Posts Tagged ‘Conditional Offer’

Making An Offer – The Highlights

Making an offer on a house is quite often done too quickly and not enough is known about the kind of commitment you are about to make.

An offer on a house quickly turns into a legally binding contract – you need to be aware of this – you will not be able to get out of a contract once it goes unconditional – so make sure you know what you are doing when you make an offer!

Making an Offer - the Highlights

In the Propertytoolbox Blog we have often delved into the subject of making an offer - here are our highlights:

1. Tendering on a House

We had a lot to say on this subject so we created a 3 part series on the tendering process. Firstly we covered off ‘Making a tender on a house - What is a tender' then we went into detail on 'Making a tender on a house - Putting in your tender’ and then we did the after match analysis in ‘Making a tender on a house - After your tender has been made’. Reading this series will let you in on the mysteries of the tendering process.




2. The Sunset Clause

A sunset clause is a condition that can be included by you or by the vendor in a sale and purchase agreement. They are not commonly used, but can be useful. In this article ‘Sunset clauses – What are they?’ we go over why and when you may want to use a sunset clause – and why the vendor may have included a sunset clause.

3. All About Countersigning

Countersigning is common – a very large proportion of house purchase negotiations involve haggling on price and conditions – and therefore will involve countersigning – especially in today’s market. This is actually one of the most common questions we get here at Propertytoolbox. So find out all about it in our ‘What is countersigning’ article.

The Propertytoolbox Home Buyers Guide

For more tips, tricks and advice – read on in our Home Buyers Guide. And if you are about to make that offer – head straight to our ‘making an offer on a house’ section.




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I’ve Got My LIM Report – Now What?

Your LIM Report has arrived from your local council for the house you are looking to buy – now what! There is a lot of information in a LIM Report and knowing what to look for, knowing what it serious and what is minor, and wondering what is missing can make assessing the LIM Report a daunting task – you went to the time and effort of getting it – make the most of it.

Getting a LIM Report

You may have ordered your LIM as part of working through your conditions on an agreed sale and purchase agreement, or you may not have agreed the sale yet - the house may be for sale by auction or tender and you feel that a LIM is important to have before deciding on a price for the house – whatever the reason - the LIM Report needs to be gone over carefully.

Looking Over Your LIM Report

Read through the summary pages – potential issues are likely to be obvious here. Then dive into the main contents of the LIM. Look for outstanding financial obligations, resource consents, building permits, and related plans. Check that all issued consents have been signed off. For building work from 1992 onwards, check that a code of compliance certificate has been issued for works completed.




Take your personal knowledge of the property, its buildings, retaining walls, land use and the surrounding properties and the area and consider that against the information contained in the LIM. You should ask questions of the seller and the council if you find differences.

Getting Expert Help With the LIM Report Analysis

It is always a good idea to look over the LIM report with your lawyer when you receive it. Your lawyer’s experience and expertise regarding LIMs, combined with your knowledge of the property and your thoughts on what you intend to do with the property, will ensure that the LIM is understood and the full implications of any aspects of the LIM are realised.

Get additional expert help from a valuer or builder (the councils ‘on duty’ building officer is a great free resource), or any other relevant professional if you feel you need it to get the full picture.

What To Do With the LIM Report Results

Consider what impact the findings of the LIM report will have on your enjoyment of the property and the value of the property before you make your decision on whether this is the house for you.

Your LIM Report - What You Need to Know
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The Propertytoolbox House Buyers Guide

For all you need to know about LIM’s check out the Propertytoolbox information on LIMs. For everything else there is the Propertytoolbox Home Buyers Guide.




Making a Tender on a House – What is a Tender?

Welcome to the Propertytoolbox three part series on making a tender on a house. This first post explains just what is a tender. Next post, we talk about putting in a tender, and the post after that will be that all important subject of - what happens after the tender has been put in!



What is a Tender

A tender is a way of marketing and selling property. When a house is sold by tender, any offers (tenders) for the property are made by a set date and time (the tender date – which is set by the vendor) and tenders can be conditional offers. A vendor with a house for sale by tender is usually not open to offers prior to the tender date.

