Purchasing your home (First Home Buyers)
Buying a home could quite possibly be the largest investment of your life. If this is your first time, I'd like to convey the basics for you to help you understand the procedure.
Despite the large amounts of money involved, buying a house can actually be easier than buying a car!
Some people can spend ages looking for the perfect house, which is fine if you have the time. It has been said that you can see too many and start to get confused about which ones you have already seen!
Have you ever heard people complaining that "I told that agent what kind of house I was looking for and they took me to see something that was NOT what I wanted!"? Real estate sales people work for the vendor - they have been requisitioned by the vendor to sell their house, so that's what they are doing. At the end of the day, when a house is sold and commissions are paid, its the vendor who has paid out. The sale price INCLUDES the commission, there is no extra money paid by you, as the buyer after the sale, as a commission.
Agents only get paid when they sell a house and are directly involved in the negotiation process.
There is nothing that feels worse for a sales person than investing a lot of their time (and petrol money!) into helping buyers look at the kind of property that they said they wanted, only to call them up with "just what they're looking for" only to find that they purchased something yesterday, with another salesperson that is totally different from the description of what they had said they were looking for!
So some loyalty to your agent is a must, to ensure they will actually continue to work for you.
If you have found a sales person you like, who is willing to spend a lot of time with you - maybe even advertising on your behalf - they may wish to use your name in the properties wanted advert, then you can do them a big favour and yourself a service, by simply giving them the salesperson contact details of a property you have seen in a magazine or newspaper (or perhaps driven by), give them the opportunity to approach that salesperson to conjunct with them. The advantage to you now is that you have a sales person being more on your side, whereas if you approach the other sales person directly, then the first one has no opportunity to get paid and can't really be involved any more with that property.
In dealing with a Harcourts sales person you're well on your way as Harcourts have approximately half of Christchurch's listings (houses for sale). We automatically have the right to introduce buyers to any Harcourt's listings and often sales people from other companies are happy to conjunct (share, or "work-in").
So you have identified a house you would like to buy, now comes the fun part - you need to "put in an offer" in writing, of your intention to buy the property. The salesperson will have the necessary New Zealand standard, "Sales and Purchase Agreement Form".
It is normal for people to want to "get the best deal" when they buy. If you have seen a lot of properties, you yourself will have a fair idea of the worth of the house.
What kind of an offer are you in the position to make? A cash offer? It is certainly the most powerful negotiating tool when securing the best possible price, however not normally practical if you are buying your first home
1) The finance clause: This offer is subject to the purchaser being able to arrange mortgage finance suitable to themselves within 10 working days of the date of this agreement.
2) LIM and Title these are now contained within the main body of the agreement
3) The inspection clause: This offer is subject to the purchaser's property inspector's report being suitable to themselves within 10 working days of the date of this agreement.
This may be a condition of the bank however it weakens your offer.
Tax GST (Goods and Services Tax)
This only becomes relevant if you are in business and/or your real estate purchase is a business, commercial land a farm or development section. The contract states that "Unless stated otherwise the contract is deemed to include GST" (12.5% of the sale price). Make sure the agreement is not "Plus GST" (unless already agreed to by you). You may wish to speak to your accountant about this further.
If you are in need of an accountant, solicitor (lawyer), or broker, please click here: contacts.
This is the time that the salesperson really starts to work. Once you have decided on a price you wish to offer, and your conditions have all been laid out in the offer, the salesperson then takes it to present to the vendor and you can wait anything from a few minutes to a few hours or days, (depending on availability of all parties involved), before you know the vendor's response.
It could well be that your offer was too low, or has a condition that the vendor was not prepared to accept. They can choose at this stage to "Counter Offer" meaning they can cross out your price or condition (immediately nullifying your offer) that they can't accept, write in the price that's acceptable for them, initial those changes, and then the salesperson brings this back to you for you to either accept or carry on negotiating.
Your acceptance i.e. initialing the changes made by the vendor on the agreement ("Offer"), is acceptance. Once both parties are in acceptance, the agreement then becomes a contract and is dated, this day becomes the date of the agreement.
Once the agreement has been signed and accepted by both parties it is binding and enforceable through the courts if either party fails to "perform, as per the contract".
Once the agreement has been signed and accepted by both parties there is no opportunity for Gazumping or any of that sort of thing, as long as you pay the balance on the settlement date the house will become yours.
After signing , your solicitor will receive the agreement, a copy is also sent to the vendor's solicitor and posted to you and the vendor. It is a good idea to consult a mortgage broker before you start making offers on property, just to see how much you could afford - this can save everyone a lot of time.
If a bank tells you they could probably loan you up to a certain amount get it in writing so you can put in a cash offer. This is called pre-approval, you will find most banks are doing this.
Once all your conditions have been met within the given period, your solicitor declares the agreement unconditional to the vendors solicitor, this date then becomes the confirmation date.
Paid either on acceptance or on confirmation date - as per the contract, unless the contract specifically states otherwise.
Deposits are normally 10% of the agreed sale price, but can be more or less depending on prior negotiations.
Deposits are banked into the Real Estate Agent's Trust account, the balance once the agents fee if taken out, is transferred to the vendors solicitor, following the statutory 10 days following it being banked.
Possession or Settlement
The settlement date is often one to two months after the date of the agreement, giving the vendor enough time to get their own affairs in order, although this can also be negotiated as a condition in the contract - it may be sooner or later.
If the house is vacant you can offer the vendor an early settlement - often making your offer more attractive to them. On this date the balance of the purchase price is transferred from your account to your solicitor's trust account then transferred to the vendor's solicitor, then the keys are released normally to the purchaser's solicitor's , where the purchaser collects them.
Your lawyer will transfer the title from the vendor's name into yours on the settlement day.
Contact me at any time!
Exciting new homeloan opportunity for first home buyers - together with Housing New Zealand WelcomeHomeLoans
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