Posts Tagged ‘Making An Offer’

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House Buying Negotiating Tactics

There are plenty of house buying negotiating tactics out there - In New Zealand we love a bargain and we love to negotiate. The vendor of any house for sale will not hesitate to counter-sign an offer if it is not to their liking – so don’t be afraid to start house buying negotiations with a lower offer than you are prepared to pay.

There are exceptions to the ‘go in low’ theory and that is when you are involved in a tender, or ‘best offer’ situation – here you need to put your best offer forward.

Negotiating tactics come into their own when you are in a one on one negotiating situation with the vendor. So here are a few guidelines.

Don’t be influenced by the advertised price, or what the real estate agent is indicating, or even the RV - plan to pay what you feel the house is worth - using your experience of what you have seen to guide you (we have some suggestions on how to work out a houses market value) and offer accordingly.




Now, there is low and there is LOW. Don’t go too low - offer something that you would be pleased to get it at, but you feel is still fair, or at least in the ballpark. Sometimes negotiations can stall right from the beginning when an offer is just too low, and there is a feeling that no agreement will ever be reached.

If timing is something you want to use to your advantage - have a think about using a sunset clause.

Once you get that first counter-sign, you will have your first indication of what the vendor will accept. You may be partying on the inside as you are actually happy to pay this, but let’s just see if we can get them a bit lower. The meet in the middle technique in this situation is usually a good one - and often expected.

It is not always money that changes on a counter-signed agreement or that is up for negotiation - sometimes settlement date is a big issue and being flexible with this is as good as cash to some vendors. Find out if this is the case and use it in your negotiations.

Take time to think about it if the sale and purchase agreement comes back counter-signed you don’t have to respond straight away – give it a few hours or even sleep on it.

If the negotiations stall and you are still more then 10% away from the vendor’s price, then it is unlikely to happen. But once you in the 5% realm, then it would take some very stubborn people to let the negotiations fail.

If negotiations do fail and weeks later the house is still staying stubbornly on the market – if you are still interested – re submit you same last offer – the vendor may now be prepared to meet the market.

Need more help on making an offer – check out the Propertytoolbox house buying guide.

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Am I a Cash Buyer – Can I Make a Cash Offer?

Cash buyers and cash offers are two very different things but these terms are quite often used in the house buying process so it is a good idea to know what they mean. A ‘cash buyer’ is a buyer with the ability to make a ‘cash offer’. House buyers often refer to themselves as ‘cash buyers’ when they:
  1. Have ‘cash’ i.e. have money in the bank and don’t need to get a mortgage, or
  2. Have pre-approval from their bank for lending and will not need to sell an existing house in order to buy a new one (i.e. will not need a house sale condition).
But! Many ‘cash buyers’ will never end up making a cash offer… So what is a ‘cash offer’? If you make an offer with no conditions (an unconditional offer) then you are making a ‘cash offer’. It is not recommended that you make a cash offer unless you have completed all your due diligence regarding a house (i.e. know what you are getting into!). Due diligence can include, but is not limited to, a property valuation, building inspection, LIM, and making sure you have finance approved for that particular house for the price you are offering  i.e. all the stuff that you would normally have as a condition… Once a cash offer is accepted you have ‘gone unconditional’, skipping the period between ‘under offer’ and ‘gone unconditional’ that exists when a conditional offer is accepted. If you make a cash offer and it is accepted you have now bought a house and on the possession/settlement date you will be required to have the funds to complete the purchase. So you may be a cash buyer – but will you ever make a cash offer? That is for you to decide… Need to find out more about financing and making an offer – check out our Mortgages and Money section and the Propertytoolbox House Buying Guide.

For Sale By Auction – Before The Auction

So the house is ‘for sale by Auction’ - this puts a lot of new home buyers off – but get to know the process and you will be able to make good decisions about buying at auction. This article is here to help you with thinking about buying a house at auction and what you need to do before you go to the auction to bid.

Buying at Auction

Houses for sale by auction are rarely advertised with a price – this is often the reason for the Auction – the price of the property is hard to determine – and the seller of the property has decided that there will be enough unconditional interest in the property to make an auction a good option for selling & determining a market value. So you need to work out the price for yourself – you are ‘the market’ after all!




Sometimes a vendor is only after an unconditional sale, quickly, and an auction is seen as a way to achieve this – so don’t assume that if a house is for sale by auction that there is going to be lots of people interested or that you are going to have to pay a premium – you may be the only one who turns up on the day...

The Marketing Campaign - Before the Auction

A house for sale by auction is usually marketed over 2 – 4 weeks with the auction date included on all the marketing information for the property. If you want to buy a house for sale by auction you (usually) need to bid. You do not have to be at the auction in person, you can organise to bid over the phone, or you can send someone to bid on your behalf.

