21 January 2019
Making an offer on your first home
If you’re looking to buy your first home and it has an asking price, or is for sale by tender, negotiation or deadline sale, how on earth do you determine what your offer should be? In this blog, we’ll explain what you can do to figure this out, and how you can be well prepared to make that offer turn into a successful purchase.
Firstly, there are several key people who will hold your (possibly slightly sweaty) hand through this process: your real estate agent, your lawyer and a builder. Collectively, they will help you learn as much as you can about the property.
A real estate agent will step you through the due diligence required, give you an idea of the prices houses have sold for recently in the area and help you make your offer when you’re ready.
We strongly recommend that a builder inspects the property to check the integrity of the building and identify any possible issues, such as leaks. There will be a cost involved for their time on this and they will provide a report detailing their inspection and findings.
A property title and Land Information Memorandum (LIM) report can be obtained from the Hamilton City Council. Fees apply so visit their website to find out more. Have your lawyer look over the property title document and any other legal matters involved in your purchase, most importantly, reviewing the sales and purchase agreement that you will sign to officially secure your first home purchase.
Not all of this work needs to be completed before you make an offer. Offers are almost always conditional on things like finance (just to be sure your pre-approved finance is all good), and a builder’s and LIM report. Auctions are different: an offer made there is unconditional, so you need all the above done before the auction date. While we’re on auctions – they are a popular way to sell a house in Hamilton at the moment but it can be a daunting way to buy a home (particularly your very first) so consider attending an auction for interest, to see how one works.
Some types of sales have a deadline date to have your offer in by, or require you to put your best offer forward to clinch the deal, like tender sales. Check out settled.govt.nz for more helpful information on the different types of sales.
In terms of deciding on a property’s value and what your offer should be, find its indicative rating valuation (RV) by searching for the property on qv.co.nz. RVs are updated every three years and based on capital value, floor area and building materials. Your Lugtons real estate agent will advise you on whether they think your offer is too low, and be a conduit between you and the seller during the offer and negotiation process.
Once you have gone unconditional (all your conditions have been satisfied and you’re happy to proceed with purchase – YAY!), you’ll make it official by signing on the dotted line of the sales and purchase agreement and paying your deposit. A settlement date will be agreed upon between you and the seller and it could be just four to six weeks until you get the keys to your first home!
To learn more about what’s involved in the exciting stage of buying a home, download our helpful guide on Purchasing your first home.