We've got you covered
Whether you’re a first time buyer or a investing in a second home, buying property can be complex and the choices overwhelming. We want our clients to have all the information they need. Below is a short guide to buying but we encourage you to contact a salesperson to discuss the process in more detail.
Step by Step
Buying a property and getting on the property ladder is a big decision but not unobtainable if you do your homework. Research the area you'd like to buy in, the amenities, local schools, community activities and property values. Talk to other homeowners or property investors for tips and advice.
There are a number of online resources available to you such as settled.govt.nz, qv.co.nz, sorted.org.nz but if you prefer, talk to one of our many local, experienced salespeople. They know the area, they know the market and they can answer any questions you may have.
Pre-Approval for a Home Loan
It is imperative when you begin the search for your property, to find out how much money you can borrow - this will give you an idea as to what you can afford. Contact a mortgage broker or your bank about this.
How much you can borrow depends on:
By obtaining pre-approval you are in a better position to negotiate, it helps speed up the mortgage documentation process and enables you to bid with confidence at auctions.
Do you have a solicitor? this is important when buying a property as they ensure all the legal processes are followed and can check any property reports e.g. LIM's, Titles etc.
Do your Homework
Once you have found a property, do your homework. What is the traffic like throughout the day? access to main thoroughfares, roading, public transport? what is the age and condition of the building and materials? are there any building covenants? how many bedrooms?
There are specialist reports, such as a Land Information Memorandum (LIM), and builders and engineers reports that you can obtain once you have found a property.
Submitting an offer
If you are satisfied with the property and are ready to make an offer, talk to your saleperson and they can take you through the process. We would also advise engaging your solicitor at this stage as they may have considerations for you to take into account before signing the offer document.
- Unconditional - a straightforward offer to buy according to the terms set out in the contract
- Conditional - when your offer to buy has conditions attached, for example, arranging finance or being satisfied with a building report you arrange.
Ways to Buy
Auction - An auction is a method of selling a property through the process of public negotiations. Purchasing property through an auction allows you to publicly negotiate the price, which helps ensure you are paying the true market value for the property at that time. Buying at an auction or making a pre auction offer, requires an unconditional offer only.
Tender - A real estate tender is a method of buying a property through the process of private and confidential offers made and submitted by a set deadline. Find out what types of offer you can make and what you need to do before submitting your offer.
Offers need to be submitted in writing on the standard tender document - your Richardsons Real Estate salesperson will provide these - and deposited at the specified closing location by the tender deadline. Your salesperson will hold your offer secure until the deadline.
All tenders are opened at the same time in the presence of a manager or auctioneer. Although vendors reserve the right to negotiate with any tenderer, in most cases a decision is reached on the tender day. If your tender is accepted you are legally bound by the terms and conditions of the tender document. Offers can be conditional or unconditional.
Negotiation - This is when properties are advertised with a price, a price band or by negotiation. People are invited to make an offer on the property. This allows the buyer to negotiate with the seller on price. Offers can be conditional or unconditional.
Mortgagee Sale - When an owner fails to meet their mortgage payments this may result in a mortgagee sale; the mortgagee exercises its power of sale. The property is sold, after completing a legal process, to recover its debt and in the majority of cases, the property is offered for sale by public auction or tender.
The Vendor has accepted your offer - now what?
Once all parties have agreed to the price and terms of the offer, the contract agreement is signed. The purchaser has a set period of time (set out in and agreed to within the sale and purchase agreement) to undertake due diligence eg obtaining building reports, finance etc at the end of which, if all conditions are satisfactory, the agreement goes unconditional.
In a standard property sale, the deposit due date is specified in the sale and purchase agreement and is as agreed to by both parties. This could be upon the agreement being accepted and signed by purchaser and vendor, or it could be upon the agreement going unconditional.
Once you have exchanged signed contracts and paid the deposit, the contract is legally binding but you do not technically own the property yet.
It is standard practice in New Zealand that when the contracts are exchanged, the buyer must give the seller a 10% deposit, unless the contract has specified a different amount for the deposit.
If you buy at auction however, you will sign the contract and pay a deposit (usually 10%) on the spot.
The deposit is paid into the Richardsons Real Estate Trust Account and by law, is required to be held for 10 working days or until the sale goes unconditional - whichever is longest.
When an offer is unconditional the agreement becomes binding. The purchaser must pay the rest of the purchase price on settlement day.
Prior to settlement day, it is recommended you arrange an inspection of the property to ensure all chattels listed in the agreement are there and in the condition as stated at the time of signing the agreement, as well checking that any maintenance or repairs agreed to by the vendor have been carried out. If the property is tenanted, this allows you to check the condition they have left the property in.
Congratulations you have just bought a property! This is the day you pay the balance to the vendor and often, the same day you take possession. Once the legal settlement has occured, the vendors solicitor will notify us and we can release the keys to your new home.