we have got to the point
where we are letting people come to inspect the property.
Sooner or later, someone is going to make an offer
on it. Sometimes the offers come in early and sometimes
they take a long time.
some houses sell faster than others it doesn’t
necessarily mean that they are better properties or
of better value. Finding a buyer for a house is a
bit like finding a spouse. Some times it takes a long
time and sometimes it happens quickly. People who
marry younger aren’t necessarily more desirable
than the ones who marry later in life. The same applies
to the buying and selling of houses. Sometimes it
takes a while to find the right buyer and sometimes
it can happen on the first day. There were times when
I was selling real estate that an offer would be made
on a house within a couple of days of being on the
market, but then the offer would fall through for
some reason or other and it would take several months
before another acceptable offer came in.
When someone is prepared to make an offer,
tell him or her to get his or her solicitor to put
the offer in writing and send it to your solicitor
so that he, or she, can study it first before going
over it with you. In most cases the offer will be
less than the asking price. If so, you can always
counter the offer with a higher figure and then initial
the alteration. But you must never sign the contract
until you are happy with all the conditions on it.
be too shocked or disheartened if an offer
is thirty or forty thousand dollars lower than your
asking price. It’s a game some cheeky people
play as a means of trying to find out how low the
vendor is prepared to drop the price. They don’t
expect you to accept it. They hope that you will respond
by countering the offer to something in-between their
offer and your asking price. Such people are generally
speculators who are not interested in the house as
a place to live in, but are searching to buy properties
below value so that they might resell them at a profit.
game goes like this; say you are asking $450,000
for your house and you truly believe that the amount
you are asking is not excessive. A speculator might
come in with an offer of $400,000. They do this with
the hope that you might counter it to say, $435,000.
If you do, then they pat themselves on the back for
conditioning you to accept an offer of $15,000 less
than you asked for. Their next move is to test you
with an offer of, say, $420,000 with the hope that
you will drop the price even further. My advice would
be not to get involved in the game.
The first thing you should do when you receive an
offer is to check the amount they are offering. If
it is too low, don't bother to counter it. Just tell
your solicitor to pass the message onto the prospective
buyer’s solicitor that the offer was not accepted
because the offer wasn’t high enough. If they
are serious buyers, they will come back with a higher
you needn’t be too concerned about
the small print on an official ‘Agreement for
sale and purchase’ form. These are set out with
a list of conditions that are there to protect both
the buyer and the seller. What you have to be very
careful about is the special conditions that are usually
added to them.
the implications of the special conditions
on an ‘Agreement for sale and purchase’
contract is the trickiest part of selling a property.
This is where it would be very wise to get some professional
advice before putting your signature next to them.
the advice doesn’t need to come from
a real estate salesperson. As I said earlier, most
solicitors would be happy to advise you whether the
contract being offered is okay or not for no charge,
provided that you get them to handle the change of
ownership details once you are happy with an offer.
There are a number of special conditions
that might be added to a contract for sale and purchase.
For instance, there might be a condition relating
to finance, such as this one:
offer and any contract arising herefrom is
conditional upon the Purchaser/s arranging finance
on terms and conditions suitable to themselves to
enable them to complete the purchase of the said property
by 5 p.m. on (such and such a date).
shouldn’t require more than a few days
to find finance.
people will include a special condition where
an independent valuation is sought. This might be
to reassure the purchasers that they are not paying
more than the property is worth, or it may be necessary
as a provision for borrowing from a lending institution.
The condition is likely to read something like this:
offer and any contract arising herefrom is
conditional upon the Purchaser/s at their own expense
receiving a valuation report acceptable in all respects
to the Purchaser/s from a registered valuer within
(so many) days of the acceptance of this offer.
is often a condition or two that requires
approval sought from other people regarding certain
matters. Some times purchasers will get a builder
to do a construction check just in case the foundations
are slipping or the building materials are starting
contracts for sale and purchase have a clause
written in that allows the purchaser, or the purchaser’s
solicitor to search the title of the property, just
in case there is something about it that you weren’t
aware of, such as a proposal for a future road expansion
that will require a piece of your land. Or there might
be a legal provision for the neighbours to use your
driveway. Such a special condition will appear something
offer and any contract arising herefrom is
conditional upon the Purchaser/s solicitors approval,
and is also subject to the Purchaser/s solicitor searching
and approving the title of the said property within
(so many) days of the date of acceptance.