Sometimes, in the fine print, a vendor is open to offers before an auction, be aware of this and make sure you register your interest in the property with the real estate agent so that if any pre-auction offers come in – you get a chance to put in your offer too. A good real estate agent will never turn down to opportunity to create a competitive offer situation!

Buying at Auction is an Unconditional Offer

When you buy at auction you are buying unconditionally. This means that if you are the highest bidder, and the reserve is met, you have effectively made a cash offer that has been accepted and this is legally binding. If you are unable to make a cash offer, don’t give up, if a property does not sell at auction, conditional offers will usually then be considered.

Therefore, if you are planning on buying at auction, you need to make sure that all your conditions have been satisfied before you bid. Get your property valuation, building inspection, and your LIM, confirm your finance, get your lawyer to check the title and make sure you have done your personal inspections and research into the property.

Get Familiar With the Auction Process

Attend a couple of auctions as a spectator before your auction - find out who the auctioneer is going to be at your auction and check out their stlye - some are a lot more understandable then others, and most have different techniques for handling vendor bids.

Let's Do it! Buying at Auction

By the time you are standing (or sitting) in front of that auctioneer you have probably already spent a fair bit of money on the house. It is very important to not let that affect your bidding.

You need to set a budget and stick to it! Easier said then done when you already have an emotional and financial investment in the house. Perhaps someone bidding on your behalf is a better way to go...

Buying at Auction - Before the Auction
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The Propertytoolbox Home Buyers Guide

So now you are ready to bid – good luck! The full run down of Auction is in our House Buying Guide article ‘For Sale By Auction’.




House Sale and Purchase Agreement – Checklist

You are putting an offer in on a house, the sale and purchase agreement has been drawn up (usually by the real estate agent) it is time to sign - for your own peace of mind check that the sale and purchase agreement is correct.


Your Sale and Purchase Agreement Checklist

  • Date - is the agreement dated correctly (at the top).
  • Purchaser – The name(s) of the person(s) purchasing the house.
  • Property - The Address, Estate, and Legal Description of the property – these should be the same as on the title document which can be provided (and checked) by your lawyer.
  • The price you want to pay for the house – what you are offering - both numerically and in words.
  • Deposit - The deposit amount - these are funds that you must have available to pay if/when the contract becomes unconditional.
  • Possession - Check that this date (the date you want to take over ownership of the property) is correct.
  • Conditions - Check these are correct and agreeable to you.
  • Tenancies – Check to see if there are any
  • Futher Terms of Sale - These are also referred to as 'Conditions'. Check that any conditions you require are present, are worded correctly, and are agreeable to you.
  • Schedule 1 (Chattels) - Are these what you expect to be included - is anything crossed off or excluded.
  • Check that all the pages of the agreement are present
  • Check that no clauses in the agreement have been crossed out  - if they have - find out the reasons and the implications.
  • Check that all the pages and amendments have been initialled.

Who is the Purchaser on the Sale and Purchase Agreement?

Be careful when checking the name of the purchaser(s). You need to correctly name all of the people who will be owners of the property. These names can be people, company’s or trusts.

If you are unsure who the purchaser of the property is going to be – you can add ‘or nominee’ after the purchasers name (i.e. John Smith or Nominee) – this gives you scope to change the name.

It really is best to know exactly who/what is going to be purchasing the property when filling in the sale and purchase agreement. Remember any change to the contract – even a change to the name is considered countersigning.

Adding Conditions to Your Sale and Purchase Agreement

There can be conditions added to the sale and purchase agreement in both the 'Conditions' section on the first page and the Further Terms of Sale section later on in the document.

The 'Conditions' section provides a structure to the way in which the conditions are dealt with in the body of the agreement. Any conditions that are specified in the 'Further Terms of Sale' section can be drafted to meet your requirements - which is often preferable.

Tenancies Noted on the Sale and Purchase Agreement

Tenancies can be an issue – if the property is tenanted check to see what the tenants lease agreement is. If they have a fixed term tenancy they have a legal right to live in the house until the end of the fixed term.

If it is a periodic tenancy – 42 days notice needs to be given to the tenants (if you, or your family) are going to move in. For more info on tenancies check out the tenancy services website.

Check With Your Property Lawyer

It is always best, and we highly recommend, sending your sale and purchase agreement to your lawyer to look over before you sign. Especially if there is some unusual conditions, sections crossed out or anything you are unsure about or have questions about - run them past your property lawyer.

Are You Ready to Sign?

