I'm ready to make an offer - what next?
How to take the stress out of buying your first
Having a pre-approved home loan may help you tackle the market with more confidence. By knowing exactly what the bank is prepared to lend you, you'll have more certainty in the negotiation process, and you'll be able to compete with other buyers.
The three main ways to buy a home:
- By offer and negotiation (usually done via a real estate agent)
- At an auction
- By tender (where all interested parties put in a written offer for the seller to consider)
Most homes are sold by offer and negotiation.
How to make an offer
TIP: Ensure your lawyer is involved with any offer you make.
Offers are negotiated via a standard sale and purchase agreement. A buyer's written offer is given to a licensed real estate agent, who takes it to the seller.
If the seller accepts the buyer's offer they sign the agreement which then becomes a contract. If the seller changes the buyer's offer, this becomes a counter offer which the agent presents back to the buyer to either accept or not. Negotiations continue on the same written agreement. Conditions may be written into the offer. You should consult your lawyer with any conditions before signing up.
Once all parties have agreed, the buyer pays a deposit of usually 5-10% of the purchase price to the agent to hold until the agreement becomes unconditional (the remainder is paid on settlement day). The agent deducts their fee from the deposit and pays the seller the balance of the deposit when the offer becomes unconditional.
Before you sign on the dotted line...
TIP: Consult your lawyer as the sale and purchase agreement is a legal contract.
If the sale falls through because the conditions haven't been met, the deposit money is returned to the buyer.
Your sale and purchase agreement is a legal contract, and should therefore be checked by a lawyer.
Once both parties have signed it, the agreement becomes legally binding.
Making a conditional offer
Often buyers make offers subject to conditions such as obtaining a satisfactory report and title search and on finance being approved. This allows buyers to make an offer on the condition that if the property does not check out or finance is not approved, the agreement comes to an end.
Click here for a list of common conditions.
Making an unconditional offer
Buyers making an unconditional offer i.e. not subject to any conditions, basically a cash offer, need to have their finance organised beforehand. Once the offer is accepted you will have a legally binding contract. If you break a contract you could be sued.
Bids at an auction are legally binding, so don't bid without a pre-approval certificate.
Dates for the diary
Finance date: When the finance for the purchase of the house needs to be organised by.
Settlement date: The day you pay the balance of the purchase price, get the keys and take over the home.
The TMS guide to buying your first home
Downloads to take to open homes
Calculate how much you could borrow
How do I apply for a home loan?
What's involved in...
...the lending process?
Why do I need a lawyer and insurance?
More info on Westpac's Choices home loan
The content of Talking Money Sense is general in nature, is designed for information purposes only and is not intended to constitute financial or other advice. Information is subject to change. Terms, conditions, fees and charges apply to Westpac products and services. See www.westpac.co.nz or call into your nearest Westpac branch for details. You can get a copy of the current disclosure statement for Westpac New Zealand Limited from any Westpac branch in New Zealand free of charge. Westpac New Zealand Limited.