What are the different ways to buy a property?

There are many different ways to buy property in New Zealand. At present, auctions are very common, because they usually command the best price for the vendor. 

Auction 

An auction is where multiple would-be buyers bid on a house. The winner is considered to have entered an unconditional purchase, so diligent homework is required beforehand. A Real Estate Agent should provide a copy of the sale and purchase agreement, title, and maybe the LIM report. A building inspection and evaluation may also be required, which may run up the cost if a would-be buyer continually bids at multiple auctions. 
Auctions also require that would-be buyers register their interest before bidding day and to be able to front a 10% deposit after winning the auction.  

The format for an auction is the following: Everyone interested in the property bids at the same time. The highest offer wins, as long as the seller's reserve is met. As mentioned above, bids are binding, so it is necessary that bidders are entirely certain about their decision and that they have all their finances in order.  

The bidding format of an auction tends to drive up the price of homes significantly, given the competition involved. This is especially the case with upscale homes that provide high-end features like nice views or being in a respectable neighborhood. Another perk for the seller is that they set a specific selling date, which can significantly shorten the buying period. Partially for this reason, they are more common in larger cities, such as Auckland, so that sellers are not stuck with hefty, extra mortgages.  

 

Tender

A tender is where a buyer puts in a written offer with a specified timeframe and the seller considers the offer alongside others. Conditions can be placed on the offer but may result in it becoming less appealing than others.   

No price is set in a tender. Interested buyers submit an offer in writing, and the seller picks the offer that is most agreeable (which may not always be the highest offer). Sellers can either accept the offer, in which case it becomes legally binding, or they can negotiate with the bidder. The other offers are off limits to the winning bidder, giving the seller negotiating power. 

 

Private Sale

Private sales are where the buyer negotiates directly with the seller. (Not sold through a Real Estate Agency) Once the buyer has negotiated with the seller and agreed on a purchase price, the buyer will then need to instruct their Solicitor to draw up the Sale and Purchase Agreement for the purchase. (It is imperative to discuss this contract with your Solicitor prior to signing any binding contracts).  

Once signed this is then sent to the sellers Solicitor for the seller to accept and sign.  
Private sales typically demand that the deposit is paid to the Solicitor once the contract is unconditional. 

Lenders are more likely to require a registered  valuation report to confirm that the buyer is not overpaying for the property and there is no deferred maintenance of concern. 

How much do I need for a deposit?

Securing the funds for a deposit is sometimes the hardest part of buying your first home. Deposit requirements vary from lender to lender and are based on a variety of criteria that can change over time. Although 20% of the asking price is widely considered the best amount to use for your deposit, there are lenders who will lend to those who put down as low as 10%.  

How do I make an offer?

Are you going to sign on a Sale and Purchase agreement? Congratulations, you're just one step away from owning your dream property. However, as with any legal document, there are a few things you should consider before signing the agreement. Firstly, ensure that you are completely aware of your legal obligations, and then, make sure to include some conditions (about the property you're buying) in order to satisfy the bank as well as yourself. 

So, once you've decided to make the purchase, do the following: 

1. Contact a Solicitor who's skilled in real estate deals. 

2. Get your loan preapproved by a mortgage provider (like us) to confirm you are financially strong enough to purchase the property. 

3. List the conditions of your offer. Some important conditions are Builder's Report, Finance Condition Report, the LIM (Land Information Memorandum) report, and a drug test.  

The Need for a Solicitor: 
Buying a property involves many legal procedures, so you need the help of an expert Solicitor to examine the contracts and check if the property's title is in order. The Solicitor's help is further needed while arranging the valuations and reports,    with transferring the property to your name (conveyancing) and registering your mortgage on the property title. He also helps you understand your rights and advises you on price negotiations and on the various ways you can own the property. (Such as a Trust or LTC Company)  Also, he can create a Power of Attorney and  Will, and the arrangements for your insurance and loan.  

Most banks need you to have all these things sorted out, as a condition of the mortgage.  

Finding a Solicitor: 
You may ask your friends or family to recommend a Solicitor specializing in conveyancing or property deals. You can also find a suitable Solicitor by searching online or in Yellow Pages.