Help for property buyers

Buying a property can be a daunting process. Here’s some background information to help you get the job done.

Buying by negotiation

A negotiation process is the traditional way to buy a property. A property being sold by negotiation will be marketed either with or without a price and you as the buyer will be encouraged to present an offer to purchase it.

If you see a property you like and you want to present an offer to purchase it, it’s best to indicate your level of interest to the salesperson so that they can let you know if any other purchasers are also considering presenting an offer. At the same time, ask them to provide you with any documents they hold on file for the property, like the LIM or title.

Once you’re ready to proceed to offer stage, call the salesperson and ask them to draw up a draft of the Sale and Purchase Agreement for your approval. Check the document and then get your lawyer to review it with you before you sign it.

Once your lawyer has given you the green light, you will be asked to sign the document so that it can be presented to the vendor for their response. The vendor then has the option to either accept, reject or negotiate your offer.

If they choose to accept your offer, the agreement will then proceed into the conditional period (if there is one) and you will be given the opportunity to satisfy the conditions you’ve stipulated.

If the vendor chooses to reject the offer, the agreement will not proceed any further, unless you choose to revise your offer and re-present it.

If the vendor chooses to negotiate the offer, the salesperson will then work with both parties to negotiate the terms and conditions of the sale and purchase agreement, including the settlement date, the deposit, the purchase price and any additional conditions the purchaser needs like finance, a building inspection, a registered valuation or the sale of their own property.

Buying by auction

Properties being sold by auction are marketed without a price and the purchaser is required to bid on an unconditional basis and pay a cash deposit on the day of the auction if they are the successful bidder.

That means the buyer must satisfy all their enquiries and investigations prior to the auction so that they can purchase the property without requiring any conditions. These investigations typically include getting approval from their bank and a building inspection and getting their solicitor to check the LIM, title, auction agreement and any other documents being supplied by the vendor eg Pre-Contract Disclosure Statement, Body Corporate minutes etc.

Before the bidding starts on the day of the auction, the auctioneer will announce the major terms and conditions of the sale (as noted in the auction agreement) and whether the seller reserves the right to bid personally or through an agent. All bids are unconditional, bidders cannot change their minds after a bid and the seller cannot place a bid in excess of their reserve price.

The property can be sold when the bidding exceeds the reserve price but if the property doesn’t reach its reserve price, it will be passed in. At this point the highest bidder has the first right to purchase the property at the reserve price or to negotiate a price with the seller.

What is a LIM?

A Land Information Memorandum is a report written by Auckland Council that includes a detailed history of a property’s land and its buildings. It helps buyers identify potential issues on the site as well as any future development restrictions before they finalise their purchase.

LIMs can be ordered online or in person from Auckland Council and specifically they include:

  • Special features of the land like subsidence or the presence of hazardous contaminants
  • Details of the storm water and sewage drains
  • Any outstanding rates
  • A summary of approved and pending permits and consents
  • Details of current and proposed zoning including any heritage classifications

How much will my Council rates be?

Head to the GIS viewer and you’ll be able to search for the current rates and CV for any Auckland property.

What is a Body Corporate?

If a property is on a Stratum in Freehold title (otherwise known as a Unit Title), it is legally obliged to have a functioning Body Corporate. The Body Corporate is administered by a Chairperson and a Secretary who are responsible for running and maintaining the building. To do this they collect an annual levy from each of the owners and put it into a fund which is used for general maintenance like painting and gardening as well as major repairs like a new roof. As well as arranging and staying on top of the repairs, the Body Corporate Manager is responsible for negotiating building insurance and preparing the annual statement of accounts.