Until recently, selling a house by Auction has been the most popular method of selling in Auckland. It takes advantage of the excitement in the market and pits buyers directly against each other. In most of the other cities and towns around NZ however, selling a house “price by negotiation” has remained one of the more popular methods. With the cool down in the Auckland housing market, we are beginning to see this trend start in our largest city too.
Price by negotiation indicates the vendor is willing to take an offer at any time. It differs slightly from a Deadline Sale where a vendor will accept all offers up to a certain date. Price by negotiation is an open-ended timeline. However, once an offer has been submitted and conditionally accepted, further offers must wait for that initial deal to be cancelled before their offer can be accepted. Even with price by negotiation, it pays not to wait around too long.
You should ideally have your finance pre-approved before making an offer. An offer without a finance clause is a much stronger temptation for the Vendor. If you’re competing against other offers, the less conditions on the offer, the better. You all know where to click to get the pre-approval stage started!
You should always get a lawyer to check the offer before submitting it. A Sale and Purchase is a legally binding contract. Even a small mistake can cost tens of thousands of dollars.
If you have conditions - finance, building report, valuations etc - in your offer, then you will have a set amount of time to get these ticked off before telling your Solicitor to go unconditional. At this point, you will need to pay the deposit into the bank. The deposit is usually 10% but can be varied and is not usually refundable if you want to pull out of the deal. Going unconditional is not to be taken lightly so check with your Solicitor before confirming.
There are some pros and cons of buying a Price By Negotiation property
We found a nice simple process chart here courtesy of our friends at The Property Practice. We recommend you check it out before you begin organising your pre-approval.
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