When you have finished checking have one final think - have you done all you possibly can to assure yourself that you know what you are signing?

Are you feeling pressured? Don’t worry about taking a bit more time to do some more checks and research. Don’t sign until you are assured that you know what you are committing to.

Sale and Purchase Agreement Checklist
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The Propertytoolbox Home Buyers Guide

For all you need to know about making an offer on a house – check out the Propertytoolbox house buying guide.




Before Making an Offer – 2010 Blog Highlights

Making an offer on a house is a big step! The first time you make an offer can be quite nerve wracking! Here are some of this years best articles from the Propertytoolbox Blog that have tips, tricks and advice for you before you make that offer.

1. Take Your Time!

This is the best advice we can give – take your time, don’t be rushed. This is probably the biggest financial decision of your life so don’t hurry into it. We talk more about this in ‘Sleep On It!’ – which is part of our 10 key rules before you make that offer. And we delve a little bit deeper in the blog article ‘I Want To Buy A House - Take Your Time’.

2. Thinking About Getting The Experts In…

Should you get a building report, a valuation and a council LIM before you make an offer? This can be a tough one to decide. We talk about the pros and cons of getting these reports before making an offer in the article ‘Should I Get a Building Inspection, a Valuation and a LIM Before Making an Offer’ it could help you decide.

3. Question The Agent

The real estate agent will know stuff about the house, and if you ask they are obliged to tell you. So make sure to ask! This can be a helpful short cut to finding out information about the house that could affect your offer. Depending on the agent they can be a real mine of information – make the most of this. Here are the Propertytoolbox recommendations on what to ask in ‘Questions to Ask the Agent’.

4.  Ten Things To Look At When Viewing A House

Make sure you make the most of your house viewings. Right from the beginning, if you find yourself interested, start taking note of the things that really matter to you, things that will affect price, and that may be a deal breaker – no point wasting time! We have a top 10 things to look at blog article that gives you a place to start in ‘House Viewing Checklist – 10 Quick Visual Checks’.

There is a whole lot more good advice if you are thinking about making an offer on a house in the Propertytoolbox house buying guide – make sure to check out the I've found a house and making an offer sections.

House Buying Traps – A Property Lawyers View

There are many things to be aware of when buying a home, it really can be a minefield! One person to carefully listen to the advice of is your property lawyer. They have been through the house buying and selling process with many clients and have lots of great advice - and coming from the legal corner - it is always good advice to pay attention to!

Thanks to the team at Homelegal we have a property lawyers view of 'traps for home buyers'. Read and beware!

Traps

1. Misunderstanding the type of property

There are various types of property including fee simple, crosslease, unit title, company share and leaseholds. Each has advantages and disadvantages that you should be aware of prior to purchasing. Misunderstanding the type of property you are purchasing or the interests in the land may result in an unexpected impact on your enjoyment and use of the property.

2. Misunderstanding the agent's role

Always remember the real estate agent is trying to sell the property at the best possible price for the vendor (the person selling the property). Don't show all your cards to the agent at the outset and don't disclose your financial limit to them.

3. Signing agreement under pressure

Putting in an offer can be exciting. Don't feel compelled to sign an Agreement straightaway. Once an Agreement is signed it is a legally binding contract. Make sure you understand what it is you are signing. Get your lawyer to look over it.  If you are unable to make contact with your lawyer get the agent to include a solicitor's approval clause.

4. Insufficient conditions

You have an obligation of good faith to the vendor. You can't use a finance clause, for example, to get out of an agreement if you have simply changed your mind. Carefully consider the reports you wish to obtain on the property before you sign e.g. builder's report, valuation report or LIM report. If any of these reports do not meet the standard you require you are able to cancel the Agreement. However as soon as the conditions relating to the reports are formally confirmed the Agreement is binding on you.

5. Deemed consent conditions

Avoid conditions that are deemed to be satisfied unless you notify the vendor. These are dangerous. If you don't confirm or notify the vendor that the condition is not satisfied they are deemed to be satisfied.

These house buying traps were provided by the team at Homelegal. Looking for more home buying advice? Check out our home buying guide, or to find out just what a lawyer is doing for you during the house buying process our Settlement section has a lot of interesting info.

The Building Report Says There is a Problem…

It is always a good idea to get a building inspection before you commit to buying a house – either before making an offer or as a condition in your sale and purchase agreement.

When you get a building inspection done you are hoping that everything comes out OK, with maybe the odd minor maintenance issue identified here or there in the building report – but what if there is something unexpected, something big, something that leaves you dazed and confused? Here is a summary of our advice on what to do…

First things first – are you still thinking of buying the house? If not – this is the easy bit – walk away! Tell your lawyer you are not going unconditional, or just don’t make that offer – easy! Or maybe not so easy as you have already invested time, money and emotion into the house...

