For first home buyers, a property purchase 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 the following general stages (order may vary slightly).
Finding a house
You can seek out houses either through a real estate agency or by a private arrangement between the home owner and yourself.
You will need to have a lawyer or conveyancing professional acting for you in order to complete the purchase. We will be able to advise you of each step and aid you with the documents required along the way.
You will need to be completely satisfied that you will have sufficient finance available to you prior to making an agreement for sale and purchase (“ASP”) 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. As first home buyers, 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.
Receiving the ASP
Once you have found a house and contacted the agent or vendor about making an offer, generally the agent will prepare an ASP. We strongly suggest that prior to signing an ASP you send us a copy to review. At the least, have us provide a wide “due diligence clause” to include in the ASP. This will give us time to review all aspects of the ASP after you have signed and during the conditional period, and is discussed further in paragraph 5.
Many first home buyers can feel pressured to sign an ASP straight away to ensure they don’t lose out on a purchase. However, we often receive ASP’s that are already signed and discover that without advice, the buyers are locked into terms and conditions that are entirely unfavourable for them.
If your ASP has no conditions included when you sign it, then it is unconditional upon signing. This is the usual situation when you purchase at auction. Once the ASP 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.
Agreements often require a deposit to be paid on signing but most buyers negotiate to include a deposit that is only payable when the contract is declared unconditional. 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.
Once unconditional, we will begin preparing the relevant documents for you to sign prior to the settlement date and will liaise with your Kiwisaver provider (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, we can, prior to settlement, raise the issues with the vendor to negotiate to have these issues remedied, the settlement price reduced or both.
On the settlement day we will complete the transfer of the property to you once all the funds have been received and paid out to the vendor. We will then advise the agent or vendor that the house keys can now be released so you can move in.
The key to purchasing any home for first home buyers is being prepared. Ask us for help – talk to us early, and ensure you have your required IDs and finance ready to go!