Auction
An auction is an unconditional purchase, which means you need to have done all of your due diligence upfront. The Real Estate Agent will provide you with a copy of the S&P agreement, and may also provide the Title and LIM report upfront. You may need to do a building inspection and/or valuation before the auction, which can become expensive if you keep going to auctions.
You need to register your interest in an auction before the day and you will need a 10% deposit that is payable on winning the auction. One of our Registered Financial Advisers is available to attend the auction with you within the Auckland region.
Auction check list
- Register your interest with the agent before the day
- Agree any changes to the deposit or settlement day with the Agent before the auction
- Have your solicitor check the title
- Get your finance fully approved
- Read the LIM report and do any other due diligences
- Do a building inspection or valuation (if required)
- Arrange your deposit
Tender
You put in a written offer within a specified timeframe which the seller considers at the same time as any other written offers. You can put conditions on the offer but this might make it less appealing than other offers.
Private Treaty
Property can be bought by Private Treaty without a 3rd party. An approved sale & purchase agreement by the Real Estate Institute of New Zealand Incorporated and by Auckland District Law Society Incorporated Ninth Edition 2012 must be used. Due to transactions not be at arms length, the banks will usually require a Registered Valuation in support of any lending proposal.
Private Sale
Private Sales are the same as Private Treaty above. They are worth covering off separately because you end up negotiating directly with the vendor. It would be wise to include your solicitor before signing any sale & purchase agreement.
Once you find a place you’ll be asked to sign a Sale and Purchase agreement. This is largely template driven with space to insert your own purchase conditions. We’ve outlined the main conditions below.
Purchase Conditions
- Subject to finance – 5 to 10 working days
- Subject to building inspection
- Subject to LIM report
- Subject to solicitors approval – 3 working days (insert this if you are not confident about what you are signing)
Another clause is a Due Diligence clause that gives you full control on the purchase process but REMEMBER it is a legal contract. Once you go unconditional you are committed to purchasing the property.
Important Dates
- finance date – 5 to 10 working days from offer date
- settlement date – the day you take ownership of the house
Often you will not have the deposit available when you buy a property.
This can cause some stress around the unconditional date so here is an outline of the rules and process:
The amount of a deposit is completely negotiable.
With an auction it is set at 10% but you can negotiate with the Real Estate Agent before the auction if you do not have 10% available. Agents/vendors want as many bidders as possible at the auction so will generally agree to a lower deposit. With private treaty (by negotiation) sales you set the figure as part of signing the sale & purchase agreement. 5% is usually enough.
When is the Deposit Paid?
You normally agree to pay the deposit on going unconditional. If you do not have funds available we will set up a temporary overdraft or draw down the funds on your existing property to form the deposit.
Although it is best to pay the deposit on unconditional day this is often not possible due to the amount of paperwork required to get temporary facilities in place – especially if you are a first home buyer. In this situation you can go unconditional, and as a courtesy let the Agent know that the deposit will be paid within 48 hours.
Always check with your solicitor – you have 3 working days from being served notice (by the vendor’s solicitor) to pay the deposit. This means you have at least 3 working days from going unconditional to pay it.
Once you’ve signed a sale and purchase agreement we can recommend a Building Inspector and Property Valuer to you, prior to going unconditional.
LIM Reports
A LIM report is prepared by the council and is based on its property records. It will tell you whether or not the property has the right consents and a code of compliance. We do not arrange LIM reports. If you want a LIM report you will need to order it from your Council. It costs around $150 and takes up to 10 days so order it immediately after signing the Sale and Purchase agreement. Alternatively you can check the council’s property file yourself.
The Lawyer and Signing Contracts
Your Lawyer is an important part of the house buying process. The first question you need to ask yourself is what level of service you require. There is a massive range of Lawyers out there both in terms of quality of service, quality of advice, and cost.
If personal service is important then as one client put it, pay extra and go to a reputable law firm. There are also a number of low cost transactional services available. These work well provided you do not need advice or lots of reassurance.
Your lawyer will manage all dealings with the vendor (i.e. confirming that you would like to go unconditional), they check that the title of the property is clean, run through the mortgage documents with you, and settle the funds.
If you are outside of Auckland or Overseas, they will courier the mortgage documents out to you to be signed in front of a Justice of the Peace or Public Notary. For non-residents you do not need to come to New Zealand to buy property. Just allow enough time for us to manage the paperwork back and forth.