Buying Property

When buying a property there are several points you need to consider.

There are generally two methods of purchase. Unconditional and Conditional.

If you are purchasing ‘sight unseen’ then it is crucial that you have trust in your salesperson, usually gained from past experience, or obtain the necessary independent information that satisfies your needs.

An unconditional agreement means exactly that. You are making an offer with no clauses and if accepted by the vendor then you have purchased the property, it is yours.

Should you make an offer with conditions then there are several conditions that you may need to consider.

1. Finance Making the agreement subject to obtaining finance satisfactory to yourself. This means you have a time frame, usually 7 – 10 days, in which to arrange the finance.
   
2. Valuation Making the agreement subject to a Valuation satisfactory to yourself. This means you have requested an independent Registered Valuation. This process can take up to 10 days.
   
3. Builder Report Making the agreement subject to a written builders report obtained by you and at your expense and being satisfied with that report. This can also take up to 10 days to complete
4. Sale of another Property Making the agreement subject to the sale of another property. This clause is used in a situation where you have to sell an existing property in order to purchase another property.
5. Cash Clause This clause is inserted in an agreement for the sole benefit of the vendor.
   It is used in conditional agreements where the conditions are over a period of time greater than say 7 days. It is up to the discretion of the vendor when they install a cash clause and the terms of that cash clause.
   The meaning and purpose of a cash clause gives another buyer the right to submit an offer over and above an existing conditional offer. If accepted by the vendor, and if the second offer is unconditional or once it becomes unconditional, then the existing conditional first agreement will have so many days (usually 3 working days) in which to make their agreement unconditional if they have not already done so. Should they fail to do so then that conditional agreement shall become null and void.
6. Multiple Offer Situations This arises when 2 or more purchasers express interest in submitting an offer on the same property. In the event of this happening you will be encouraged to submit your very best offer both in terms of purchase price and any conditions.
   
7. LIM Obtaining a Land Information Report (LIM) from the local Invercargill City Council. www.icc.govt.nz
   This can take up to 15 days and can cost up to $150.00. A LIM report provides you with an historical report on the property and ensures all necessary permits and code of compliance are in place. Should you decide to obtain a builders report then both of the recommended builders I have chosen (See the Links page) will if requested check the LIM for you

In Summary

There is no doubt an unconditional cash offer is more appealing and acceptable to sellers and in a multiple offer situation a cash offer will make your agreement strong therefore enhancing your chances of securing the property.

If you find a property that appeals to you then you will find it easier, and providing time allows, obtaining some or all of the above requirements prior to making an offer and once satisfied make your offer unconditional. This cannot always be possible as others may also be interested in purchasing the same property and you may not have the time to obtain the above information. In this case you may find yourself in a position where multiple offers are to be presented to the vendor. In the above situation you will need to decide whether you make a conditional offer and if so then include any of the above clauses that you deem necessary.

Remember, if you end up offering under a competitive situation (multiple offer) where 2 or more purchasers are offering on the same property then the vendor (seller) are more likely to look closely at an agreement that is clean or has the least amount of clauses contained within the agreement.

If in doubt always make your offer conditional.