You’ve found it. The perfect first home. The kitchen’s exactly what you imagined. The garden’s just right. You can already picture yourself living there.
Stop.
I’ve seen this happen many times. Buyers fall head over heels for a property, make an offer in a rush, and within weeks discover they’ve overpaid or moved into a house with serious problems they never knew existed. Unconsented work. Insurance issues. Repair bills that dwarf their entire deposit.
The thing is, the excitement of buying your first home is real, but so are the consequences of moving too fast. Here’s what you need to do before you let yourself fall in love with any property.
Your step-by-step checklist for making an offer:
- Find out what you can borrow
- Research and view properties without commitment
- Understand the value in your price bracket
- Arrange proper conditions on your offer
- Get a building inspection
- Check for consented work
- Verify insurance availability
- Allow enough time for due diligence
Step 1: Find out what you can borrow
I can’t make this point enough. This comes first. Not second, not after you’ve found a house you like. First.
Basically, there’s no point looking at properties if you don’t know whether you can afford them. You might be dreaming about a $1,000,000 house when actually a $1.2 million property is within reach. Or you might be looking at places you’ll never get finance for.
Don’t underestimate the value of working with a mortgage broker to understand your true borrowing capacity. The thing is, a broker can navigate between different banks to find the best option for your circumstances, and they’ll help you avoid common pitfalls like agreeing to conditions that are too short or accepting insufficient lending. If you’re self-employed, this is especially important. Your invoicing might show $200,000, but once expenses come out, your actual income for lending purposes could be far less.
Something I always tell people: Just because you can borrow a certain amount doesn’t mean you should. Understand what those repayments will look like and what level of pressure you’ll be under.
Step 2: Research without falling in love
This is the next thing. It may seem obvious but once you know your budget, start looking. Visit open homes. Browse the property websites. But don’t fall in love yet.
When we were looking for a home, (admittedly before websites such as TradeMe and OneRoof), we viewed around 40 properties, and that gave us a really good understanding of value. Most first home buyers need to view a similar number before they truly understand what’s worth the asking price. Even though it’s a bit easier these days to browse through the websites, in my experience nothing beats an open home, because you need to see a few places before you can spot the difference between a well-maintained home and one that’ll need serious work.
Yes, I’ll admit, occasionally you’ll walk into a property and just know it’s right. But if it’s right for you, it’s probably right for someone else too. And that means competition.
Step 3: Make an offer with the right conditions
This is where I’ve seen many first home buyers stumble. They’re so eager to secure the property that they agree to whatever the real estate agent suggests.
Remember, the agent wants the sale to close quickly. They’ll encourage shorter timeframes on conditions if they can. That’s not necessarily wrong, but it might not be in your best interest.
Basically, your lawyer is the person to rely on for truly independent advice about conditions. Not just the agent. I generally recommend 10 to 15 working days for all conditions, and this gives the bank time to do valuations, and it gives you time to think and investigate properly.
If you need a valuation, that’s a one-week process at minimum. So don’t agree to a five-day finance clause. It’s as simple as that.
Step 4: Check for consented work
Here’s where falling in love gets dangerous. You’re emotionally attached, the clock’s ticking, and suddenly the building inspector finds something.
The thing is, unconsented work is the main issue. New Zealanders love DIY, and they often crack on without asking the council for permission. Some unconsented work doesn’t matter, but lots of it looks harmless when actually it’s really quite serious.
The dangerous stuff involves plumbing and electrical work. Has someone added a downstairs bathroom without proper consents? That’s bad. If sewerage work isn’t properly consented, the house might not be insured.
In my experience, the bank might refuse to lend you the money if these issues aren’t remediated. Even if they do agree to lend, they may offer less than you need. Always discuss any inspection findings with your mortgage broker and lawyer before proceeding.
Step 5: Verify insurance is available
You will have seen in the news recently that since the floods three years ago, insurance has become trickier. If you can’t insure a house, the bank won’t give you the money for it. Full stop.
But, remember, it’s not just about whether you can get insurance. It’s about the terms and conditions attached to that insurance. If the insurance company is willing to cover the property but with a $50,000 excess for flooding, the bank might still decline. They don’t like houses with severe insurance restrictions.
I advise all my clients to check this early. Don’t assume insurance will be straightforward just because the property looks fine.
Head first, then heart.
I’ve seen it so many times – when you walk into that perfect home, every instinct tells you to grab it before someone else does. But first home buyers who rush in without doing their homework end up with unexpected costs and sometimes properties they can’t even get finance for.
The key point is that right now is really a good moment for first-time buyers. Prices have fallen from their post-Covid peak. Interest rates have come down. There’s plenty of stock to choose from. Banks can lend more low-deposit money than they could a year ago.
But the truth of the matter is that doesn’t mean you should skip the due diligence.
Basically, go through the checklist. Understand your borrowing capacity. View enough properties to know value. Put proper conditions on your offer. Get the inspection. Check the consents. Verify insurance.
Then, and only then, can you safely fall in love.
Contact me to have a chat about your situation, and I’ll give you an honest appraisal of what you can borrow and how to make the most of this opportunity.