The three most common methods of sale in New Zealand property
The seller will pick a method based on what the property market is doing because each of the below options are more beneficial depending on the current economic conditions.
Price by Negotiation
Normally, a purchaser will make an offer based on an advertised price. When the purchaser submits an offer, the purchaser will need to include the name of the purchaser(s), the price, the deposit, the settlement date and any conditions. It is common for the purchaser to include conditions such as due diligence, finance or a building inspection.
The seller is also able to include conditions in the agreement e.g. the seller entering into another unconditional purchase agreement for their next property, an escape clause if this purchaser receives a better offer etc. It is then up to both sides to negotiate between themselves regarding the final terms and conditions in the agreement.
Auction
Several weeks prior to the auction date, the seller will provide a copy of the auction agreement to all interested purchasers. If the purchaser wants to vary the terms of the agreement e.g. pay a lower deposit price upon signing the agreement, this will need to be agreed upon with the seller prior to bidding at the auction. It is important that you have completed all your due diligence prior to the auction day. It is very uncommon for an auction agreement to have any conditions in it and as such the agreement will become unconditional once signed by both parties.
The seller will need to set a reserve price which is kept confidential from all the bidders. If you want to bid at an auction, you will need to register with the real estate agent prior to the auction beginning.
At the auction, the auctioneer will take bids from interested parties. Once the reserve price has been met the highest bidder will win the auction. This means the highest bidder will sign the agreement and pay the deposit immediately following the auction.
Tender
If the seller elects to sell their property by tender, a purchaser will submit a confidential written offer before a set deadline date. Like price by negotiation, a purchaser will be given a tender form to include their own purchase price and terms. Following the deadline date, the seller will consider all the options and pick the option that suits them best.
Normally, a seller will look for an offer that has the fewest buyer conditions, preferred settlement date and the highest price however the seller does not have to accept the highest offer or any offer at all. Often, the purchaser is required to pay the deposit when it submits its tender form. The seller may elect to negotiate with a purchaser/tenderer before it accepts the tender. At the conclusion of the tender, any unsuccessful tenderers will receive their deposit back.
Please contact us if you would like some advice regarding which sale method may suit you best. Alternatively, if you are a purchaser, we can guide you through an agreement to ensure you understand how each option may suit your own needs.
