The Mortgage Supply Company

Buying A Property


Buying a property

There are a number of ways to buy a property in New Zealand. Each one is different and requires a careful and considered approach from the buyer.

Buying via tender

A tender is essentially a blind auction, where you make an offer by a certain date – and so does everyone else who is interested in the property. After that date, all the offers are opened by the seller, and they make their decision. Usually the house won’t be advertised with an asking price, so you don’t know how much the seller is looking for. You also won’t know how many other people are interested in the property. You can attach conditions to your offer but that will make the offer less attractive to the seller and so less likely to be accepted.

If you are interested in tendering for a property, ask the seller’s agent for the tender documents. These usually include:

  • A partially filled in sale and purchase agreement
  • A copy of the certificate of title
  • Terms and conditions of sale by tender
  • Instructions to use when filling out the tender
  • Any other documents relevant to the property

Never assume you have all the information about a house in the tender documents – you will have to do your own checks.

After the tender date has passed the seller can choose to accept one offer, negotiate with one or more potential buyers, or reject all tenders.

Buying via private treaty

This is a lot like buying via tender, but with more control and flexibility in favour of the buyer. A house for sale by private treaty is usually advertised with a price and you have far more leeway to put conditions into the sale and purchase agreement, so you can spend less money on a house you may not end up buying.

Common conditions are:

  • Subject to finance
  • Subject to building inspection
  • Subject to LIM report
  • Subject to solicitor’s approval

You will usually negotiate back-and-forth with the seller over price and conditions. This means you are able to make a number of offers without being rushed into signing anything.

Buying at auction

This involves bidding against other parties, and the competition can get hot! Auctions are popular with sellers, because they tend to get the best price.

Because you see the other potential buyers face-to-face you can gauge how many people are interested in the property. You can also make higher bids than the competition, which a private treaty or tender doesn’t usually give you the chance to do.

However, a winning bid is considered an unconditional offer on the property, so you need to make sure you have everything in order before the auction day. This can mean spending money on things like a building inspection and valuation – meaning going to multiple auctions can become expensive, though it’s important not to let that factor into your bidding. Auctions can be fairly intense, so be wary of getting caught up in the heat of the moment, as you could end up bidding more than you can afford.

The sale and purchase agreement

This is a contract between you and the seller which agrees on the sale of the house. It is usually put together by the seller’s agent. The agreement lays out a description of the house and the terms of sale – including the price, the amount of the deposit, and any other conditions. It also includes important dates such as the finance date and the settlement date – which is the date you actually take ownership of the house.

It is important to get your lawyer to look over the sale and purchase agreement, as once you go unconditional you’re committed to purchasing the property.

Paying the deposit

You usually pay the deposit on the day the purchase goes unconditional, but you legally have three working days from when you receive the papers to pay it.

The deposit for a sale by auction is set at 10%, but you can often negotiate it down with the seller’s agent before the auction.

For any other type of sale, the deposit is completely negotiable and is set in the sale and purchase agreement.

Using a lawyer

A lawyer is a necessary part of the home-buying process. They will look over the title of the house, inspect the sale and purchase agreement, check that you’re ready to go unconditional, run through mortgage documents with you, and settle the funds.

It is worth spending some money on the lawyer when you’re a new buyer, as they will be able to make sure all the Is are dotted and Ts are crossed.

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