No-one wants to buy a money pit. Yet it happens and it can be costly financially and psychologically.
Even those who intentionally buy a home that requires work usually need to double their budget for the work, says property lawyer Nick Kearney, of Schnauer and Co.
One of the problems when it comes to buying money pits is that buyers often fool themselves into thinking it will be a cheap fix. This often happens when the human tendency towards confirmation bias takes over. This is where the buyer has come to a conclusion about the property and creates a narrative with the “facts” to justify the conclusion.
Another money pit for buyers, says Kearney is leasehold properties. Buyers are often not aware of how much the ground rent may rise by following an introductory period.
In the case of some buildings in Auckland, that has been five or 10 times in one go. Buyers need to read and understand the review clause of their lease.
Read more here: http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=11737138
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