Sales methods
Buying Privately
This process involves dealing directly with the seller or their lawyer.
It is very important to use your lawyer at each step, and to pay your deposit to your lawyer so they can arrange for it to be held safely in a trust account.
Buying at Auction (not the Trade Me sort of auction)
This process involves the seller setting a reserve price (the lowest price they will sell for). Only the auctioneer knows this.
If the highest bid is over the reserve, the property will be sold. If the reserve is not reached, the home is 'passed in'.
It may however, sell by negotiation straight after the auction, and if you are highest bidder, you have first chance to negotiate.
When you buy at auction it is unconditional, so you need to have everything sorted out first and you need to be absolutely sure that the property is the place that you want.
Before the auction you should:
- Register your interest with the agent
- Talk things over with your lawyer, and ask them to do all their checks, such as property title
- Get a copy of the auction contract
- Arrange your finance
- Get a valuation
- Any other information or report that you need done
- Decide on your top price
You will also need to make sure that you have money ready to pay a deposit to the auctioneer on the day if you are successful.
This is normally 10% of the sale price.
Buying by tender
With a tender you make a written bid for the property. It needs to be your best offer, particularly in the case of a competitive closed tender.
The seller looks at all the offers together and may accept the highest bid or negotiate with the person whose offer they like the best.
You may have to include a deposit when you put your offer forward. This deposit is refundable if your bid is not successful.
If your offer is accepted you are from that point on committed to purchasing the property, and have a set amount of time to meet all the sale conditions.
Next - The inspection