4. Buying
Navigate the process of buying your first home, learn about different offers and sales methods and work towards the long-awaited move-in day.
This step is all about navigating the process of buying your first home. From learning about the different types of offers and sales methods to actually making your first offer and doing your due diligence, you’ll soon know everything you need to do to see that long-awaited ‘sold’ sign.
This is it – you’ve found the home that’s right for you. Now it’s time to make an offer. There are two types of offers – conditional and unconditional.
Conditional offer
This is where your offer has specific conditions that must be met before your sale and purchase agreement can be finalised. Your conditions might include things like:
- getting advice and approval from your solicitor
- your bank or lender confirming finance
- a building inspector's report (recorded).
Any conditions will need to be completed by an agreed date.
Unconditional offer
This is when there are no further conditions attached to your offer to buy. When an unconditional offer is accepted, you’re legally obligated to complete the purchase of the home. It’s often the next step when you've worked through everything needed under your conditional offer but can also be the first offer made in specific situations (like at auction).
Whatever the situation, it’s always best to make an unconditional offer only after you’ve sorted things like your builder’s inspection report, confirmed your full home loan is approved, and had your solicitor review the sale and purchase agreement. These steps are part of a process called due diligence, which your solicitor will be able to guide you through.
This is where you collect all the important information and documents about the home you’re looking to buy. When you make a conditional offer to buy a home, that offer will include time to allow you to complete any outstanding due diligence.
You may have a range of different things to check, and your solicitor will help by reviewing everything and making sure you know what it all means for you. These are the most common due diligence checks:
- The Land Information Memorandum (LIM) report: Your local council keeps detailed information about things like existing requisitions (orders to fix a problem), building consents, and whether the property is subject to resource consents and provides this in a LIM report.
- Building inspector’s report: A detailed look at the structural condition of the home and section. If the report finds any defects that need repair, you may be able to negotiate with the vendor (seller) to have them fixed before your settlement date or have the purchase price reduced.
- Valuation: Your bank or lender may request a valuation by an independent registered valuer to show that you’re paying a fair price for the home. It’s also a good way to make sure you’re getting the best deal you can.
- Title, easement and covenants: The title gives the legal description of the property, and its current owner and shows any loans currently registered against it. Easements and covenants listed on the title can place restrictions on what you can do on the property.
Here is a resource from Settled that may help you in this stage of your journey:
- Property checker(external link) - This tool provides you with a report on everything you should look out for in a property you're thinking of buying.
Tip – bidding at auctions
If you’re planning to buy at auction, you’ll need to complete your due diligence before the auction date as a successful bid is considered an unconditional offer.
Every home sold in New Zealand must have a sale and purchase agreement, a legal contract between the buyer and the vendor. It covers what will happen and when and set out all the agreed terms and conditions of purchase. It usually includes:
- the names of the people involved in buying and selling the home
- the address of the home
- the type of title
- the purchase price and deposit amount
- chattels – things like furniture or appliances – that are being sold with the home
- any specific conditions from you or the vendor
- the settlement date (if available).
When you make an offer to buy a home, it’s likely a real estate agent or the vendor’s solicitor will draw up a standard sale and purchase agreement for you. Once both you and the vendor have signed it, you’re both legally obligated to meet its terms.
Having your offer accepted can be a joy and a relief, and it’s also your cue to finalise full approval of your home loan. This is when your bank or lender reviews all available documents about the home you’ve found to make sure it meets their lending conditions. Getting full approval confirms your total loan amount and means you can continue with your offer to purchase the home or bid on it at auction.
When you’re browsing listings for your future home, you’ll start getting familiar with the four main ways homes are sold: by negotiation, at auction, by tender (or deadline sale), or through private sale. Each has its own conditions and requirements, so it pays to talk with your solicitor for advice on what will suit you best.
Negotiation
This is the most common way a home is sold. It’s listed with or without a price, and you make a written offer to buy it – including how much you’re willing to pay. The vendor will look at your offer and do one of three things: accept it, reject it, or make a counter-offer. If they make a counter-offer, that’s when you enter into negotiations.
The price you offer is usually the main area of negotiation, but it may also involve things like:
- the chattels and anything else included with the home
- the settlement date
- any conditions you or the vendor want included.
Any conditions to be met before the offer becomes unconditional will be set out in your sale and purchase agreement.
Tender or deadline sale
This is when a home is listed with no price and all interested buyers make a conditional or unconditional offer. The vendor then reviews and accepts their preferred offer, or in some cases may enter into negotiations with several buyers.
This can be a tricky way to buy a home as the vendor is usually able to set most of the terms of sale. It also means competing buyers have to make assumptions and predictions about what other offers are being made.
A deadline sale is similar to a tender process but with more opportunity for negotiating conditions. The agent will often use a tender document, which is a type of sale and purchase agreement.
Private sale
Most private sales are negotiated directly between the buyer and seller, without a real estate agent representing the vendor. If you’re thinking about making an offer on a private sale, it’s really important to let your solicitor know from the very start and keep them involved through every step of any negotiation. They’ll help you resolve any challenges you come across.
If buying a privately listed home, you’ll pay your deposit to your solicitor and they’ll hold it in trust until settlement day.
Auction
A sale by auction is where you bid against other interested buyers. The vendor sets a reserve price, or minimum price to sell the home, as well as conditions of purchase (such as the settlement date).
Not all homes will sell on auction day. If bidding doesn’t reach the vendor’s reserve price, the home is ‘passed in’ and they may choose to negotiate with the highest bidder.
If you buy a home at auction, the sale is unconditional – you’ll need to get legal advice and do your due diligence, have your finance approved ahead of the auction, and be ready with your deposit on the day.
Can I make changes to an auction agreement?
You may be able to ask for changes to if you find a home you want but see it’s going to auction with conditions that don’t match your needs, but this needs to be sorted before auction day. Talk with the real estate agent and your solicitor about this, and the seller will be able to decide if they’re happy with any changes or conditions you ask for.
Pre-auction offers
In some cases, the vendor may be willing to accept an offer before the advertised auction date. Usually, this will mean the auction goes ahead earlier than planned, or it’s cancelled altogether if a sale and purchase agreement is signed.
As long as you’ve registered your interest in a home, the real estate agent should let you know if another buyer makes a pre-auction offer, and whether it has been accepted.
If you want to make a pre-auction offer yourself, the best place to start is by speaking with your solicitor. They’ll take you through everything you need to do, including checking the auction’s terms and conditions to see if a pre-auction offer can be withdrawn. If it can’t, any offer you make will become the first bid when the auction starts, and that’s when you can let the auctioneer know you need to withdraw it.
Tip – KiwiSaver and auctions
If you’re making a KiwiSaver first-home withdrawal, this can’t be used for your deposit when buying at an auction. Your KiwiSaver contribution will instead be paid towards the purchase on settlement day.
Here are some useful website links to assist you with the “Buying” step.
Settled resource:
Page updated: 12 February 2024