Buying a property in New Zealand - Buying at Auction - Buying at Tender
Buying a property in New Zealand
Buying a residential home in New Zealand is normally a relatively easy exercise, unless you wish to buy a farm or a property over a certain land size, value, is next to or adjoins lakes, rivers, sea coast or historical, protected or special interest land. The New Zealand Government and The Overseas Investment Act will need to approve all such purchases.
In New Zealand the majority of residential homes and commercial buildings are brought and sold through licensed Real Estate Companies by licensed Real Estate property consultants. Most homes in New Zealand are sold in four main ways. With a price attached, by Negotiation, by Auction or by Tender. How to buy at Auction and Tender, is discussed on further pages in this section.
The contract or sale and purchase agreement documents have been approved by the New Zealand Law Society and the Real Estate Institute of New Zealand and the same documents are used throughout the country.
All real estate property consultants in New Zealand have to pass the Real Estate Salesperson Certificate, many also proceed to University to complete The National Certificate, National Diploma and a Business Degree in real estate. They all have to be licensed by The New Zealand Real Estate Licensing Board. They are trained to help you through the entire buying process, and they have a lot of valuable information that will help and be very beneficial to you. Harcourts of Golden Bay Property Consultants are all very highly trained people and have knowledge in all aspects of Real Estate practice.
The Real Estate agency will do all the negotiations between the home owner (the vendor) and the buyer. And generally a solicitor comes into the process at the end of the negotiations after the contracts have been signed or if the client wishes for legal advice prior to commencing or during the buying process.
There are two main types of Real Estate contracts that people enter into when buying their new home,
- A conditional contract which is subject to certain conditions. An example of conditions are: condition on selling a property, condition on arranging Finance, condition on obtaining a satisfactory specialists report on the home.
- An unconditional contract. This is a contract which is a cash offer and has no conditions attached.
Once contracts have been agreed to by both parties then a 10% deposit of the price agreed will be payable by the buyer and held in the Real Estate Company’s trust account. Once the contracts have been declared unconditional, the deposit money can be disbursed to the vendor after statutory 10 working days have passed.
A general time frame from a signed unconditional contract to the day you move into your new home is around six weeks. However the settlement or possession date can also be negotiated to a longer or shorter period. Once you have paid for the property your solicitor will transfer your name onto the property title.
How can we buy this home at Auction?
Some answers to commonly asked questions about Auctions
Q What is a Real Estate Auction?
A Auction is a form of marketing and selling a property through intensive advertising media designed to capture the maximum attention of buyers within a set time frame. The process is a means of purchasing/selling Real Estate through public negotiations to determine the true market value of the property at that time.
Q What is the Reserve Price?
A The vendor usually sets the reserve price prior to the Auction. The reserve is generally established as a result of feedback during the marketing period from interested parties. The reserve is the minimum figure that the auctioneer is instructed to sell the property for.
Q How do we bid at the Auction?
A The auctioneer will ask you for an opening bid and will then nominate the increments by which the bidding can be raised.
Simply attract the attention of the auctioneer by:
Raising your hand
Calling out your bid
Nodding your head when you catch the Auctioneer's eye
If you are the successful bidder, you will be asked to pay the deposit and sign the Auction contract.
Q Can I buy before Auction Day?
A Yes. In most cases you can. You simply submit your offer in the normal way on the Auction Sale and Purchase Agreement. If the offer is acceptable to the vendor, all other registered buyers are given the opportunity to submit their offers if they wish to. The vendor can then decide which offer suits them best. The amount you have offered will not be disclosed to other parties. The auction can also be brought forward.
Q Can I bid when I have to get finance?
A Because you must be in a position to bid on a cash unconditional basis at the Auction, you can organise through your bank or mortgage broker pre-approval to bid up to a price that you are prepared to pay.
Q Can I bid when I have a property to sell?
A There are two options. If you are in a sound financial position you may arrange a bridging loan to cover any delay in settling your property. The other option is to ask the vendor for a longer settlement date, giving you time to sell and to settle your property. You must arrange this before the Auction.
Q What price do I have to pay to buy the property?
A This is the price YOU are prepared to pay, and the vendor will accept, bearing in mind that other buyers may have different ideas regarding the value of the property. It is sometimes prudent to fix a figure you would like to secure the property for, but also a higher amount just in case. Remember, if it sells to another buyer at Auction you won’t have another opportunity.
Q What if the property doesn’t sell?
A If the reserve price is not reached, the property is passed onto the highest bidder. The highest bidder is then offered the first right to purchase the property immediately after the Auction at the Vendor’s reserve price. If a sale is not completed immediately after the auction then the property will be offered for sale to all other interested parties.
Q What contract do we sign and what are the standard conditions?
A The contract is the standard Auction contract approved by the Law Society of New Zealand and the Real Estate Institute. This contract and information is available from the salesperson during the marketing of the property and on Auction day. It is important that you read and understand this contract prior to the Auction. If you are the successful purchaser you are required to sign this contract and pay 10% of the purchase price paid as deposit; either by bank cheque or personal cheque. Settlement date is often flexible. You should discuss this with the salesperson prior to the Auction commencing.
Your Harcourts Property Consultant is specially trained to assist you if you have any questions or if you require further information about Auctions.
How can we buy this home at Tender?
Some answers to commonly asked questions about Tenders
Q What is a Real Estate Tender?
A Tender is a form of marketing and selling a property through intensive advertising media designed to capture the maximum attention of buyers within a set timeframe. The process is a means of purchasing/selling Real Estate through public negotiations to determine the true market value of the property at that time.
Q How should I approach the Tender Process?
A The Tender contract, which is your offer, is filled in and then deposited at our branch office and held secure until closing time. The Tender documents are different from normal Sale and Purchase Agreements and you may wish to seek legal advice before submitting your tender contract.
Q Can I submit a Tender if I have to arrange finance?
A Obviously, an unconditional, cash Tender would be more attractive to the vendor and you can organise finance prior to submitting your offer. However, do not hesitate to submit your Tender, even if conditional.
Q Can I submit a Tender if I have a house to sell?
A Yes. There are three options (1) You may make a Tender, conditional on the sale of your property (2) If you are in a sound financial position you may want to arrange a bridging loan to cover any delay in settling the property (3) You may offer on an unconditional basis but with a longer settlement date, giving you time to sell and settle your own property.
Q How do I decide how much to pay?
A Naturally the more attractive the offer the more likely the chance of having your Tender accepted. Although vendors reserve the right to negotiate with the highest or any Tenderer, in most cases a decision is reached on the Tender day. However the Vendor can have up to five working days from the closing of the tender to make a decision. For this reason, your submitted Tender should be your best offer. A combination of your own instincts, market awareness and guidance from your sales consultant will give you a good indication on price. Obviously, the price you tender is in direct proportion to your desire to own the property.
Q Can I buy before the Tender day?
A Yes. In most cases, you can. Please register your interest with the Real Estate agent to ensure your opportunity to purchase. They will give you information on this process.
Q What contract do we sign and what are the standard conditions?
A The contract is the standard Tender contract approved by the Law Society of New Zealand and the New Zealand Real Estate Institute. This is available from the sales consultant. You should have read and understood the Tender documents. If you need to insert any conditions or vary the settlement date, do so. To ensure the correct wording seek assistance from your solicitor or your sales consultant. If your tender is accepted you are legally bound by the terms and conditions of the Tender contract.
Your Harcourts Property Consultant is specially trained to assist you if you have any questions or if you require further information about Tenders.