the Property Title which can be very revealing because it will tell you information like how many owners there have been and even what they paid for the property.

With these reports, if you want to view them, you have to agree that your email address will be shared with the Real Estate Agent. I think that’s fair and reasonable, again there is the issue of privacy and the Agent and Vendor have made the effort to make those documents available. You would probably be looking at them because you are interested and aty the very least, it allows them to see and tell the vendor that there is interest, even if you take it no further.

house docsWhen you are looking at a property and genuinely interested, the more information you can find beforehand, the easier it is to compile the list of properties you will want to view.

For both the vendor and the buyer, access to these documents can lead to a quicker sale and reduce the often time consuming legwork. I suspect that there are various reasons why some documents are or aren’t included, but I do believe there is an element of the commitment to professionalism by the Agent representing the property, because you will find that some Agents consistently have lots of information for the buyer, while others consistently have very little. I know which Agents I would prefer to do business with. Again something I discuss in my FREE eBook.

I have just about written a book about this app and I have to say that I am as impressed as I expected to be, given the previous history, whilst also continuing to recognise that the delivery is only as good as the investments the vendors and the individual Real Estate Agents are prepared to make.

For my readers outside of the region covered by Barfoot & Thompson, in other cities or other countries, there will be similar apps and websites available to you that you can easily find via Google. Features vary and many are multi-agency and have a lot more information as I outlined in my previous book Buying a House – Using Real Estate Apps, Maps and Location Based Services which is available on Amazon. I am developing a course which amongst other things will feature information available in New Zealand, Australia, USA, Canada and the UK and the best place to keep track of that is via this link, or by subscribing to this blog.

The amount of information available is mind boggling and the challenge is to know where to start. There are things like local crime, your commute, public transport, amenities, climate change risk and much more.

I hope you found this blog interesting and are getting the idea that you can and should do a lot of research before you go and talk to any Agents. Using tools like this app, you can get a better idea of what you want and can therefore better brief an Agent, or potentially you can hone in on specific properties of interest and not waste a lot of time looking at properties you don’t want to see or buy.

I welcome your feedback and comments and just want to finish by saying that I have no affiliation with Barfoot & Thompson. They have no idea that I was writing this review and the opinions expressed are entirely my own.

 

Posted in Auckland, Australia, Australia Real Estate, burglary, Buying a Home Research, Buying a House, Buying a House Mistakes, Canada, Canada Real Estate, census, climate change, commuting, Crime, Crime Prevention, Family, First Home Buyer, Flood, Future Technology, Futurist, Gadgets, good books, Google, Google Glasses, Google maps, Google Mobile App, Google Satellite View, Google Street View, home, Innovation, Internet Privacy, Lifestyle, Location Based Services, Map apps, mapping buildings, Maps, Market Research, Mobile Apps, mobile friendly, New Zealand, New Zealand Maps, New Zealand Real Estate, People, property, Public Transport, Selling a House, SmartPhone, Smartphones, Technology, telecommunications, theft, top apps, track crime, traffic congestion, Traffic Information, UK, United Kingdom, USA | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 1 Comment

Buying a Family House – In a Child Friendly Area

One of the reasons we buy a house is because we have or are planning to have children. We focus a lot on the house and property itself, but if you think back to your own childhood, it was very much about the friends you made. It was also about the freedom to play on the street, have fun and be safe. Many of us have life long friends because we grew up together, played together and perhaps went to school together.

How do you find places like that? One place I’d look would be a cul-de-sac. A dead-end street. Somewhere that doesn’t have a lot of traffic. The last thing you want is a busy street where you are afraid to let your kids go past the gate unsupervised.

IMG_5685Going for a walk in the street where the house you are interested in is a good idea.

If there are kids, you might see a group playing and get an idea of their age group. You’ll see swings, trampolines and maybe bikes parked up by the footpath.

That will tell you that not only are there kids around, but their parents feel safe having them play on or near the road. In my area I often see parents working in the garage, or looking out from the kitchen. That means they are not only looking out for their kids, but will be aware if there is anything to be concerned about for other kids.

IMG_5686If you see a group of kids playing on the street, you’ll be able to gauge the age group as well as see how they play and interact together.

With all that activity you should also have the confidence that most people driving on the street will be aware that there may be kids around, so will drive with more caution.

Streetview KidsIf it’s a long way away, you might find that a virtual along the street with Google Street View will give you an idea of whether it is a child friendly area.

You can look pretty much at any street in the world from the comfort of your home, like this one in Antioch, California. Looks like a great sport for a family to me….

Posted in Auckland, Australia Real Estate, bikes, Buying a Home Research, Buying a House, Buying a House Mistakes, Canada Real Estate, driver behavior, drivers, Family, First Home Buyer, Google, Google maps, Google Satellite View, Google Street View, home, home loan, house hunting, Lifestyle, location based apps, Location Based Services, Map data, Maps, Mistakes Buying a House, Money, mortgage, Neighbors, Neighbours, New Zealand, New Zealand Real Estate, People, Real Estate, risk, SoLoMo, The Location Guru, traffic, UK, UK Real Estate, Urban design, US Real Estate | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Buying a House? How Good is Your Credit Rating and How Do You Find Out?

