REAL ESTATE METHODS : Navigating the Different Ways to Buy A Property ??

Whether you're a first-time buyer or an experienced investor, knowing how each sale and purchase method works can help you make an informed decision. In this week's update, we'll explore the different ways to purchase property, providing you with valuable insights to help you navigate the process successfully.

1. The Negotiation Method

One of the most common methods of purchasing property is by negotiation. This involves making an offer on a sale and purchase agreement and negotiating with the real estate agent acting on behalf of the vendor (or seller). The advantage of this method is that you can make your offer subject to conditions, known as a conditional offer. These conditions may include obtaining a satisfactory builder’s report, a LIM report, or finance. Once an agreement is met, any conditions need to be satisfied by the due date and it is the buyer's responsibility to satisfy those conditions. It is highly recommended to consult with a solicitor to determine the appropriate conditions to include in your offer. They will provide you with advice based on your specific circumstances and ensure that you have a thorough understanding of the legal implications before signing any agreement. If you make an offer conditional on finance, you will normally have between 5 and 10 working days to get this sorted. It always pays to make sure you start working with a Mortgage Adviser well before this so we can arrange all the necessary paperwork to make it happen for you in time.

2. The Private Sale Method?

In a private sale, you have the opportunity to negotiate directly with the vendor without involving any real estate agents. While this method can provide more flexibility, it's essential to exercise caution and seek guidance from your solicitor throughout the process. They will ensure that all parties meet their legal obligations and help you navigate any complexities that may arise.? When engaging in a private sale, it's important to make sure you have a standard Sale and Purchase Agreement in place. This agreement outlines the obligations and responsibilities of both parties involved and as always, make sure to consult your solicitor before signing any documents to protect your interests. If you are needing finance for the purchase you will almost always need a Registered Valuation so the bank can be sure you are paying a fair market value for the property. Make sure you engage your Mortgage Adviser early on in the process so we can help arrange the valuation as part of the finance requirements.

3. The Auction Method

Auction rooms are starting to heat up again and are currently a very popular method of purchasing a property. They are held at a specific time and place, and potential buyers compete to outbid each other for the property. If? you end up being the successful bidder, your offer is unconditional, meaning you are legally obligated to purchase the property. Therefore, it's important to have all your due diligence completed and your finance in order before participating in an auction. Typically, a deposit of approximately 10% is required on the day of the auction so you need to make sure you have that readily available.?

4. The Tender Method

A less common method of purchasing a property, but one that pops up every now and then, is through a Tender process. In a tender, interested parties submit written offers (tenders) by a specific deadline. All tenders are then presented to the vendor simultaneously for consideration.? The tender can be conditional or unconditional. Since you typically only have one opportunity to submit a tender, ensure you offer your best price from the start and be prepared to compete with other potential buyers, as the seller may choose to negotiate with multiple tenders.

5. The Mortgagee Sale Method

A mortgagee sale happens when the borrower does not meet their obligations under the terms of the mortgage (usually not meeting their mortgage repayments), so the mortgagee (Lender) exercises its power of sale. The property is sold, after completing a legal process, to recover its debt.? In the majority of cases the property is offered for sale by public auction or tender. For buyers, the big upside to acquiring a home through a mortgagee sale is that you might be able to secure it for a cheaper price than if you bought it in the conventional way.

However, cheaper doesn't necessarily mean easier.?

Here are some risks you will need to consider:

??The home is being sold against the owner’s wishes. So the owner might refuse to let you view the property or conduct a building inspection. Furthermore, the lender doesn’t have to guarantee the property will be vacant, which means the owner might refuse to leave the home after settlement. If that happens, you will be forced to take steps to evict the owner.

??The owner can repay their mortgage before settlement, and the property can be removed from the market at any time.

?? The lender doesn't have to guarantee the quality of any chattels (e.g non-permanent items such as fridges, washing machines and ovens) that are part of the sale or provide any warranties or supporting documentation for anything relating to the building, fixtures or fittings.?

Given these risks, it's wise to proceed with care when it comes to mortgagee sales. It is even more important to do your due diligence, seek legal advice and understand the risks associated with the sale.? If you require finance for the purchase make sure to talk to a Mortgage Adviser so we can get the right pre approval in place for you.

??Tips & Tricks When It Comes To Negotiating

Negotiating the purchase of a property requires careful consideration and strategy. Here are some things to keep in mind:

Do's ?

• Have a clear understanding of the property's value by conducting thorough research.

• Be prepared to negotiate and consider the possibility of obtaining a lower price.

• Know your price limit and stick to it.

• Be flexible with certain conditions, such as the settlement date or deposit amount, to make your offer more attractive.

• Gather as much information as possible about the property to strengthen your bargaining power.

Don'ts??

• Don't feel pressured to rush into a decision. Be prepared to walk away if the negotiations exceed your top price.

• Avoid disclosing your top price to the agent or seller, as it may weaken your position during negotiations.

• Don't sign any documents you don't fully understand. Seek clarification from your solicitor before committing to any agreements.

• Remember, real estate agents work for the seller and will strive to negotiate the highest price possible so it’s important to approach negotiations with a clear understanding of your own requirements and limitations.

Whether you purchase a property by negotiation, private sale, auction or tender, one of the best things you can do to prepare is to sort your finances out early.

Make sure you engage with a Mortgage Adviser early on in the process to obtain a home loan pre-approval which will help to determine your financial capacity when house hunting.? Having access to funds that enable you to purchase will strengthen your bargaining power as well.

Remember, I'm here to support you every step of the way, providing expert guidance and financial solutions that will help you to achieve your property ownership goals.

Cheers,

Simon

??021 322 109

[email protected]

?? loanmarket.co.nz/barrington