Guide To Buying A House

Buying A House

Good Advice - Take Your Time
Don't rush into buying a house. Give yourself time to learn something about the local market.

Money
If you need a mortgage you can arrange it with a bank. New Zealand banks approve mortgage applications quickly.

Learn About the Local Market
"Open homes" are popular in New Zealand and are usually held at weekends. You are welcome to look around an open house without making an appointment first. Visiting open homes is an excellent way to learn about the local property market.

Another way to see lots of houses quickly is to go on a tour with a real estate agent. Agents are usually happy to spend time driving overseas buyers around, hoping for a sale. Agents earn significant commissions on house sales so you will find that most are willing to show you plenty of houses.

Fixed Price vs. Auction
Once you've found a house that you like, the next stage is to make an offer for it. Most New Zealand property is offered at a fixed asking priced. Unless the market is red-hot, it's normal to offer less than the asking price. Your local research will enable you to gauge an appropriate offer.

Another popular way of selling houses is by auction. Occasionally a bank forces an auction when borrowers cannot keep up with their mortgage payments. More often, auctions are used when sellers believe buyers will compete for the house and bid the price up.

Sellers pay extra fees to sell their house by auction - so agents earn more money from auctions than fixed price sales. Even if a house doesn't sell, the seller still has to pay auction fees. For this reason, agents are often keen to persuade homeowners to sell by auction.

Make Sure You Buy a Solid House
If you like a house and you intend to bid for it at an auction, you'll need to arrange the rest of the buying process before the auction. You'll need a solicitor to check the property title. You are also strongly advised to get an independent valuation of the house and to have a building inspection carried out. You may learn enough from these to deter you from bidding or to alter the amount you'd be willing to bid.

You would be well advised to find solicitors and inspection agents by recommendation - and not a real-estate agent's recommendation. Agents may be friendly but they are not your friends - they are acting on behalf of the seller and themselves. This is another reason not to buy too soon after you arrive. By waiting you give yourself time to meet people whose judgement you trust and whose recommendations you can rely on.

A document you must see before completing a purchase is a Land Information Memorandum (LIM). The LIM contains information from the local council about a property's zoning, boundaries, building consents, etc. For a copy of a LIM, local councils charge anywhere between $100 to $400. This is expensive, particularly if you do not buy the property.

LIMs also have a slight reputation for containing unreliable information. Once you've got the LIM, it's a good idea to visit the local council's building department to discuss it. You can ask for any additional information they have on the property - often they have more than they've included in the LIM.

To learn even more about any house that interests you, you can pay a fee to the government's Quotable Value. For around $5, QV will tell you the prices other properties in the neighbourhood are selling for, For $4 they will report to you the prices a house has sold for in the past. $50 buys a hazard report, etc, etc.

Making an Offer For a House Selling at a Fixed Price
If a house is selling at a fixed price, you will normally make an offer through the real-estate agent. The process usually involves offer and counter offer until you reach an agreement with the seller. During this negotiation the seller may agree to remedy any faults your building inspection has uncovered.

You are entitled to attach conditions to your offer. You may make the offer conditional on obtaining a satisfactory inspection report or a satisfactory LIM report or your offer may be conditional on your own house selling. Even if the seller accepts your conditional offer, you need to be careful. If someone comes along with an unconditional offer, the seller can accept this offer - leaving you to start house hunting all over again.

When your offer goes unconditional you will be expected to pay a ten percent deposit on the purchase price.

Making an Offer for a House Selling at Auction
If a house is being auctioned, you may make an offer before auction day. Just be aware that your offer is legally binding. It has legal status as an auction bid, albeit an early one. You therefore cannot attach any conditions to it. The seller is at liberty to accept or reject your bid, or continue with the auction on the planned day. The seller could hold your early bid in reserve, hoping for higher bids on auction-day.

If a house goes to auction, don't be surprised if you find yourself bidding against the sellers - an agent is allowed to make bids on the seller's behalf. If you suspect you're in a bidding war against the sellers, you should probably stop bidding.

If you buy a house at auction, you need to have funds available immediately for settlement.

The End
A few days or weeks after your offer is accepted, you should at last be able to move into your dream house in New Zealand.

Whether you bid in an auction or buy a house more conventionally, we hope it goes well for you.