Buying by negotiation

Making an offer

There are two types of offers:

 Conditional.

Having one or more conditions to be met within a specified period. For example, subject to a building inspection, house sale, finance.

 Unconditional

Commonly known as a Cash offer.

All contracts relating to land must be in writing. That means that any offers made on a property will be drawn up by the salesperson on the Real Estate Institute Sale and Purchase agreement.

This offer needs to be signed by the buyer and is usually accompanied by a 10% deposit cheque.

The offer is then presented to the seller for their consideration. If the offer is at an acceptable level, the seller will sign as acceptance and the sale is concluded.

 

What is a Counter-signed agreement?

If it is not at an acceptable level, the offer may be counter-signed by the seller and sent back to the buyer for their consideration. This may happen several times until the price and conditions are satisfactory to both parties and a sale is concluded. Any changes to an agreement need to be initialled by all the parties to it.

At this point, the Sale and Purchase Agreement is dated, and the agreements are forwarded to both the buyer’s and the seller’s solicitors.

It is our normal standard practice to also give copies of the completed agreement to both the seller and the buyer so that all parties have documentation detailing the possession date and what chattels go with the property.

 

Be aware of GST  Liability

Most farm transactions take place between sellers and buyers who will both be registered by the time of settlement. New rules came in to place in 2011 which allow most of these farm transactions to be “zero rated” for GST purposes.

Lifestyle blocks and farmlets may fall into the middle ground between farms and as such can be tricky at times, especially in the situation where the seller may be registered for GST and the buyer not.

We always recommend seeking advice from an accountant and/or solicitor on GST liability before signing a Sale and Purchase Agreement.  Even better, seek this advice before contemplating the sale or purchase of a rural or lifestyle property.

 

Paying a deposit

The deposit must be paid when the agreement has been signed by both parties and is  payable to the Public Trust.  A deposit of 10% is usually required. When we receive confirmation from the seller’s solicitor that the agreement is unconditional, we forward the deposit to their solicitor, less our commission. The conclusion of the settlement is carried out between your solicitor and the seller’s solicitor. Once an agreement is unconditional, the deposit is not refundable.

 

When can I move in?

The process by which the settlement/possession date takes place is commonly conducted through lawyers and involves the payment of the purchase price (less any deposit already paid) in exchange for which the purchaser will be electronically registered as owner on the Certificate of Title to the property. This electronic registration will also ensure that all previous charges over the property are released. Rates will be apportioned as at the date of possession and shown clearly on your lawyer’s statement.

 

Keys to the property are usually either handed over to the purchaser by the agent or the vendor’s lawyer once settlement has been confirmed. Normally, the settlement date and the possession date are the same.