Methods of Sale

Below are four common methods property is sold in New Zealand.

The information provided is an overview only. Always first seek advice from the real estate agent representing the sale and legal advice from your solicitor.

Auction:

If you’re interested in bidding for a property at an auction, the first step is to inform the selling agent.

The agent will provide legal documents for you and your solicitor to review, including auction terms and conditions and the sale and purchase agreement. This agreement will outline details such as the deposit amount that the successful buyer must pay on settlement.

Before bidding, it’s important to conduct your own due diligence on the property, such as a building inspection, property reports, and a LIM report. Ensure your finances are in order as auctions are final and unconditional.

At auctions, bids are open for everyone to see. If you’re new to auctions, it’s a good idea to attend as a spectator first.

Winning an auction means you’re committed to buying the property and will need to pay the deposit on the auction day. The reserve price won’t be disclosed by the auctioneer.

If you need to make changes to the agreement or add sale conditions, do so before the auction using a document called a variation of agreement.

Consider the pre-auction offer process, which could lead to the auction being held earlier or cancelled.

If you can’t attend the auction in person, consider options like telephone bidding by registering your interest with the agent.

 Tender:

When you make an offer on a property for sale by tender, the offers are usually opened after the tender deadline. However, the property can be sold before the deadline if the seller decides to accept offers earlier. The marketing should mention “unless sold prior” if the seller might accept offers early.

Prospective buyers should let the agent know if they’re interested and ask to be informed if someone else makes an offer before the deadline or if the closing date or time changes. This gives them the best chance of making an offer.

The seller may give a price indication, and buyers can choose to offer more or less than the amount indicated.

Buyers can add conditions to their offer, such as making it subject to a property inspection report, valuation, approved finance, or selling another property.

Sellers can specify terms and conditions for the sale, such as the settlement date and which belongings will be included.

By Negotiation:

In this sales method, there is no set end date for offers. Potential purchasers make offers based on their assessment of the property’s current market value. A seller may choose this method when it’s challenging to determine the market price of a property.

When a property is sold by negotiation, the seller sets an asking price or a price range. Buyers can then make offers higher or lower than the asking price and negotiate the sale. There is no specific deadline for offers.

Buyers can include conditions with their offers, such as setting an expiry date for the offer, making the offer subject to a property inspection report, a valuation, approved finance, or contingent on selling another property.

Sellers can also attach terms and conditions to the sale, such as the settlement date and which items will be included in the sale.

If a buyer is unable to meet the conditions or requires more time, they should communicate with their solicitor and the real estate agent at the earliest opportunity.

If there are multiple offers, the sale may become a multi-offer process.

Deadline:

Deadline sale is where a property is marketed for a set period with an advertised end date.

If a property is being sold by deadline sale, the seller sets a date and buyers can make an offer at any time before that date. The seller may indicate a price, and buyers can offer more or less than that price and see if the seller is open to negotiation.

Buyers can attach conditions to their offer such as an offer expiry date, making the offer subject to a property inspection report, a valuation or approved finance or selling another property.

Sellers can also attach terms and conditions to the sale, for example, the settlement date and which chattels will be included.

If you can’t meet the conditions or need an extension, you need to talk to your Solicitor and the real estate agent as soon as possible.

A deposit is paid either on acceptance of the agreement by the seller or on the agreement becoming unconditional (depending on the terms of the offer).

Blue Water Mortgages, New Plymouth, Taranaki.