Putting your best foot forward in a booming property market
The COVID-19 pandemic has created a great deal of economic uncertainty both globally and in New Zealand. During the lockdown in April and May 2020 we were all questioning how the housing market would be impacted.
Contrary to the expectations of some commentators, the NZ housing market has been booming since the end of lockdown. Whether this is from an increase in Kiwis returning home, new home buyers taking advantage of lower interest rates or people just needing a change, the fact is competition for houses has increased and prices are still rising. According to data REINZ released in September 2020, median house prices across NZ increased by 16.4% in August 2020. In Hawke’s Bay the increase in annual sales volumes during August was 32.5%, the highest number of house sales for the month of August in 14 years.
Bramwell Bate is finding that clients are often involved in a multi-buyer situation where now, more than ever, they are needing to put their best foot forward in order to have a chance at their offer being accepted.
It is still important, however, that you do your homework first. A house purchase is one of the biggest investments you will likely make in your lifetime.
When you put forward an offer to purchase a property, you can make the offer subject to several conditions that need to be satisfied before your purchase proceeds.
One of the most common conditions is finance. Even if you have pre-approval from a bank, most banks will need to see the signed Agreement for Sale and Purchase and approve the property you are looking to purchase before they will give you final approval. This makes the finance condition crucial.
If it is your first home, then you may be eligible for a Homestart Grant or to withdraw funds from your Kiwisaver. In these situations you should speak with your lawyer about what timeframe your finance condition should have to ensure you have sufficient time to get approval and withdrawal of funds, especially if you need those funds to pay a deposit to the vendor.
A solicitor’s approval condition is also often included in an Agreement for Sale and Purchase. This can provide your solicitor with a chance to look at the Agreement and the title to the property. For example, there may be an easement on the property which gives someone a right of way, or a right to run power or pipelines through your property. You may also have plans to develop your property and before you proceed with the purchase it is important to consider whether any easements might restrict your ability to do so.
Another common condition is a builder’s report. This report generally allows you to obtain a report on the condition of the home and other improvements on the property.
We recommend you speak with your lawyer prior to making an offer so that you can consider the number of conditions to include and ensure that you are sufficiently protected. There may also be instances where you can make enquiries before putting forward your offer, such as obtaining the builder’s report or asking your lawyer to take a look at the title to the property before you proceed.
Whatever you decide, it is important to get the proper advice and support. A signed Agreement for Sale and Purchase is a legally binding document. Your lawyer will talk you through it, answer any questions, and ensure it is correct before you sign.
This article was also published in The Profit: https://www.theprofit.co.nz/category/pro-experts/bramwell-bate-lawyers/