Make them an offer they can’t refuse
You’ve found your dream home – or at least a home which will work for now. How do you work out how to make a winning offer? Joanna Davis reports.
You’ve been in the market to buy a home for a while, and found a place that you can imagine living in – that also seems to be within budget.
The next step is making an offer – it’s time to put something in writing.
Deciding what to offer on a property can be difficult. With the market constantly shifting, you don’t want to pay too much – but offering too little could mean you miss out.
Also, this is a binding legal contract – and probably one of the biggest financial transactions of your life – so knowing about the process beforehand will help.
Tremains Napier and Taradale sales manager Sherry O’Sullivan says that once buyers have a clear idea of the offer they want to make, they should trust the real estate agent to take them through the offer process with a sale and purchase agreement.
‘‘Real estate law is clear. Our fiduciary obligation is to the vendor. But we have a duty of care to the buyer, so we must take care of them,’’ she says.
She recommends buyers include conditions in their offer: a building report, suitable finance and that the solicitor approves the title.
‘‘The other one they can do in advance is check the council records before making the offer. They can also make it a clause if they want.’’
Some will want to add solicitor’s approval of the LIM – land information memorandum – although that can take 10 working days and not all consider it necessary if council records are thorough.
O’Sullivan says because the market has changed, first-time buyers can ‘‘breathe and have time to consider’’ before making their offer. ‘‘They’re not as stressed as they were last year.’’
However, she says, because of rising interest rates and the high cost of housing, first timers are still not likely to be buying their dream home.
‘‘The budget they’ve got doesn’t open up everything to them. It’s about what’s a good stepping stone,’’ O’Sullivan says.
‘‘But now the market is so much more in their favour, before putting pen to paper, they’ve got time to do their research and feel confident that
they’re buying well.’’
Mobile mortgage manager Lorene Rutherford has been helping people buy houses for 26
years, and says her experience is calming for firsttime buyers.
Rutherford, who has worked for
Westpac for the past 12 years, says there are ‘‘so many boxes to tick during the process. But because we do this all the time, we can guide them through the process and not make it stressful, but instead make it a great experience.’’
She says buyers need to have relationships established with their mortgage adviser and lawyer well before putting in an offer. Developing a relationship with their bank during the journey, while saving a deposit, will help. ‘‘It’s such a big thing taking on the debt level: We can give them confidence.’’
She recommends first-time buyers get pre-approval for their loan amount, which typically is good for 60 days.
‘‘We like to pre-approve so they know what price range they
If you can’t get to the amount the vendor wants, offer them something else – like an extended settlement date, or fewer or shorter conditions. Andrew Duncan Property blogger
‘‘Now the market is so much more in their [first-time buyers’] favour, before putting pen to paper they’ve got time to do their research and feel confident that they’re buying well.’’ Sherry O’Sullivan Tremains Napier and Taradale sales manager
‘‘We can guide them through the process and not make it stressful, but instead make it a great experience.’’ Lorene Rutherford Mobile mortgage manager
can buy in,’’ she says, ‘‘and then work through options like what KiwiSaver they can use. They need to have a deposit. Are they entitled to a First Home Grant? Or shared equity through
Ka¯ inga Ora First Home Loan?’’
All those should be sorted before the offer is on the table, so buyers know exactly what they can offer, and how much wiggle room they have on price.
Property blogger Andrew Duncan has advice from his own experience for those making their first offer:
■ Offer 5% to 10% below the maximum you would be willing to pay. It can be tempting to go in much lower, but you risk offending the owners, which can reduce your chances of securing the property – even in a buyers’ market.
■ Offer an uneven number such as $801,230 – it’s always better to be slightly above any round figure rather than below. For example, $801,000 is far more attractive to an owner than $799k, but doesn’t make much difference in the scheme of things. ■ You could also write down and cross out some lower figures, such as $790,000 and $800,000. Most buyers adjust their pricing in their own minds before offering, so it makes sense to show this progression on paper.
■ Fill in the offer with your lawyer and drop it off to the agent yourself – especially if it’s your first time offering. This allows you to go through the sale and purchase agreement at your own pace, without feeling pressured to increase your price.
■ You should always run everything by your lawyer first.
■ If you can’t get to the amount the vendor wants, offer them something else – like an extended settlement date, or fewer or shorter conditions.
■ Don’t fall for the ‘‘meet in the middle’’ trap. If you like the home, and you feel like you’re getting it at a fair price, then go for it. Many negotiations fall over because no-one wants to budge and move the last $10,000 to $20,000 to get the deal together.
■ If you are in a multiple offer situation, you need to put your best price forward first time.