What is the Tender Process

The tender process attempts to encourage a competitive offer situation with the tenderers all being unaware of what the other is offering. Sometimes the ‘winning’ tender can be far in excess of any other tenders. The reason for choosing to sell a house by tender are many and diverse! But the most common are:

  • The real estate agent feels that there will be a number of people interested in the house, a tender is a good way to structure a multi offer situation.
  • The vendor wants a strong marketing campaign with a set end. The house will be marketed intensively over the days/weeks leading up to the tender date.
  • The property is unique and difficult to value – a tender lets the market decide the value.
  • A house being sold by tender can give the illusion that there is strong interest in the property – this is a clever marketing technique that implies a multiple offer situation when in fact there is likely to be little interest in the property.

Properties for Sale By Tender

Properties for sale by tender are usually not marketed with a price. However, a trend over the last couple of years has been the ‘tender reserve’ where a guide as to the minimum amount acceptable to the vendor is advertised.

What is the difference between a tender and an auction? A tender is different from an auction because of two crucial points:

  • The tender offer can include conditions (an auction bid is an unconditional offer).
  • When tendering you don’t know what other potential buyers of the property (tenders) are offering, unlike you fellow bidders at an auction.

Open and Closed Tenders

The terms ‘open’ or ‘closed’ tender can often be used – this can be a confusing! An open tender is a tender made available to anyone while a closed tender is where only selected individuals or companies are invited to submit a tender on a property.




Open tenders are the most common form of tender used for the sale of private dwellings. Often the term ‘closed tender’ is used incorrectly – most commonly the intended meaning of ‘closed tender’ when used with regard to residential property is that offers will not be accepted prior to the tender date – but this should be confirmed.

Next - Part 2 - Making a Tender on a House - Putting in Your Tender

What is a Tender on a House
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The Propertytoolbox Home Buyers Guide

Want to find out more about house buying? The Propertytoolbox house buying guide has all the basics – check it out. Want to bookmark a great dictionary for all those real estate terms – the Propertytoolbox definitions section is a fantastic reference.


There is a Problem With the Building Inspection! What Should I Do?

The first thing you need to do when your building inspection identifies a problem is to work out how serious the problem is – a good person to question initially is the person who did your building inspection – you need to make sure that you fully understand the problem that they have identified.

Building Inspection Problem? Get a Specialist Building Advice

A building inspector is not an expert in all aspects of building so if a particular problem has been identified and the building inspector has indicated that they cannot tell you the extent of the problem or the cost to fix - it is best to speak to, or get quotes from, an expert in the area.




Say the piles are a problem – speak to a replier – they will be able to assess the extent of the problem and give you a quote for the remedial work.

Now you are in a position to start making decisions depending on your situation...

I Have a Signed Sale and Purchase Agreement

You may have gotten the building inspection as part of working through the conditions on a sale and purchase agreement. If you are not happy with the building inspection:

  • You are now legally entitled to cancel the agreement. To do this you tell your lawyer, and usually the real estate agent that you are not going unconditional based on an unsatisfactory building inspection. This can be a very hard decision to make as by this stage you have invested time, money, and emotion in the house, but in many cases it is the best decision.
  • You can re-negotiation the price of the house with the vendor. Go into negotiations with quotes for remedial work in hand – and bargain hard! Don't forget, it always pays to budget for some extras!
  • You can ask the vendor to fix what is wrong before you buy the house. Especially if the problem is fairly easy to fix i.e. a few hours work by a plumber or electrician this is often a good solution. If the problem is major – the vendor will rarely agree to fix it.
  • You may still be happy to proceed with purchasing the house at the agreed price - and you still can. Perhaps none of what was identified in the building inspection is a surprise, or you now know why the house was a reasonable price from the beginning! Before proceeding double check your numbers, make sure you are happy with the amount you are going to have to pay in repairs and renovation, and add a contingency of at least 10%.

