There are several methods of buying and selling property in New Zealand. It is important that you understand the particular process for the property you are buying or selling. Practices also vary between agencies so make sure you confirm details with the salesperson. Here, we have made some information easily accessible to you for instances that you will come across when considering buying or selling property. The following information is obtained from the Real Estate Agents Authority.
Buyers and sellers have choices about the agents and salespeople they choose to deal with. It is important to check that a salesperson is licensed and whether they have had any complaints upheld against them.
Buyers - You do not have to deal with the salesperson a property is listed with. You can contact any salesperson from the agency the property is listed with and ask to deal with them.
There is an online public register, including contact details of all licensed real estate agents and salespeople in New Zealand. You can search the public register on this website www.reaa.govt.nz. Always check that any salesperson you are planning to deal with is licensed, even if you know them.
It is important to find out as much as possible about the property you are considering purchasing before the sale and purchase agreement is finalised.
You can ask the salesperson anything you want to know about the property and they cannot withhold any information they know. However, you should not rely only on their information.
Important legal information about the property will be held by the local council and by Land Information New Zealand.
Before signing a sale and purchase agreement, find out as much as you can about the condition of the property through a builders report. This is a property inspection carried out by a New Zealand standards compliant property inspector. You will need to pay for this inspection.
Property inspectors are listed in the Yellow Pages. Ask if they comply with the New Zealand Standard (NS 4206:2005 Residential Property Inspection). This means they adhere to the Standards New Zealand requirements for residential property inspections.
Depending on the property, you may also want to hire other specialist advisors such as a valuer or structural engineer to help you decide whether you want to buy the property and how much you would be willing to pay for it.
An auction is an open process where buyers bid against one another to purchase a property.
When a property is being sold by tender, prospective buyers submit confidential written offers for the property to the agent.
This is when the property is marketed with a selling price – the amount the seller wants to be paid for it.
When you want to make an offer on a property, the salesperson will draw up a sale and purchase agreement and ask you to sign it. They must give you a copy of the Sale and Purchase Agreement Approved Guide and ask you to confirm in writing that you have received it. You should read this guide before you sign the sale and purchase agreement. This guide is also available in a number of languages from the website www.reaa.govt.nz.
You can make your offer subject to certain conditions. Common examples include making the offer subject to:
You can negotiate when you pay the deposit i.e. when your (conditional) offer is accepted or when the agreement goes unconditional.
The sale and purchase agreement is legally binding, read it carefully and if you don’t agree with anything, raise it with the salesperson. Have your lawyer check the agreement before you sign.
The property will remain available for sale to others during this process, and until the offer becomes unconditional.
You can negotiate with the seller, through the salesperson, with the aim of reaching a mutual agreement. The sale and purchase agreement may be amended a number of times during this process. The salesperson will ask you and the seller to initial any amendments to show you agree with them. Read any changes and make sure they are acceptable to you before initial them.
Then both you and the seller will be asked to sign the final version of the sale and purchase agreement. Have it checked by your lawyer before you sign. It will then be dated at this time.
Sale and purchase agreements are legally binding. Once you and the seller have signed, you will have a contract; the process of working through any conditions towards settlement will begin; and, once conditions are satisfied, you will have to go ahead with the purchase.
The sale and purchase agreement sets out in writing all the agreed terms and conditions of sale/purchase.
The agreement will also set out obligations and conditions that the buyer and/or seller must abide by. These may include what access the buyer may have to inspect the property before settlement and ensuring the property remains insured until the settlement date.
The agreement will also cover compensation costs that must be paid if buyer or seller defaults on the terms of the agreement, for example by delaying settlement. Your lawyer can explain these conditions to you.
A deposit – usually five to 10 per cent of the purchase price – is normally paid by the buyer, either when the offer is made or when it goes unconditional. The salesperson will usually take their commission from this deposit when the agreement becomes unconditional. However, the money has to have been in the agency’s trust account for 10 working days before they can take their commission.
The agreement will also specify the settlement date – the date when the buyer pays the rest of the amount agreed for the property – usually through their lawyer. This is typically also the possession date, when the buyer takes possession of the property.
The Code of Professional Conduct and Client Care sets the standards real estate agents must follow. It applies to all areas of real estate i.e. residential, commercial and rural. You should let the Real Estate Agents Authority know if any agent breaches the code.
A salesperson must also act in accordance with the seller’s instructions – unless doing so would be against the law.
And they cannot take advantage of any party’s inability to understand relevant documents; and they must keep both the buyers and seller regularly updated on any relevant matters.
The salesperson is in contract with the seller and will always work on their behalf. However, they have an obligation to treat the buyer fairly, including not withholding, or giving inaccurate information.
The salesperson must not disclose any confidential personal information about the seller unless the seller consents in writing or if the salesperson is required by law to disclose it.
The advertised price for the property must be in line with the pricing expectations the salesperson has agreed with the seller. The salesperson should not mislead the buyer about the seller’s pricing expectations.
The salesperson must not use any confidential information for their own benefit or that of any other person. The salesperson must disclose any conflict of interest to a buyer or seller with regard to the sale or purchase of a property.