Buying Residential Property - Where to begin?
Whether you buy an existing property or build new, purchasing your home is likely the biggest investment you will ever make – but where do you begin? This insight provides a brief guide on the process for purchasing a residential property in New Zealand.
Conditions
When you sign an Agreement for Sale and Purchase, your offer can be conditional or unconditional.
A conditional offer means that there are conditions that must be met before the agreement is confirmed and you agree to buy the property. The front page of the Agreement records a number of conditions you can include. As a general starting point, we recommend your Agreement be subject to the following conditions:
Finance
You need to arrange finance prior to confirming all conditions. It is important to obtain pre-approval and determine your budget prior to submitting an offer, so you have a clear idea of what properties are available to you.
Insurance
A valid insurance policy will need to be in place prior to settlement and you will not be able to obtain finance without insurance.
Title
We will review the Record of Title and provide you with our report. A review of the title is useful to understand any easements or covenants on the title and how the property is held, for example Freehold, Leasehold, Unit Title.
LIM Report
The Land Information Memorandum is a summary document obtained from the relevant Council that contains all the information that Council holds for the property. We will review the LIM and provide you with our report.
Building Report
It is important to obtain a building report to enable you to understand the condition of the property. You should arrange for a building to inspect the property and note down any defects.
Toxicology Report
You might like to obtain a toxicology report for the property in the circumstance where there is cause for concern.
Purchasing at Auction
If you are purchasing a property by Auction, you must ensure you complete your due diligence on the property prior to placing your bid. This is because properties purchased at auction are unconditional, meaning if you are successful at auction you are bound by the Agreement. We can assist you with completing a pre-auction assessment of the property for you.
KiwiSaver
You can withdraw funds from your KiwiSaver to assist with financing your purchase.
You must have been a member of KiwiSaver for 3 years prior to making your withdrawal; are a first home buying intending to live in the home or on the land you buy; and you must not have made a prior withdrawal from KiwiSaver.
You can also apply for a HomeStart grant or Kāinga Ora Partnership.
We are able to assist with completing these applications.
Deposit
You will need to arrange your deposit. This is generally 10% of the purchase price, which is payable on signing the agreement or on confirmation of all conditions. The amount payable is always negotiable.
The Real Estate Agent usually holds the deposit for the statutory 10-day period unless the deposit is released to the Vendor early with written consent of all parties.
If you are purchasing a house and land package the deposit should be paid to the Vendor’s solicitor to be held as stakeholder until the Code Compliance Certificate is issued.
If there is a sunset date in the agreement and the agreement is subsequently cancelled, deposit will be returned to the Purchaser.
If you are unable to complete settlement, the Vendor is able to retain up to 10% of the deposit and sue for additional damages.
Settlement process
Prior to settlement, we will draft all settlement documents for you to sign along with any loan documents required.
You also have the right to complete a pre-settlement inspection of the property, ideally two working days before settlement. The agent usually facilitates this process, and you must raise issues prior to 4pm the day before settlement. A pre-settlement inspection is an opportunity for the Purchaser to check the property and chattels are in the same condition as when the agreement was signed. This is not an opportunity to raise problems that existed when you signed the agreement.
On the day of settlement, we arrange for the transfer of funds and complete the registration of you as the new owner of your property.
Summary
Purchasing a home is exciting but can be an overwhelming process. If you are thinking of purchasing residential property, our property team is here to assist. Please contact us on 03 379 3880 to discuss how we can help you.