If you and the vendor come to an agreement that involves the vendor having to complete work, or the price changes, or anything else at all, this needs to be formalised in the sale and purchase agreement by your lawyer.

Even if the work agreed is small (i.e. rubbish removal or repairing flashing) and seems insignificant to include – the reality is that it will not be done unless the vendor commits to it via the sale and purchase agreement.

I Haven’t Started Price Negotiations

If you have obtained this building inspection before even beginning negotiations on a house that you are interested in you have similar options:

  • You can walk away – the house is not suitable anymore – move on!
  • You can start price negotiations fully armed with exactly what is going on with the house. This is a much stronger bargaining position then if a price had already been agreed and a reduction was being negotiated. It is hard for people to comprehend that seemly overnight their house price has decreased significantly.
  • You can start negotiations from the beginning with a condition that lists things for the vendor to fix before you will settle on the house – again, if the problems are extensive - this can be a very short negotiation!

Sometimes the extent of the remedial work needed to fix a problem identified by a building inspection can not be worked out exactly by a ‘surface only’ examination by a building inspector or tradesman i.e. extent of rot given evidence of rotten weatherboards.

In these situations you will only be able to get an estimate of the cost of fixing – as a lot will depend on the extent of the problem and this will only be known when the remedial work starts.

It is up to you here to make a decision based on how much of a risk you want to take! In these cases, if you are not comfortable with what can potentially be an unknown, and large, expense it is best to walk away.

Building Inspection Problem - What To Do
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The Propertytoolbox Home Buyers Guide

The information you have just read about building inspection problems has been added to the Propertytoolbox house buying guide - An essential resource for house buyers in New Zealand. Find out more about house buying in New Zealand here.


Should I Get a Valuation, Building Inspection, and LIM Before Making an Offer?

There is a cost to getting all of these reports prior to making an offer on a house - so why should you get them done?

Advantages of Getting Your Due Diligence Done Prior to Offering

The main advantage of having your valuation, building inspection and LIM done prior to offering is you have a full understanding of the house and its worth to you.

Another major advantage is that getting a valuation, building inspection and LIM usually means you can get unconditional finance approval for that house and can then choose to make a cash (unconditional) offer – this sort of offer is very appealing to vendors.




When a cash, unconditional offer is agreed and signed it is binding, the house is sold! A cash offer can give you bargaining power and you can often buy a house for a lower price with a condition free cash offer.

The Disadvantages...

The main disadvantage is the cost. Altogether, these reports will cost well over $1000 – just how much depends on the house itself. This money is potentially being spent on a house you may never buy.

In normal house negotiation situations (not a tender, or auction) putting your building inspection, valuation and/or LIM as a condition in your offer is standard. If a price is agreed on – then you get the reports (do your due diligence).

Houses for Sale By Auction or Tender - Due Diligence

In the case of an auction, if you want them, you need get your valuation, building inspection, LIM and unconditional finance prior to the auction as when you are bidding you are making an unconditional offer for the house; if you are the winner bidder – you have bought the house.

In a tender situation – adding a building inspection, valuation and/or LIM to your tender puts you well below a cash offer in the rankings. Your offer will need to be significantly higher then other tenders to be seriously considered in this situation.

So if you are serious about your tender – try to make as close to a cash offer as possible – this usually means doing your valuation, building inspection and/or LIM prior to the tender date and getting an unconditional finance offer so you don’t have conditions in your tender.

Due Dilligence You Can Do For Free

No matter what you decide to do, we recommend you read our before you put in that offer section, here we have 4 things you can do at minimal cost (free even) that will let you get to know the house you are thinking of buying. You may find that what you discover changes your mind, saving you the cost of hiring the professionals altogether.

Building Inspection Property Valuation and LIM Before Making an Offer - Due Diligence
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The Propertytoolbox Home Buyers Guide

Want more info and advice? Head to the Propertytoolbox Home Buyers Guide for all you need to know about buying a house in NZ. We have comprehensive information about property valuation and building inspection that can help with those pre-offer decisions.