Ways To Buy A Property

Date: 21st Jul 2020

What are the different ways to buy a house in New Zealand?

The process of buying a house can feel more than a little overwhelming. 

There are just so many methods that real estate agents and sellers use to sell property in New Zealand! 

Today, we’re cutting through the jargon and covering the different buying methods so you can make a decision that aligns with your real estate goals, whether you’re interested in buying your first home, relocating, or adding another property to your investment portfolio.

Auction

At auctions, buyers bid against each other to purchase property, either in person or through an online bidding window. The vendor sets a reserve price before the auction, and once this price is reached, the bidder who presented the highest offer becomes the successful property owner. 

What to Know if You Are Buying at Auction:

  • All bidders must be cash buyers.
  • As a buyer, you must register with a real estate agent or auctioneer.
  • All offers are unconditional; sold means sold!
  • A vendor can consider offers before the auction if the terms and conditions allow for it.
  • The seller’s reserve price is the lowest price they are willing to accept and is usually kept confidential.

How the Bidding Process Works:

  • Once bidding reaches the reserve price, the property is officially “on the market” and will be sold to the highest bidder—this sale is unconditional.
  • If bidding doesn’t reach the reserve, the auctioneer discusses the next steps with the seller.
  • If the bidding gets close to the reserve, the vendor may either choose to put the property on the market anyway, meaning the highest bid wins, or decline to sell, in which case the property is “passed in”, and the auction ends without a sale.
  • When a property is passed in, Tremains encourages the seller to negotiate directly with the highest bidder. This gives buyers a second chance to purchase, though in this case, a conditional offer may be placed, depending on the terms agreed upon.

Learn more about the process with our complete guide to buying a home at auction in New Zealand.

Tender

A tender is a process where you submit confidential written offers for a property by a set date. Offers may be accepted prior to the close date, and this will be made clear in the advertising. Although there is no reserve price, like in an auction, a price guide may be provided. 

What to Know if You Are Buying by Tender:

  • All offers are confidential.
  • Vendors have the option of accepting an offer before the tender date if this is clear in the marketing material, so acting fast is important.
  • Following the deadline, the seller takes time to review all offers before making a decision.
  • If there is no price guide, you decide what the property is worth to you
  • Your offer is drawn up on the tender documents provided by the seller or their solicitor. If you make an offer prior to the close date, you draw it up on a standard Sale and Purchase Agreement.

Price By Negotiation

The price by negotiation process is typically used when a property is hard to value. In this instance, you’ll make an offer based on what you believe the property is worth. You’ll do your own research to make this judgment and enter negotiations through the real estate agent.

What to Know if You Are Buying at a Price by Negotiation:

  • Use similar properties as a guide for determining an offer.
  • There is no time pressure to make an offer, giving you plenty of room to do your due diligence.
  • It’s common for no price indication to be advertised.

Negotiating Range

The negotiating range process is a sales strategy where the seller provides a price guide or range to indicate the expected selling price of the property. This helps you understand their expectations while still allowing room for negotiation.

What to Know if You Are Buying at a Price Within the Negotiating Range:

  • Properties are usually marketed to a wide range of buyers, meaning there are more homes for you to consider
  • The vendor can negotiate the price within a wider range, giving you more flexibility to secure a home within your budget

Fixed Price

Properties can be advertised with an asking price. This method of sale still allows you, the buyer, to negotiate with the seller.

What to Know if You Are Buying With a Fixed Price:

  • Transparent expectations can speed up the process and make you want to buy, particularly for first-home buyers
  • Property owners use recent market statistics to set the asking price

Deadline Sale

What to Know if You Are Buying at a Deadline Sale:

Buying property through a deadline sale is similar to a tender sale, except you write your offer on a Sale and Purchase Agreement rather than tender documents. You submit confidential written offers for your property by a set date, and your offer may be accepted before this date if the advertising clearly states so.

  • All offers are confidential and may include conditions (e.g., LIM report, builder's report, etc.).
  • No reserve price, but there may be a price guide
  • Submit your best offer within the window, as there is usually no second chance
  • The vendor has time to consider the offers before they make a decision

Buying Real Estate Is Easy With Tremains

Whether you’re a first home buyer or a seasoned investor, Tremains are experts in the different ways to buy a property and can help make your dreams come true with office across New Zealand.

If you’re wondering how to buy a house, consider contacting us or getting in touch with a Tremains consultant for assistance. We’ll compare different options, provide more information on how to make an offer on a property, and help you throughout the entire process of buying a home.