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Recently we looked at some tips for bidding at an auction.  But what if the house you love is for sale by tender?  Tenders are much less time-pressured than auctions and are often a good way for buyers with less than 20% deposit to purchase a home.

Quick tips to stress-free tender purchase

  1. The trick to getting an offer accepted is to make it as tasty as possible.  Try and remove any conditions.  If you don’t need a finance clause, don’t put it in (but you’ll need to get the security approved by the bank before you do this though)
  2. Everything is negotiable.  The price, the deposit amount, the settlement date… everything.  Sometimes it’s cheaper to pay $2,000 more for the property but delay the settlement by 2 months (think of the interest savings!).
  3. Run the offer by your Solicitor first.  You are risking too much by putting an offer on a property without checking it is suitable or that you have an exit strategy.
  4. Check that property is insurable.  This is particularly relevant in earthquake regions but even other regions may have issues with insurance.

Some important things to know about buying by tender

  1. The property can be sold earlier than the date if the seller decides to accept an offer
    • you should register your interest with the Real Estate Agent and ask to be informed if an offer comes in
  2. Even if there is a price indication, buyers can choose to offer more or less
  3. Check the document carefully to see which chattels are included (or not included!)
  4. If you are using your KiwiSaver as a deposit, talk to your Solicitor early to organise the release of your funds.  The money will go directly from your KiwiSaver account to your Solicitor’s Trust Fund (sorry, you don’t get to touch it!).
  5. If you can’t meet the deadline for your conditions, talk to your Solicitor early for an extension.
  6. Have as much of the mortgage application done before you make the offer to avoid stressful finance deadlines.  Ideally you would have a pre-approval with 1 or 2 conditions remaining to be satisfied.

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