This is a question I have been asked via email a few times over the past few weeks from buyers out of New Zealand looking to invest here. And even dealing with some people in my line of duty at the floor front I have come accross a number of people unsure of the process of buying property in New Zealand. So here I am trying to explain how it is done.
By New Zealand Law all Contracts for the sale of land and property must be Negotiated in Writing. Most Licensed Real Estate Companies will use the standard form which is prepared by the Real Estate Institute of New Zealand and the Auckland Law Society. This contract covers the legal issues necessary to protect both parties and enable a satisfactory Real Estate Transaction.
Contracts can be written up subject to various conditions that the purchaser or seller need to have to satisfy their own needs. An example of the most common ones are.
- Subject to Finance. This allows the buyer time to confirm or arrange their finance from the banks or any other lending company. Generally this codition isnt more than a week, but in any case has to have an end date for satifaction, upon this date been reached you can apply to have an extension through your Solicitor.
- Subject to the sale of another property. This condition also needs to have a time limit on it. Generally this is negotiated between the parties. This will give the person buying the property to have enough time to sell their own house in order to buy. This condition is usually followed by an escape clause. This allows the seller to continue marketing their property and being able to accept another offer that is better to the seller( this can be a lower price, it doesn’t matter). This is then called a cashing out contract. The original contract then has the agreed on working days to go unconditional. If they do not then their contract is void and the cashing out contract is executed and closed.
- Subject to a report of the building or land. This gives the purchaser to do any homework on the property once a price has been agreed to. This could include a builder, a plumber, an electritition or any other thing that the purchaser wants to do their homework on. But things you want to be investigated must be stated on the contract before it is accepted.
Once all conditions are met the contract becomes Unconditional and binding on both parties. This means the sale must settle as detailed in the contract. The payment of any deposit mentioned is payable upon this time. If you buy through a real estate agencey the deposit is usually held in a trust account for 10 working days.
You can bypass the conditions part and put what we call a cash unconditional contract in to the seller. This means that you are happy with the house and if the seller accepts your price you submit you will then have bought the property. being unconditional you will then pay the deposit and settle on the date in the contract. Unlike many parts of the world you do not need to get surveys etc on every property. In New Zealand a property cant be sold with out a title and its generally the duty of the seller to get everything in order.
The day of settlement is the day when the balance of the payment is made, this being the total purchase price minus the deposit which was payed at the unconditional date. The money is usually transfered via the solicitor. This is the day you pick up your keys to the property and take over the legal rights to the property. You can move in this day 🙂
A solicior is a lawyer. When you deal with them in terms of a property sale they look after the legal aspects of the sale like transfer of money, transfer of title and things like that. Basicly when the contracts are agreed on, sent to the solicitor, and becomes unconditional the job of the real estate agent is all but complete. A good agen should keep in touch with both parties, bring them together, and make sure that a smooth transition ofsetlement takes place.
The fees associated with buying a property in New Zealand are very minimal. The only fees that you need to pay are the solicitos fees for buying, which can be anywhere betwen $500 – $1000. But could be more or less depending on the area your buying. Also if you want to have any inspections done or a LIM report done you will also need to pay for those. Costs on these are minimal though. So really for buying residential property in New Zealand what you put on the contract is what you pay. So in fact there is no charge to you for getting your friendly real estate agent to help you and negotiate on your behalf.
There is other things associated with buying property in New Zealand but the general layout is this and it answers all the questions I have had so far. Other ways of buying such as tender and auction are avaliable but the princible is the same. For more questions or to find out more call or email an agent. They will be able to assist you with your questions. Remember that to have the agent sell you a hiuse as a buyer its not costing you anything, and you get their knowledge and support the whole way through.