What happens next after your home sells?

The end to your property sale journey will depend somewhat on how you sold the home. For example, if you sold your home at an auction, as long as your reserve price is reached, the highest bidder wins the home, and the offer is immediately unconditional. In these cases, you won’t accept the offer formally, the property is simply won by that highest bidder.

By contrast, if you sell by tender or deadline sale, you can review all the offers you received and choose which (if any) you want to accept.

Finally, if you sell a home by negotiation, the process isn’t finalised until you and the prospective buyer agree on the price and conditions of the sale.

The sale and purchase agreement is the legally binding document that both you and the buyer will sign as official proof that the home is changing hands.

If you haven’t already recruited the services of a property lawyer, now is the time to do so. Understanding the sale and purchase agreement is crucial when selling a home, and absolutely should not be done alone. While most agreements are based on the ADLS/REINZ Sale & Purchase of Property agreement, you might be able to find sale and purchase agreement templates online, and different agreements can have any number of different clauses attached to them. As such, you need the experienced eyes of a property lawyer to help you review this paperwork.

Among the elements that should be included in a sale and purchase agreement in NZ include:

• The names of both parties.
• The property address and type (e.g. leasehold).
• The sale price.
• Any conditions (for example, subject to building inspection report) and how long the relevant party has to meet them.
• What happens if conditions aren’t met.
• Chattels to be included in the sale.
• The date the agreement will go unconditional.
• A settlement date when the buyer will move in.
• The deposit the buyer needs to pay – depending on what the agreement says, the buyer will either pay when the agreement is signed, or when the offer goes unconditional.
• The interest rate on overdue payments.

You should only sign and date the sale and purchase agreement once the price and any conditions have been agreed by both parties. Remember that it isn’t just the price that can be negotiated, and common buyer conditions can have a huge impact on you as a seller. For example, if the buyer wants to attach the condition that they have to sell their own house before your property ‘goes unconditional’, this could put the brakes on your own plans, so make sure you fully understand the possible implications of what this will mean for you.

For most property sales in NZ, a 10% deposit is usually paid into your real estate agent’s trust account when the sale and purchase agreement is signed. This 10% figure isn’t fixed, as buyers can seek to negotiate a lower deposit, often 5%.

However, if you’ve sold your property through tender, you’ll receive deposits from each prospective buyer who submits an offer. You’ll return the deposits to any unsuccessful buyers, and keep hold of the one you accept.

In most cases, you’ll receive the outstanding value (the total sale price minus the deposit) on settlement day. We’ll get back to this in a minute.

The settlement period usually refers to the time between signing the sale and purchase agreement (which is sometimes called “exchange”) and settlement day itself.

How long the settlement period lasts will depend. A good average is about six weeks, although it can be much shorter than this, or go for as long as three or six months. Most of what happens during this stage will be handled by your estate agent.

One of the most important things that will take place during the settlement period is the pre-settlement inspection. This is essentially another inspection of your home, to make sure it’s still in the same condition as when the agreement was signed. Often this takes place a few days before the scheduled settlement day.

Importantly, this isn’t an opportunity to raise issues that were present at the time of the settlement. For example, if there were maintenance issues that a new buyer would need to address, you should have informed them of these, and resolutions should have been reached before settlement (e.g. as a condition of the sale).

If the buyer has new problems with the home, they need to raise these with you no later than 5pm the working day before settlement.