If you have never bought a property before, it can be an intimidating prospect. We have broken down this process below and highlighted some things you may want to keep an eye out for along the way.
The process can be split into about eight general stages (order may vary slightly).
1. Finding a house
You can seek out houses either through a real estate agency or by a private treaty between the home owner and yourself.
2. Get a lawyer
You will need to have a lawyer or conveyancing professional acting for you in order to complete the purchase. They will be able to advise you of each step and aid you with the documents required along the way.
3. Arranging finance
You will need to be completely satisfied that you will have sufficient finance available to you prior to making a sale and purchase agreement (“SPA”) unconditional. Ideally, you can do a lot of the ground work for your finance before you even find a house to buy.
If you are getting a loan you will need confirmation from your bank that your application for this lending has been approved, which you can get while you house hunt. You can also complete your initial Kiwisaver forms to start the process of receiving your Kiwisaver first home withdrawal and home start grants before you sign. These forms can be downloaded online.
4. Receiving the SPA
Once you have found a house and contacted the agent or vendor about making an offer, generally the agent will prepare a SPA. We strongly suggest that prior to signing a SPA you send a copy to your lawyer to review. If you cannot arrange for your lawyer to review it prior to signing, we suggest at least asking your lawyer to provide a “solicitor's approval clause” to include in the SPA. This allows your lawyer time to review all aspects of the SPA after you have signed and during the conditional period. This is discussed further in paragraph 5.
Many buyers can feel pressured to sign a SPA straight away to ensure they don’t lose out on a purchase. However, we often receive SPAs already signed and discover that without advice, the buyers are locked into terms and conditions that are entirely unfavourable for them.
5. Conditional Period
If your SPA has no conditions included when you sign it, then it is unconditional upon signing. Once the SPA is unconditional, it generally cannot be cancelled.
If your Agreement is “conditional” you will have a specified amount of time to perform the recorded investigations into the property such as a building report, LIM report, methamphetamine testing and arranging finance.
By the end of the specified time period for each condition, your lawyer will need to advise the vendor’s lawyer (on your behalf) that the relevant condition is or is not satisfied. Once both parties have satisfied the relevant conditions, the agreement will be declared unconditional.
Once unconditional, you will be required to pay the deposit (if any) for the property. If you do not pay the deposit, the Vendor can provide three working days’ notice of requiring payment. If it is still unpaid, and sufficient notice has been issued to you by the vendor, the vendor is entitled to cancel the agreement.
7. Settlement preparation
Once unconditional, your lawyer will begin preparing the relevant documents for you to sign prior to the settlement date and will liaise with your Kiwisaver (if applicable) and lending parties to prepare for settlement. You will also need to arrange insurance.
Up to one day prior to the settlement date of the property, you are entitled to arrange with the agent or privately, a pre-inspection of the property. If, as a result of your pre-purchase inspection, you identify damage arising since the agreement, your lawyer can, prior to settlement, raise the issues with the Vendor to negotiate to have these issues remedied, the settlement price reduced or both.
9. Settlement day
On the settlement day your lawyer will complete the transfer of the property to you once all the funds have been received and paid out to the vendor. The lawyers will then advise the agent or vendor that the house keys can now be released so you can move in.
The key to buying any home is being prepared. Ask for help. Talk to your lawyer early, and ensure you have your required IDs and finance ready to go.