Okay, 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.

Because 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.

THE CONTRACT.
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.

Don’t 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.

The 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 offer.

Generally, 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.

Understanding 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.

But 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.

Special conditions
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:

This 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).

Purchasers shouldn’t require more than a few days to find finance.

Sometimes 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:

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.

There 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 to rot.

Official 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 like this:

This 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.

There might be a condition regarding the sale of another house that the purchaser needs to sell first, like this one:

This offer and any contract arising herefrom is subject to the Purchaser/s arranging an unconditional contract for the sale of their property situated at………………………….
…………………………………….by……………….200…

Then 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.

A 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:

Building plans. These are often excluded because it is too costly and time-consuming and bulky to include plans and drawing.

Accurate 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.

Easements. You will find easements (shared access) on the property Certificate of Title at Land Information New Zealand

Sacred sites, such as the presence on site of historical importance to Maori. Many city councils choose to exclude these sites in the LIM report.

Neighbourhood 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.

Development 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.

If 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.

Should 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.

Another 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.

One 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.