might be a condition regarding the sale of
another house that the purchaser needs to sell first,
like this one:
offer and any contract arising herefrom is subject
to the Purchaser/s arranging an unconditional contract
for the sale of their property situated at………………………….
there might be a special condition that covers
all the other special conditions, such as this one:
If the conditions set out above have not been fulfilled
by the date aforesaid, or within such extended time
as the parties may agree, then this agreement shall
be at an end and any deposit paid by the purchaser/s
shall be repaid in full and neither party shall have
any further claim on the other.
very common conditional clause is one that
depends on the vendor obtaining a LIM (Land Information
Memorandum) report from the local council. These reports
inform you about special features of the property,
such as whether it is subject to flooding, erosion,
or has the presence of hazardous substances. They
give you information on storm water and sewerage drains.
They notify you whether there are rates owing. They
give you information about building and resource consents,
code of compliance certificates and special orders
issued by the council.
The certificates issued by the building certifier
inform you about what use the land can be put to and
the conditions attached. It also provides information
on building classifications such as the Historic Places
Trust and information given to the council by the
utility operations, such as a power or gas company.
It is wise for a purchaser to invest in a LIM report.
However, they can thwart sales because they may reveal
hidden problems. Comprehensive as they are, a LIM
report rarely contains everything you need to know.
Below is a list of things you are unlikely to find
in a LIM:
plans. These are often excluded because it
is too costly and time-consuming and bulky to include
plans and drawing.
boundaries. Even with an aerial photo of
the site with the boundaries marked out, their accuracies
may only be accurate within two and three metres.
If the boundaries are important, check the certificate
of title or the survey pegs.
You will find easements (shared access) on the property
Certificate of Title at Land Information New Zealand
sites, such as the presence on site of historical
importance to Maori. Many city councils choose to
exclude these sites in the LIM report.
proposed developments. If your immediate
neighbour has resource consent to build, say, a pig
farm, most local councils don’t put that information
into the LIM since they are not required by law to
do so. It’s a case of buyer’s beware.
restrictions. A LIM won’t give comprehensive
details of the building restrictions. If you are buying
with a specific development in mind, ask the council’s
planning staff to advise you.
Once you sign the contract to sell, all you need to
do is wait and hope that all the special conditions
of the contract will be completed. Sometimes contracts
fall through because the purchaser can’t raise
the finance, but the most general reason for a contract
to fall through is because one of the conditions of
sale is that the purchasers must get an unconditional
sale on a property they are selling first.
First homebuyers are generally confident that they
will raise the finance because they will have discussed
the amount they would need to borrow with their bankers
beforehand. Those who need to sell their houses first
can’t be so assured that it will sell within
a limited period, therefore it would be a good idea
to keep your property on the market for back-up offers
just in case any conditional offers don't eventuate.
It goes without saying that any person making a back
up offer needs to be notified that some other party
has the first priority to buy. Once the special conditions
on a contract are met, the offer becomes unconditional.
the conditions on a contract are not met
within the specified time and there are no back up
offers, you can always negotiate with your buyers
and give them an extended time to fulfil those conditions.
you wish to sign an offer that has the condition
which requires the purchaser to sell his, or her house
before buying yours, make sure that your solicitor
puts in an additional clause in the contract that
states that if someone else approaches you with an
acceptable cash offer beforehand, the contract will
become null and void unless the first buyer can match
the conditions of the back-up offer within a specified
date, which is usually about three working days.
thing that has to be clarified on a contract
is the possession date for the new owners. This is
usually set down as a certain number of days after
all the special conditions have been met. Make sure
you leave yourself enough time to find yourself another
property to live in if you haven’t already done
so. If you allow, say, up to six weeks, but find another
property to move to within a fortnight, you can always
hand the keys over to your solicitor to give to the
purchasing parties solicitor so that the buyers might
take possession beforehand.
more thing you must do is to make sure that
any person making an offer puts down a few thousand
dollars as a deposit to prove their genuineness. There
are a few game players in the real estate world who
have no qualms about mucking you around with dubious
offers that are unlikely to be completed. I don't
want to bore you with examples. Just believe me that
these people exist.