Last post we talked about how to put in a tender, and before that we explained just what a tender is. This post is all about ‘after the tender’. Sometimes with all that is going on with just making a tender, once the tender has been submitted you find yourself saying - What now? Well here is what to expect.

What Happens After the Tender is in?

The tender(s) received are all kept sealed (confidential) and are not opened until after the close of the tender. The tenders will be opened with the vendor present, this may not be until a few hours after the tender closes.

The details of each tender will be explained to the vendor as they are opened. If there is more then one tender, the agent will usually document the key points of the individual tenders as they are opened on a separate piece of paper for the vendor to review.

The vendor can choose to accept any tender (not necessarily the highest one), reject all the tenders, or enter negotiations with one or more of the tenderers.

If the vendor does not receive the price or terms they want, they may choose to start negotiations. The submitters of the top tenders can be asked to re-submit a new offer, or negotiations can continue with one. This can mean that tender negotiations continue well past the tender time/date.

When Will I Hear if my Tender is Successful?

You should hear back from your agent within a few hours of the tender close time. The agent will tell you whether or not you have been successful. If you are, you now have a contract with the vendor and can start working through your conditions (if any). If your tender has not been successful, your deposit cheque will be returned.

Your agent may come back to you asking for an improvement in your offer (more money, less conditions), there may be another offer very close to yours, or your offer is the most favourable offer, but the vendor is after a bit more i.e. the vendor wants to enter into negotiations with you, the agent may even come back to you with a countersigned agreement.

Think through any changes in your offer carefully, remember you already put in your ‘best offer’ when you submitted the tender!

What If I Don't Hear Anything About the Tender?

If you do not hear within a few hours the result of the tender, contact the agent and discuss the situation. Agents often hold off contacting any of the tenderers until a contract has been agreed.

In this situation make sure you are comfortable with what is going on. Ultimately, if the tender deadline has past, and the vendor is in negotiations with another party, your offer is now considered unaccepted and you are free to pursue other house purchase opportunities.

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The Propertytoolbox Home Buyers Guide

Just starting out on the house hunt? Not even sure if you can afford a house? Maybe a free chat with a mortgage broker could help you find out.

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

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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.

When you make an offer, or place a tender, on a house it will either be accepted, rejected, or you will start negotiations with the vendor. If you start negotiations you will presented with your original sale and purchase agreement countersigned. This countersigned agreement is usually the original contract you submitted with some changes made by the vendor, signed by the vendor. They may have changed anything on the agreement including the price, the settlement date or the conditions.

It is usual for these negotiations to be handled by the real estate agent and you should have any amendments to the sale and purchase agreement approved by your lawyer before signing - especially if the amendments are changes to the conditions of the contract, or parts of the standard contract have been crossed out. You may choose not to accept the changes made by the vendor, and can either countersign the agreement again (making your own changes) or end the negotiations.

Every time the sale and purchase agreement is amended and submitted to the other party it is, in law, the rejection of the previous offer and the making of a counter-offer. This amendment of the sale and purchase agreement is often referred to as countersigning. All changes to the agreement need to be initialled (this can mean a lot of signing!). Only when the countersigned document is accepted without any amendment and signed is a legally binding contract formed.

Just because you have countersigned and countersigned and finally agreed - this does not mean that the house is sold - you may still have conditions to work through before the contract goes unconditional - find out more about going unconditional.

The real estate Complaints Assessment Committee (CAC), part of the Real Estate Agents Authority (REAA) has made its first decision. A North Shore real estate agent was found guilty unsatisfactory conduct.

The daughter of a recently widowed woman complained after her mother received a condolence card from a real estate agent soon after her husband’s death that included a business card and a valuation of the mother’s house.

As a result of this solicitation, the real estate agent was found by the CAC to be in breach of the authority’s Code of Professional Conduct and Client Care for the manner she approached the complainants mother.

This is first of many assessments and decisions to be made by the CAC – there are another 200 complaints currently in the pipeline!

If you are buying or selling a home you should be aware that real estate agents are required to comply with the Real Estate Agents Act 2008. This Act introduces changes into the real estate industry that will benefit the buyers and sellers of houses.

One more obvious change brought about by this new Act is that buyers and sellers (before signing a sale and purchase agreement) must get a copy of the New Zealand Residential Property Sale & Purchase Agreements Guide from their real estate agent! This guide has all the essential info that you must know before signing a sale and purchase agreement.

This act also saw the creation of the REAA. The REAA launched in November 2009 with a focus of high standards of service and professionalism within the real estate industry, and to provide increased protection for buyers and sellers of houses. The REAA provides independent oversight of the NZ real estate industry and in conjunction with the Act hopes to promote public confidence in the industry.

The REAA replaces the Real Estate Institute of NZ (REINZ) and now handles licensing of people and companies working in real estate, investigation of complaints from consumers (the CAC), disciplinary action (the Real Estate Agents Disciplinary Tribunal), setting industry standards, and providing information to buyers and sellers of houses.

Want to know what to expect from a real estate agent – check out the Code of Professional Conduct and Client Care . This code was published as a result of the Real Estate Agents Act 2008 - those working in the real estate industry must follow this code and it is a reference point for discipline.

You can even check a real estate agents license details here, including checking whether they are licensed, finding out how to contact them, check the history of their licence and check their recent individual disciplinary record.

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.

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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.

If you are putting in an offer on a property, you should make a satisfactory LIM report a condition of the sale. A LIM is very useful in helping you decide whether the land is worth purchasing. From a LIM you can determine whether the property has permits for all its building work, what zoning it has, whether it is free from any restrictions, what proposed local developments may affect the property, and whether the intended use of the land is feasible.

A LIM may contain all sorts of information that can impact significantly on your perception of a house's value. For example, resource consent may have just been issued for a building that will block your view, there may have been a history of flooding or subsidence, the land was previously a landfill site, or alterations to the house may not have a building consent.

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The house you are interested in may be marketed with or without a price - the only thing the price indicates is the vendor's expectations. Whether these expectations are realistic, is for you to decide. You may think you have a good idea of what a house is worth, but it never hurts to do a bit more research.

If you want to get the experts in, a registered property valuation can be done and costs from $500. If there have been some sales in the area that you think were comparable, ring the listing agent. If the sales are now unconditional agents should be happy to tell you what the sale prices were.

If you want reliable house sale information Quotable Value (QV) has some great online resources - some of the information available on this site is free to access.

We recommend you buy a recent or local sales report from QV as these reports will give you the addresses of a number of recent sales near your chosen address.

Take the report and go for a drive, note the differences you can see between the houses. Take into account, location, street appeal, exterior presentation and building type. The reports will give you floor area, age, rateable value, sale price and sale date, and you can use all this information to compare houses and to make up your mind about price.

The online 'valuer' reports do not give an accurate enough estimate of market value to be relied on, but they can be useful as they contain an 'all you need to know' range of information about a house which includes comparable sales, sales history and more.

Sometimes the rateable value (government valuation of the house) has a strong relationship with price for an area i.e. in Palmerston North, in February 09, houses were selling within 1% of their rateable value. In areas like these, the rateable value can give you a good idea of price. But you should only use the rateable value in combination with other information, like your own experience or a registered valuation. You can find out rateable value information on your local council's website for free.

Before settling on a price, make sure you have done a second inspection and checked around the house again, as you may have missed something that significantly affects the value. Here is our second inspection checklist to help you out.
 
 




 
 

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