Posts Tagged ‘Tendering’

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.

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


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.

Making a Tender on a House – After the Tender Has Been Made

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.

What Happens After the Tender on a house

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.

Making a Tender on a House – Putting in Your Tender

Last blog post we talked about just what a tender is.This post is all about putting in a tender. Next post we give you an insight to after the tender.

Thinking of Making a Tender on a House?

If you are interested in making a tender on a property, request a copy of the tender documents from the real estate agent. The tender documents can include any or all of: Never assume that the tender documents include all the relevant documentation with regard to a property. You still need to do your own house buying checks.

Ready to Put in a Tender?

If you have done all your checks, your happy, and you have decided you are going ahead with the tender, read all the tender documents carefully, and fill them in.

The sale and purchase agreement will need to be completed including adding your details, the purchase price, the deposit amount, the settlement date and any conditions. There may also be other documents to sign i.e. acknowledgement that the sale is by tender.

Get in Touch with Your Bank or Mortgage Broker

This is also a good time to run the details of the property you are interested in past your bank or mortgage broker. There may be some issues with the property that could affect the amount a bank is prepared to lend i.e. its condition, title type, location etc.

This can be quickly checked. It is always good to have some mortgage advice at this point and a good mortgage broker, or personal banker can help – take advantage of free advice from a mortgage broker!

Conditions in Your Tender

Deciding on conditions to have in your tender can be difficult. A condition free tender (a cash tender) is always going to be more attractive then a conditional tender if the money is approximately the same.

A tender process often gives you time to work through all your potential conditions prior to the tender date i.e. you can get a building inspection, valuation, LIM, and confirm you finance etc, but whether or not you choose to do this is up to you. Propertytoolbox has a few thoughts on the subject of conditional vs cash offers here.

Help with Your Tender From Your Property Lawyer

It is very important to get your property lawyer or conveyancer to look over the tender documents. In most cases, the vendor will have added conditions and deleted standard clauses in the sale and purchase agreement.

Your property lawyer can tell you the implications of these changes, change the wording of the tender conditions if necessary, add any of your own conditions and check the title.

Done all Your Checks? Time to Submit Your Tender

After all these checks have been done, and you are happy to proceed, the tender can be submitted (usually to the real estate agents’ offices), with a cheque for the deposit, before the tender closes. You will get a receipt to confirm that your tender documents & deposit were submitted.

Working Out Your Chances of Winning the Tender

With a tender situation you may be the only tender, or one of many. You may be able to gauge this by asking the real estate agents office how many copies of the tender documents were sent out, or you can ask the agent – neither is a reliable method.

The reality of a tender is that unless you have reliable information to the contrary, you have to assume you are in a competitive bidding situation and have to put in your best offer.

Houses Sold Prior to Tender

Be aware of the fine print as some houses are advertised for sale by tender (unless sold prior), which means the vendor is open to offers before the tender date. In this situation, you can choose to approach the vendor early or wait to the tender date.

Registering your interest in the property with the agent ensures that if an offer is being submitted prior to the tender date, you get a chance to put an offer in also.

Next Post – Part 3 – Making a Tender on a House – After the Tender Has Been Made Making a Tender on a House |

The Propertytoolbox Home Buyers Guide

The Propertytoolbox house buying guide has lots more helpful stuff for all you house hunters – head there now!

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

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.