Frustrating reality of the offer process
It might feel like a bit of a gamble, but buying a house isn’t like betting on a horse race where you can spread your bets across the field in the hope that one will come in.
As you know, we’re talking about a major commitment here that has the potential to have serious financial and emotional consequences if things go wrong.
Every time you make an offer on a property you are saying you are committed to buying it, subject to whatever conditions you include in the offer. These conditions might be things like getting a satisfactory property inspection, or confirming insurance, or having finance approved.
It would be extremely unusual to add ‘‘we want the right to change our minds in case we see a property that we like more’’. A sale and purchase agreement – the document that you and the seller sign that lays out all the particulars of the property and any chattels being sold with it, the price you are prepared to pay and the date that it will take place – is a legally binding contract.
Whether you can make offers on other properties will depend on how your conditions are written. This is why it’s crucial to get legal advice before making the offer, which becomes legally binding as soon as it’s accepted. If you offer on a property while you’re waiting to hear back on another one, you could end up with two accepted offers and two legally binding contracts. The prospect of this scenario will give most first-home buyers nightmares (and it’s not like you don’t have enough to worry about already).
A seller doesn’t have to respond to your offer within a certain timeframe unless there is a strict deadline, such as in a tender or deadline sale. If you are making an offer on a property that is for sale by negotiation or by advertised price, and you think you might want to keep your options open, talk to your lawyer about adding an expiry time to it.
Alternatively, if the deadline for offers has not passed and you have a change of heart, you could consider asking the agent about withdrawing your offer. In this situation we recommend you have the agent confirm in writing that your offer has been withdrawn.
Keep in mind that making a conditional offer on a property, such as having finance approved, will not necessarily provide you with a ‘‘get out of jail free card’’ if you subsequently decide you don’t want to go through with the purchase. In this situation you could be required to prove you weren’t able to get finance. The better option is simply to arrange for your offer to be withdrawn promptly.
I understand your frustrations – buying a property is a complex process whether you’re doing it for the first time or not – but it’s important to take every decision seriously.
If you’re finding it hard to keep going on your property search, or to commit to making an offer, it might be helpful to remind yourself about why you want to buy a home and to identify your must-haves. Writing these things down can help keep you on track and make it easier to stay focused.
Kevin Lampen-Smith is the chief executive of the Real Estate Authority (REA), the independent government agency that regulates the New Zealand real estate industry. If you have a question about buying or selling property, send it to susan.edmunds@stuff.co.nz. For independent advice on buying or selling property, check out settled.govt.nz.