I'm ready to make an offer - what next?
How to take the stress out of buying your first
home
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.
Auction don'ts
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.