So you are still interested in buying the house.  Now you need to work out how serious the problem is – a good person to question initially is your building inspector – you need to make sure that you fully understand the problem that they have identified in the building report. Remember, your building inspector is not an expert in all aspects of building so if a particular problem has been identified it is best to speak to, or get quotes from, an expert in the area.

Now that you have the full picture of the extent and cost of the problem you can make a decision with all the facts to hand. Now you can walk away, or continue as if nothing has changed, or begin re-negotiations with the vendor - either negotiating down the price or asking the vendor to fix what is wrong with the house.

If you have obtained this building inspection before even beginning negotiations you are now in a much stronger negotiating position. You can start price negotiations fully armed with exactly what is going on with the house and adjust your price accordingly.

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

Finding something wrong during a building inspection is the main reason why you need to give yourself plenty of time to get a building inspection done – at least 5 working days is a minimum! You never know what you are going to find, and what processes you are going to have to go through after getting the building inspection and reading the building report.  So give yourself plenty of time and don't rush any decisions.

For a more comprehensive rundown of your options when there is something wrong with the building inspection – head here.

We have more great advice, tips and information about house buying in our house buying guide - make sure to check out the section 'I've found a house!'
 
 




 
 

A Property Title Search – What Is It?

A property title search or title check is a search and check done by your property lawyer or conveyancer of the records held by Land Information NZ (LINZ) regarding a house or property.

What Can I Find Out From a Property Title Search?

A title check establishes:
  • Who the owner of the property is.
  • Type of title i.e. freehold (fee simple), cross lease, leasehold, company share or unit title.
  • Any covenants or right of ways.
  • Any easements.
  • Boundaries.
  • Any other interests in the property (e.g. mortgages)

What Do the Results of the Property Title Search All Mean?

Freehold? Cross lease? Easement? Confusing! For explanations of all of these terms – head to our definitions section.

A lot of information can be found in a title check – your lawyer or conveyancer is an expert at working out exactly what is going on and can highlight any potential issues.

A title check can bring some information to light that can really affect the price you are prepared to pay – perhaps the title type is not what you expected, or the boundaries do not correspond with the fences, or easements are a problem.

Implications of covenants or right of ways may affect your enjoyment of the house, or put a stop to plans you have for the house (extensions or additions). Therefore it is a really good idea to get a title check done before you make an offer.

Making an Unconditional Offer?

If you are buying through auction or tender getting a title check done before making you offer is especially important. Commonly, the normal vendor warranties (promises) about features of the property and the purchaser’s right to requisition (raise objections to) the title are deleted from the sale and purchase agreement in the case of auction or tender.

This means you need to get your lawyer to check the title and any other reports on the property before the auction or the lodgement of a tender as you have forgone your legal right to raise objections by signing an agreement with the vendor warrantee clause crossed out.

Property Title Search

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The Propertytoolbox Home Buyers Guide

The title is one of a few things your lawyer should check for you before you make an offer. This information is all part of the Propertytoolbox home buying guide.

I Want To Buy A House – Take Your Time…

You have just seen the perfect house, you have looked at so many, you have missed out before, the real estate agent is asking when they can come around with the paperwork! It is all a bit of a rush... if you feel you can - take your time - sleep on it!

10 key rules 1-img At least take the time to make a few checks. First double check your 'not negotiable' list – this list is not a wish list it is an ‘absolutely must have list’ - it is the list where you have worked out what you need in a new home. If the house doesn’t tick every box then it is either the wrong house for you or your list needs some work! We have some tips on how to make a ‘not negotiable’ list here.

Another good thing to think about at this point is what you want to achieve with this house purchase, what did you picture when you thought about a new home? Did you see your kids going to a great local school? Did you see weekends gardening? Did you imagine an office room or a spare room for guests? Did you imagine yourself renovating, maintaining or putting your stamp on a house? Did you see your family somewhere safe and warm? And how much did you want to spend?

It is a big decision, and it could be an expensive mistake if you get it wrong. So after sleeping on it and applying some rational though - you could be surprised at how your feelings have either firmed or wavered.

So take your time to make your decision, could this house be your home? If it is the right house for you it will still be available, and if it is not, there really will be another!

‘Sleep on it!’ Is the 1st of the Propertytoolbox ‘10 Key Rules before you make that offer’ – check out the other nine!

Want some more helpful advice for the house hunt? The house buying guide has it all!

And if you want a helpful tool for deciding just what it is you want in a house - the Propertytoolbox house visiting checklist is a good place to get some ideas.

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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.