You’ve found a new home that suits your needs, and you’ve completed your pre-purchase checks. Now it’s time to make your offer.
There are three main ways of making an offer on a new property. The seller will be the one who chooses how they accept offers.
1. Sale by negotiation
You’ll usually see an ad with “for sale by negotiation.” This may be accompanied by a price and an invite for offers over that amount.
In this type of sale, you submit your offer to the vendor. They’ll consider your offer based on their own criteria, and may accept, reject, or countersign. You may go back with a second offer and negotiate on the price, settlement date, and other conditions.
Depending on the circumstances, the vendor may receive multiple offers at the same time, but usually, you’ll be the only one with an offer. There’s no closing date and your offer doesn’t have to be unconditional, so you can do your final inspections after the vendor accepts your offer as long as you make them conditions of the sale.
2. Sale by auction
Auctions are very popular in heated markets, as they enable sellers to get the best possible prices for popular homes. The advertisement won’t include a price, and it’s up to you to figure out the potential value and what you’re willing to pay.
On the correct date and time, you’ll need to show up to the auction to place your bid. If you can’t be there, you can organise a bid over the phone, or for someone to bid for you.
The important thing to remember with auctions is that the sale is unconditional. This means if you make the highest bid and the vendor accepts it, then you’ve bought a house and are legally required to complete the sale.
This means you need to satisfy all your potential conditions before you make your bid. You’ll need to organise your finance, property valuations, building inspection, LIM report, title, and other research.
By the time the auction begins, you’ll have invested time and money into researching the house. People often let this impact their bids, and they end up going way over their budgets and scrambling for finance.
Don’t do that. Make a budget and stick to it. There are always other houses.
Sometimes, a house won’t meet reserve at an auction. The auctioneer will say the property is passed in. The person who made the highest bid can negotiate with the vendor to try to land the property at a good price.
You might also be able to buy a property before it goes to auction. Register your interest with the real estate agent before the auction to make sure you get the chance to put in a competing offer.
3. Sale by tender
The third option is the least popular in New Zealand at the moment, but you’ll still come across it during your property search.
The vendor sets a date where they’ll accept tenders. Anyone who wants to make an offer will do so on this day, and the vendor will compare the offers and choose the best one.
All the offers are sealed, so you can’t see what other people have bid. Each offer will include conditions, so depending on what these are the vendor might not necessarily choose the highest bid. However, you only get one shot, so you need to make your best possible offer.
When you register interest in tendering for a property, you’ll receive a selection of tender documents, which will include the sale and purchase agreement, the title, and other documents about the property. Many buyers make the mistake of assuming this pack contains all the information about a property. It’s vital you do your own research.
Some vendors will also accept offers prior to the tender date and may sell the house then without going for tender. Register your interest with the real estate agent to get notified if an offer is put in so you can put in an offer of your own.
No matter how your dream home is offered for sale, there’s a method to help you emerge from the sale process triumphant. If you’re looking for a new home and want some advice to get your through the front door, then contact me today for a free no-obligation chat about what we can do for you.