Buying your first home - the beginners guide
Purchasing your first home is an unquestionably daunting experience. It's a huge life decision and one that not many of us have had any exposure to the process of. Below we try to give a little bit of an overview of what you might expect in your first home buying journey.
I've found a house - now what?
The first part of the house buying equation is finding the house you want to buy. That in itself can be the toughest part of the process in the current property market in New Zealand. Once you've found a house that has been listed, you'll notice there are a few different methods of sale that real estate agents tend to use.
Can I afford it?
Once you've found your house, you'll need to start thinking about whether you can afford to purchase it. You'll be able to get a gauge for how much the seller is wanting based on the listing itself, what the real estate agent is telling you, and what 'bracket' it is listed for online (search between two price points and move the top or bottom point up or down until the listing doesn't show to figure that bracket out). Armed with that knowledge you can think about how much you'd like to pay for that property and get in touch with your bank to organise pre-approval for finance. Getting a loan can also be daunting, but your bank manager or mortgage broker will be able to step you through the process, and there are plenty of mortgage calculators online to help you understand things like the interest you'll pay, and what your repayments might be.
How do I make an offer?
The real estate agent you are dealing with will be able to guide you through the offer and acceptance process as well. There is a good chance that when you make the offer, the agent will have you complete that offer on an Agreement for Sale and Purchase - so that if it is accepted, the vendor can just sign that document and seal the deal. When making your offer you'll be able to stipulate any conditions you have. As a general rule, the less conditions you have, the more favourable the offer will be, but you'll need to decide if you want to make the sale 'conditional' on things like:
These conditions can be absolutely anything. They are basically things that you want to have happen before the contract becomes completely binding. They are very common, and agents are extremely used to putting conditions in contracts, and they will normally have a time period associated with them (eg conditional on finance being approved within 2 weeks).
What happens next?
Once you have your offer accepted, it's probably time to get in touch with your property lawyer. They will step you through the conveyancing part of the process, helping you get your Kiwisaver and First Home Grant if applicable and working with the other side to ensure the transfer of the settlement sum (what you owe for the house), and the house goes smoothly. Settlement date is the date you'll take ownership of the property and will be given the keys to your new home!
It's daunting, but with the right professionals helping you through the process it can be an exciting and enjoyable experience purchasing your first home. Talk to your bank nice and early, and don't be afraid to put in conditions to suit your circumstances.
One of the most common questions we get at Conveyonline is 'when should I get my lawyer involved in the property transaction?' It's a really sensible question - you want to make sure that you aren't signing up to a dud deal, and so your lawyer's input is hugely important.
If you’ve sold or purchased a property recently it’s likely that you’ve used the Auckland District Law Society and Real Estate Institute of New Zealand Standard Agreement for Sale and Purchase. That document is the gold standard in New Zealand – used comprehensively throughout the industry to cut down on the amount of hours needed by lawyers in the conveyancing process. It comes as big news then that the Agreement is set to be fully revised for the first time since 2012. At the end of November an update will be released – after almost 2 years of work.
The main focus of the changes are to bring the Agreement in line with the modern world we live in. Putting a focus on modern technology and just generally updating the terms. There are three main areas that will see changes in this new revision.
The change here focuses on the grounds of compensation being widened from ‘mis-description’ to ‘misrepresentation’. That change effectively creates an expansion of the range of areas under which a claim for compensation (and interim determination) can be made if a dispute arises during the agreement.
The IRD has been brought on board to help tidy up the GST clause to make it more practicable. There were previous issues with timing of GST payment and the new clause seeks to fix that.
Email trumps fax
Lastly (and finally!) the agreement has altered to reflect the way we do business in 2019. Previously fax was noted as the primary method for notifying parties in the conveyancing process. That has now changed as the legal profession has finally caught up and made email that primary form of communication.
Property Law News & New Zealand Property Blog
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