Buying A Home


How much to spend

Before you start looking for a new home it is a good idea to find out whether or not you are eligible for a loan and to find out how much you can borrow.  Most banks offer to lend up to 95% of the value of your new home which means that you only need 5% of the value of your home as a deposit.  There may be conditions to this type of mortgage which may vary depending on the bank you choose.


Where to live

There are many aspects that need to be taken into account when choosing where to live. An idea is to rent first before committing yourself to the purchase of a new home. This way, you can take time to decide on the community in which you would like to live and this decision may be based on the schools in the area, access to public transport, access to work, access to other facilities/shops etc.


Finding a new home

There are several ways in which you can do this, drive through the neighbourhood/s in which you would like to live and see which houses are for sale, contacting a real estate agent in the area, checking the local paper’s real estate section and the internet.

You can also visit open homes in the area in which you wish to buy. These are usually held over the weekend and are hosted by the real estate agent (unless the owner is selling themselves). These open homes give you a great opportunity to look around the house and to ask the real estate any questions you may have regarding the property.


Building your own home

An alternative to finding a new home is to build your own home. This is a very popular alternative in New Zealand and many people to take this option. There are many housing companies or independent builders in each area that can provide the service you require.

You will first need to purchase a section and there are a variety of section types that have a variety of legal titles attached to them.

The title to a piece of land reflects the way that the land has been subdivided. Each type of title offers varying degrees of ownership of the land and may place restrictions on what you are able to do with the land.  So, before you purchase a section check out the title on the land and discuss with your lawyer any restrictions the title may place on you as the owner.


How to purchase a new home

There are a number of different ways in which you can purchase your new home;

Private Sale – this is where the owners of the home are selling the home themselves so you would deal directly with them the owner rather than the real estate agent.

Tender – The owners of the home advertise for offers on their home to be received within a specific timeframe. The person with the highest offer then usually negotiates with the vendor (sometimes through a real estate agent) to buy the home at that price, or a similar price.

Auction – The owners state a minimum price (reserve) that they are willing to accept. The home is then sold to the highest bidder. If the reserve price is not met, the property is ‘passed on’. The highest bidder then has the option to negotiate a sale price with the vendor.

Real Estate Agent – This is the most common way of buying a home. The real estate agent advertises and finds a buyer for the home. The agent then acts as a go-between as the price is negotiated through offers and counter-offers.


Making an offer

Before you submit an offer on a property you will need to think about the amount of the deposit (usually 10% on the signing of the agreement), settlement/possession dates (when you expect to pay the full amount), chattels/furniture to be included in the sale and any conditions that you wish to attach to the offer.

The most common conditions that are attached to offers are;

Title Search – this is a search conducted by a solicitor to check the title of the property that you are hoping to purchase.

Finance Approval – this condition specifies that you will only be able to buy the property if your lender approves your mortgate.

LIM Report – a LIM (Land Information Memorandum) report outlines any alterations that have been made to the home and or any proposed local authority changes to the area or property.

Builders or Home Inspection – a home inspector checks the safety of your potential new home. They especially focus on the structure, construction, and mechanical systems of the home and will make you aware of any repairs that are needed.

Independent Valuation – this is a valuation by an independent valuer to check the value of your new home.

Once the terms of your offer have been decided upon, they will be drawn up into a formal offer document. A real estate agent can prepare this offer for you however the wording of the offer is critical so it is also advisable to have your offer at least looked at by your solicitor.  Once the vendor receives your offer, they may choose to accept it, decline it or make a counter offer. A counter offer is when the vendor alters some of the conditions you made or adjusts the purchase price. You can then accept or reject the counter offer or produce a further counter offer.  These counter offers can go back and forth until agreement is reached or the deal is called off.


After your offer is accepted

Once your offer is accepted, the real estate agent will send signed copies of the contract to your solicitor and the vendor’s solicitor. Your solicitor will conduct a title search and check any relevant documents recorded against the title. Both you and the vendor have a period of time agreed between you, usually 10 working days, to fulfil the conditions listed in the contract. 

Once the conditions, if any, have been met, your offer will become unconditional which means you will be required to pay a deposit to the vendor’s real estate agent.  Your solicitor and the vendor’s solicitor will then complete all necessary paperwork and once completed your solicitor will complete a certificate requesting your lender to draw down the loan on the settlement/possession date.


Useful websites

Real Estate Institute of New Zealand
www.reinz.org.nz

Real Estate resources and information
http://www.realestate.co.nz/