It's a step by step process
We know buying a first home can be an overwhelming process. So we've given you a broad overview of the steps involved, and some of our top tips are sneakily in there too!
Generally - the process of home ownership travels along the below steps. If you're not a New Zealand citizen or Permanent Resident, you'll want to get some advice from us before you even start looking for a house - but for the majority of people you can just get stuck into house hunting! Sometimes steps switch themselves around, sometimes you skip a step (if you're lucky!) but your chosen advisors including banker or broker, lawyer, and realtor should all help you along the way.
1. Finance - first make sure you know your budget. Your banker or mortgage broker can help you work this out. You not only require a deposit, but enough steady income to make repayments on the loan which is sometimes called 'servicing' the loan.
2. Property - find a property within your budget, and decide how much money you want to offer to the owner in order to buy it. Talk to the owner or realtor, and see if that kind of purchase price is likely to be accepted. If the answer is yes, ask the realtor for an "Agreement for the Sale & Purchase of Real Estate" to be filled out. That Agreement is your contract to buy the property and will be the document you make your offer on.
3. Consult your lawyer - BEFORE you sign anything, send us a copy of the contract! The team at CP Law will review the contract, talk to you about the conditions you need to include (like extra time for KiwiSaver withdrawals, finance valuations or a building inspection!). We may even need to assess if you're allowed to buy the land if you're not a New Zealand citizen or if you're buying special types of land. Not all due diligence clauses are the same, so even if you ask your realtor to include one on the draft contract, it is best to have one of our lawyers review it before you sign. If it is a property at auction, you will want to ask us what due diligence is appropriate prior to bidding at the auction. Once one of our friendly lawyers or legal executives has given you the go ahead you can move on to the next step.
4. Make an offer (or go to Auction!) - you can then fill out the purchase price and sign the contract (which is your offer) and send that to the realtor or owner. They will then accept, reject, or counter offer what you have put forward. Sometimes you will need to negotiate in this stage. The alternative is bidding at an auction. Auctions are always unconditional, so you need to make sure you have asked all the questions you need to prior to the Auction. If you have conditional finance approval, you will need to have confirmed that the bank will lend to you prior to bidding at the Auction. This may mean you need to pay for a valuation to be completed prior to the Auction.
5. Due Diligence (skip if you won your Auction!) - Once the land owner has accepted your offer, you often will have a few days to do your 'due diligence'. This is where you get the house checked over, ask your lawyer to check the title for easements, covenants or rights of way (essentially 'rules' for what you can and cannot do with that land, or even who is allowed to cross your land), or obtain a valuation for your finance. You don't want to do these steps too early and spend money on your due diligence if the owner never accepts your offer, so this is the best time to spend that little bit extra to make sure the property is perfect for you. If you won at an auction, you cannot do any more due diligence, so you skip this step!
6. Unconditional - once you have satisfied yourself that you are happy to go ahead with your purchase, and your finance and insurance is all organised, you can ask your lawyer to confirm the contract and agree to unconditionally buy the property. You will then need to pay the deposit to either the realtor, or your lawyer. You will withdraw your kiwisaver (if possible), and you will also tell your bank that the purchase is going ahead, so they can send all the mortgage and lending instructions to us. We will then prepare all the paperwork necessary to buy the house and call you in to sign it with us (or we will let you know how to do it remotely!). We will also let you know any other steps you need to take in order to get to the final day, which is your settlement date!
7. Settlement of your new home! EXCITING! This is the day that you officially become the new owner of your home. The bank will draw down your mortgage and send it to your lawyer. Your lawyer will then pay for the home, and record the transaction on the official register of land in New Zealand called LINZ (Land Information New Zealand).
Obviously, there is a lot more detail involved, but this is the outline of what happens from beginning to end of your first home purchase.
If you have other questions, we would love to hear from you. Feel free to give us a call on 03 441 2424 or send us a message at queenstown@cplaw.co.nz
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