Buying a Home in New Zealand

There are three main methods of buying and selling houses in New Zealand: 

• By negotiation
  
• By tender
• At auction

Buying A House By Negotiation

Buying a house by negotiation is the most common method of buying and selling homes in New Zealand. This is how it typically works: 

• You have found a house you like
  
• You contact the estate agent to make an offer on the property
• The agent then negotiates between the two parties (vendor and prospective purchaser) to agree a price
• You make an offer on the property by signing a contract and stating any conditions and the price you are willing to pay
• Negotiations may or may not continue
• A final offer is accepted
• Once the contract is signed by both parties, you need to pay a deposit
• As the purchaser, you then need to have your finance sorted out
• Get your lawyer to check the contracts, conduct and check the title search
• Have the house checked by a builder or engineers to your satisfaction
• Then the sale goes 'unconditional'
• Legal checks and preparation continue until 'settlement', the date on which the keys are handed over and you move in.

Making an Offer – Things to Remember

• It is common to offer several thousand dollars under what you are willing to pay and to be prepared to move up with each offer.
  
• Prospective purchasers typically make a couple of offers this way then put in a full and final offer.
• Estate agents typically conduct this process in person with each party if they are in the same city.
• It is important to understand that the contract is a legally binding sale and purchase agreement.
• Common conditions usually entered into the contract by prospective purchasers may include "subject to finance", "subject to title search" and "subject to builder's report".
• The deposit is usually 5%-10% of the purchase price and is held in trust until the sale is completed. The term for this part of the process is that the house is "under offer".

Buying A House By Tender

With a tender, the vendor sets a final date for offers to be presented, then considers them all at the same time. Prospective purchasers put in their best offers, which can include conditions. The vendor then negotiates with the prospective purchaser/s through their estate agent, then the sale process is much the same as above. 

Buying A House At Auction 

When you buy at auction you buy unconditionally, and need to pay a deposit (typically 10%) on the day. This means that you need to have your finance sorted and, and have completed any builders reports, title searches and valuation reports in advance. 

If the property does not meet its reserve price at the auction, a process of negotiation will begin with interested parties. This is when most properties offered for auction actually sell. 

Real Estate Agents’ Fees 

Real estate agents charges fees of around 1.5% to 4% plus GST and advertising costs, though there are some private sales, discount estate agents and even set-fee estate agents. The vendor pays these fees. 

The Law Society produces a comprehensive booklet on the process of buying a home, which is well worth checking out,  http://www.lawsociety.org.nz/__data/assets/pdf_file/0018/3096/04BuyingSellingProp.pdf.

This article was supplied by Broadbase International Ltd (www.broadbaseinternational.com). Information contained in this article is of a general nature and is not intended as a substitute for professional advice based on your individual circumstances. Disclosure statements are available on request and free of charge.