Buying Privately in New Zealand

Buying a house privately in New Zealand

Are you thinking about buying a house or property privately in New Zealand, but unsure of how it works? Here are some things to consider and the 4 steps to take, when considering buying privately.

Agent or Private? Which is Better?

If you find a property you like, it doesn't make a lot of difference if you go through an agent or direct through the owner. The home owner will be able to answer any of your questions, just as the real estate agent would. 

Essentially if the asking price matches what you believe the market price is, then by dealing directly with the owner you know exactly where you stand. In any property purchase, it is important you do your due diligence when buying, including consulting with your solicitor.

Often both parties are happier after reaching an agreement, rather than perhaps feeling they were being managed or pressured by a real estate agent in some way.

The 4 Steps to Buying Property Privately

The basic steps to buying real estate in New Zealand privately are very similar to the steps required if you are using a real estate agent. The main difference is that you will be dealing directly with the property owner in terms of price and any buying conditions you may have, and will present your offer via solicitors instead of a real estate agent.

Buying property privately in New Zealand

Step 1: Criteria - What Do I Need in a Property?

The first step to buying a property is deciding what you want in a new home. Work out what you can compromise on, and what you definitely need. This will give you a useful guide in finding potential properties you can then go and see.

Grab some paper and a pen. When buying a new home or property it's really important you narrow down your criteria. Perhaps consider breaking it into 'definitely need', 'may need' and 'not important but good to have'. That way you can figure out what you'll compromise on and what you can't. Things to consider include:

Perhaps go through your current home and use it as a guide i.e. need an extra bedroom and study.

Mortgage finance for buying a home

Step 2: Finance - Mortgage Loans

Once you are serious about purchasing a new home or property, you need to contact a bank, building society or mortgage broker to work out the finance for the loan to buy a property. This will give you a guide on which properties you can afford to buy.

If you are serious about finding a new home or property, then you are best to contact a financial institution that offers home loans such as a bank, building society or mortgage broker. It pays to look around and explore the options even if you only bank with one main bank. It's a competitive market and well worth putting in the effort.

A bank, broker or financial institution will be able to give you a guide on the price you can afford to go up to to buy a property based. This will be based on your deposit and your ability to pay for a mortgage based on your (and your partners) income and situation. Generally you will need to supply salary details, other income and general expenses, the value of any assets such as vehicles, works of art plus any other debts such as hire purchase and credit cards. Some places even offer a financial contribution towards any legal or conveyancing fees during the purchase process.

Generally a registered valuation of the property will be required prior to the bank or institution lending you the money however your solicitor will more often than note, put a clause in the sale and purchase agreement which say 'subject to finance' which effectively gives you and the bank time to sort out your loan.

First home buyers in New Zealand are also entitled to use their own savings from their KiwiSaver and may also be eligible for a first home buyers grant. Talk to your bank or mortgage broker about this.

Properties for sale in New Zealand

Step 3: Search - Where Do I Look?

Finding properties for sale privately in New Zealand is not hard. You can search online private house sales websites such as this website, TradeMe and Google. You can look in local newspapers. And you can look out for property For Sale signs that aren't branded with real estate agent details.

There are three main places that you will find properties for sale privately

Once you find a property that meets your criteria, contact the owner directly and organise a time to look through or alternatively view the property at an Open Home (if available).

Browse our Private Sale Property Listings

Sale and purchase agreement for buying a home

Step 4: Offer - How Do I Make an Offer?

So you've found a property you really like, the next step is to make an offer on it. The best process is to talk to the property owner and find out how they want that offer - verbally, by email or direct from your solicitor who will write up your terms for the offer of purchase.

So you've decided you like the property and want to make an offer. You would have met the owner so you now have a few choices depending on how comfortable you feel. You can use the direct approach and simply say 'I'll offer you $XX" or alternatively you can make an offer via email or via your solicitor.

It maybe that the owner prefers one method or another so definitely inform them you want to make an offer and see what they say. It could be that they don't mind but you prefer email. That's fine and you just use the method you feel most comfortable with.

Your offer will likely be subject to a certain set of conditional clauses. These clauses include:

It's important to remember, these conditions need to be listed on your offer of purchase. Generally a time of around 2 weeks is given to satisfy all clauses before the sale becomes unconditional. The settlement for the purchase is often set at 6 weeks from the date of the offer, however this can be tailored to any given date that the purchaser and seller agree on.

You will also be required to pay a deposit on the property. Your bank or financial institution may grant you a temporary overdraft for this amount if you do not have it it in cash.

Once the offer is accepted and signed, your solicitor can order the Title and Lim for the property and advice on anything out of the ordinary. You need to check the Lim report for any work on the property that may not have the required building permits or consents. You should also check if the property is in a flood zone, near to a refuse dump or anything else that may have a potentially negative impact. Your solicitor will also help with the EQC status and transferring any active claims or payouts over.

It is up to you to organise builders, meth testers and anything else you have stipulated you want checked first on the offer to do their reports within the given time frame.

Once all clauses have been satisfactorily met, the purchase will become unconditional. As a buyer, you have the right to check the property before the final payments are transferred over. If the property has not been properly cleaned or cleared, payment can be held up until the seller meets these requirements.

Buy the book

The Complete Guide to Selling a Home in New Zealand

Buy the Private Sale book: "The Complete Guide to Selling a Home in New Zealand" is full of information and will guide you through the selling process. Being aware of how to sell your own home privately will enable you to understand what's involved and will give you an insight into the buying aspects with confidence. As a buyer you won't be interested in the lead up the sale of a home, but the section in the book on negotiation, offers and paperwork will provide a valuable insight into the process.