How to make an offer on a house in NZ
So you’ve found a home and want it to be yours. Here’s what to do next.
Work to make your offer as attractive as possible like every step of buying property in Aotearoa New Zealand, there are processes you need to follow when you’re making an offer on a house. So don’t rush – it’s not every day you end up committing yourself to spending hundreds of thousands (or even millions) of dollars on something you’ve only seen a few times.
We’ve created this guide to walk you through the process, so you can make this important step feeling confident you’ve done the necessary preparation. Let’s jump in.
How to make an offer on a house in NZ: the steps
1. Talk to your lawyer
Before you submit your offer to the vendor, consult your solicitor.
They’ll provide crucial support at this early stage ensuring that you’ve completed your due diligence on the property (e.g. checking the LIM report), and checking that your offer contains all the conditions you want to include (unless you’re planning on going unconditional).
Your lawyer will likely play a key role from here on in, especially when it comes to reviewing the Sale and Purchase agreement (which is generally drawn up by the vendor’s lawyer).
2. Confirm your finances
Ideally, you’ll have been pre-approved on your home loan, allowing you to move quickly when that perfect property pops up. Hopefully, you’ve also already checked whether you're eligible for support in buying a home (especially if it’s your first property), for example using your KiwiSaver.
Even if this is the case, you should get back in touch with your lender to confirm how much they’re willing to lend to you. Just as you use a lawyer, it's wise to enlist the help of a mortgage adviser who will communicate with your chosen lender on your behalf. They’re free to use and will cast the net wide to a number of bank and non-bank lenders.
You'll need to confirm your finances before making an offer.
3. Decide what conditions, if any, you want to include in your offer
Offers on homes in New Zealand can either be conditional or unconditional.
What is a conditional offer?
Quite simply, attaching conditions means that your offer isn’t finalised until these conditions are met, usually within a set timeframe. It’s worth noting that both the buyer and seller can add conditions to the Sale and Purchase agreement. Common buyer conditions include:
- A satisfactory building report: you’ll have examined the property yourself during open homes or private viewings. However, we’d highly recommend having a professional builder’s report completed on the property ideally before you make your offer. If there isn’t time, adding a building report of your own conditional to your offer means that if it doesn’t meet your expectations, you can walk away.
- Finance satisfactory to you: many first-time buyers make the mistake of thinking pre-approval on a home loan means that finance is set in stone. That’s not the case, so you might want to build in this condition to allow you to go back to your lender and decide on a specific loan program.
- An appraisal condition: this gives you time to bring in a professional valuer to assess the property’s true market value. If there’s a big difference between the value they tell you, and the price you agreed with the seller, you might want to walk away.
- An insurance condition: this condition tends to be used if you haven’t already established that you can get insurance on the property. This is becoming increasingly important especially in earthquake prone cities.
- Sale of another home: if you need to sell another property before unconditionally committing to buy this home, you can include that as a condition. It’s worth noting that you’ll likely be bound to a time period. Alternatively, you could make the offer unconditional but ask for a long settlement period, giving you time to sell your home.
- Due diligence condition: this is a bit of a catch all for any further research you want to do about the property. Warned any vague conditions like these can be off-putting to sellers.
Note: If the buyer meets the conditions within the specified time period, your offer immediately goes unconditional, meaning you’re now legally obliged to go through with the transaction.
If your conditions aren’t met, you have several options:
- Ask the seller to pay for a problem to be fixed you could renegotiate the house price
- Or you can walk away
Think about what conditions you might want to add to your offer, and how the buyer might see them.
What is an unconditional offer?
If you’re making an unconditional offer on a home, you’re simply offering to buy the home with no caveats or hoops the seller needs to jump through. By doing this, you’re committing 100% to buying the home, if your offer is accepted, and you can’t back out later.
People tend to do this in a hot, competitive market and you have to be aware of the pitfalls. If you find out any issues with the property, or your ability to access finance, after the offer is in, you could find yourself in a very tricky situation.
4. Understand the sale and purchase agreement
A sale and purchase agreement is a legally binding contract between you, the buyer, and the seller. It will contain all the important information about the property sale – the price, conditions, any chattels being sold with the house, the settlement date, etc.
Usually, this is drawn up by the seller’s solicitor, and needs to be signed by both parties. You will ask your lawyer to go through this with a fine tooth comb. In particular, if the seller has included any conditions on their end of the deal, you need to be on top of these, and the timeframe you have to complete them.
In some cases, once everyone has signed the agreement, you’ll now pay your deposit. In other instances, this won’t happen until the offer goes unconditional.
The Sale and Purchase Agreement is an important document you need to understand.
How to make a house offer more attractive
If you find yourself in a multiple-offer situation, you’re going to want to find ways to make yours the most attractive. It’s important not to get carried away in the heat of the moment, especially where budget is concerned, but here are a few common concessions buyers can make to get their offer over the line:
1. Be flexible on settlement date
Flexibility about your settlement date could really appeal to a seller. It pays to check with the agent first to see if the seller is under any time pressure, such as an unconditional date looming for another property purchase.
2. Be prepped with your finances
Be as ready as you can be with your finances – anything you can do to act faster than other buyers will help get you into pole position.
3. Show commitment to working through your conditions
When adding conditions that involve third parties, for example a builder or property valuer, let the seller (or their agent) know that you’re already in contact with these professionals, and you plan to move quickly to bring them in.
4. Keep your timeframes as short as possible
While you don’t want to rush yourself by providing unrealistic time frames for your conditions to be met, don’t go too far the other way. This shows you’re really keen on the property, and just need these things ticked off the list.
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