How does buying process differ from OZ?

Hi Wolly
I’m probably just as much a beginner as you but we have just had our first offer accepted on a property in NZ. We made the offer 15 April (Friday) and it was accepted on the Monday (18th). We made it subject to a satisfactory building report which we organised that same day. Normally we would also have included ‘subject to finance’ but as we already had that in place we didn’t bother making it a condition. We have also requested a LIM.

We have been told our offer should become unconditional within two weeks and at that point we pay our deposit. After that it should take about 4-5 weeks for everything to be finalised. Don’t know if this is normal but it’s what we’ve been told.

I’d be happy to keep you informed of our progress and let you know how long things actually take.
Cheers
jel

Hi Wolly!

“After the offer has been accepted, is there a cooling-off period?”

Yes. that is unless you make a totally unconditional offer! Usually you make an offer subject to this and that (touch base with a solicitor prior to your first purchase and talk through the process with them. Run all offers past them first especially initially.)

Cooling off period = unconditional period. How long that is is up to your offer. Obviously vendors like them short or not at all, and purchasers like them long, so you find a happy medium. 5-15 days is usually good. 3 days if you are really crazed on the deal and want to be more competitive and have the money ready for a deposit and are confident you can get builder’s and val. But for me – 5 working days is an absolutel minimum.

“How long is the usual period from deposit to going unconditional?”

Deposit is not due until unconditional. In Aus the trend of offering a deposit on signing has not caught on so basically it costs you nothing to sign an offer, and if accepted, the deposit (usually 5-10 percent) is payable on unconditional.

Once unconditional you have to settle the property. I.e. your ‘out’ is prior to unconditional.

” I gather this is the time to do your due diligence (property valuation, number crunching etc). What is the typical time until settlement/exhange of contracts?”

Yes. as I said 5-15 working days is good. If you can get it.

“It is typical to do both pest and building reports?”

Typical for me, but you’d be surprised how many don’t bother. Pest – not so typical. NZ doesn’t have termites, it has borer. Borer is more laid back, eats slower, not as big a deal, can be ‘bombed’ and killed cheaply. Borer is picked up in the builder’s report so I don’t know anyone who bothers with separate pest inspection in NZ.

” In OZ, I’ve been advised that it is wise to make sure there is a clause in the contract ‘subject to pest and building…’.”

Yes, in Aus it is more difficult to get vendors to accept many more clauses than that – but we write in all sorts of things. that we want access before settlement, that the contract can be done via fax, that we want keys on settlement, that we want the vendor to fix up this and that before settlement, we need access to the tenancy details, that we want access to fix/kick out tenant and re-let/renovate prior to settlement, all sorts! You may not get them over the line, but we always try, anyway!
If you haven’t done it before do get a lawyer to word the clauses for you.

Settlement – usually we ask for 45 days from unconditional especially if it has a tenant, and
you may not want to settle the property with a bad tenant put in there by the current owner.

So you may want vacant posession. As you have to give 42 days notice, therefore 45 days to settle is needed. If the house is vacant or you want to keep the tenant or you can settle quicker (perhaps for a discount?) then 21 days should be about the shortest. Shorter than that and you may be struggling, especially if finance is involved.

If you are settling in cash, then just ask your lawyer how quickly you can settle.

cheers-
mini