Wah PedalWhen I was a teenager and still at school I bought a Cry Baby Wah Pedal for my guitar from a department store. It was probably a couple of hundred dollars and I was earning about $30 a week giving guitar lessons after school, so I had to pay for it on hire purchase. What’s a Wah Pedal? If you really don’t know, check out this demo of the unit I bought on YouTube and think Jimi Hendrix.

Unfortunately it was faulty, and I had to get on the bus, go into the city and take it back under warranty. They told me they didn’t have any replacements in stock and they would have to send it away.

To cut a long story short, something went wrong with their paperwork, I never got a replacement pedal or a repaired pedal. I went in a couple of times (a 45-minute bus ride each way) but couldn’t get any sense out of them and in the end, I gave up on it, didn’t pay for it, because I didn’t have it and totally forgot about it, other than never going back to that chain again.

Little did I know that therefore I got a bad mark against my credit rating and next time I went to buy something on Hire Purchase several years later, my loan request was turned down. It took quite a while to work out what it was about, and you can imagine how frustrated I was.

It wasn’t my fault, it was their mistake. I lost my deposit, didn’t have the pedal and got a bad mark against my credit history and couldn’t buy the Dobro guitar I wanted on finance.

I had done nothing wrong, but I was now seen as a credit risk.

There are several scenarios where people may have to or want to check your credit rating, it may be for a purchase, a loan, it may be when you are shortlisted for a job, it could be when you are renting or buying a house.

In each country there are ways to find out what your credit rating is. One thing you need to know is that each time someone requests a rating on you it is registered and becomes a statistic, even if your rating is good. People checking can see how often other people have checked your rating.

What you don’t want is any nasty surprises when it counts. A simple error became a major annoyance to me but could be much worse if its something like a car that you need to be able to get a job, or you are about to rent your first home.

Maybe you have never even had credit. I’ve always maintained it’s good if you can get interest free finance, to do so occasionally even if you don’t need it and then pay it off, always making the payments before the due date. You could even put the money into a savings account, collect interest and make direct payments automatically, so you don’t have to think about it.

Where do you go to get a FREE Credit Check?

In New Zealand, there are three agencies which are required by law to provide you with your credit rating for free. They are Illion, Centrix and Equifax. All these sites have information about how to get your report and other useful information about finance, budgets and loans.

In Australia, you can also go to Equifax, CreditSmart, or GetCreditScore.com. Again these are all free.

If you are in the UK, you can go to ClearScore, Equifax, or TotallyMoney, also all free sites.

Free reports are also available for Canada at Equifax, or TransUnion.

Finally in the USA, you can go to Experian, credit karma, or Credit Sesame.

This list isn’t exclusive, there are more. I just wanted to give you some options.

These sites all have useful tips about borrowing money, and tools like calculators to help you get an idea on what you can afford. You will find more information about buying a house on my blog at www.SoLoMoConsulting.com. This includes other things you need to think about. The mortgage repayments are just one of the costs you need to consider.

What about a Credit Score and What Is It?

There is your credit rating and an internationally recognized formula called your Credit Score. This is a 3-digit number that is based on analysis of your credit history. Lenders will use this to predict whether you will be able to repay your loan on time or not. Credit Scores are used by many organizations who may be taking a ‘risk’ on providing you with money or services. It includes everything from credit card companies, banks, insurance companies, utility and telecommunications companies and in some cases as I mentioned above, potential employers.

So What?

Even if you aren’t planning to buy a house in the next year or two, you want to know that when you do go to a mortgage lender that your financial ‘house’ is in order. You need to know that there aren’t any misunderstandings or little problems that can trip you up just when you have found that perfect house. Get it sorted when you don’t need it. If there is anything inaccurate in your information, you have the right to get it set straight.

I do also think it is a good idea to use credit occasionally even if you don’t need it. If you have never had any debt, how can anyone know whether you can pay it back or not? Don’t think about paying your electricity or gas as giving you a good record. They know you must pay those bills, so its not going to help much, but it could go against you if you haven’t been able to pay them on time.

If you’re score needs improving, do it now, not when you want a loan

3d (2)I’ve just published a new eBook on Amazon.  You can get it for your Kindle for a modest $61. But as one of my valued readers, you can get it for free here. That’s good value for money isn’t it? Don’t tell anyone.

Posted in Australia, Australia Real Estate, Banks, Buying a Home Research, Buying a House, Buying a House Mistakes, Canada, Canada Real Estate, Finance, First Home Buyer, home, home loan, house hunting, insurance, insurance risk, Mistakes Buying a House, Money, mortgage, Mortgage Calculator, New Zealand Real Estate, property, Real Estate, Retail, SoLoMo, UK Real Estate, US Real Estate | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment