The House Buying Process in New Zealand

Most migrants to New Zealand from the UK buy a home fairly quickly after they arrive. It is a great way to start getting settled in an area, but as in the UK it can be a very stressful time. The more you know before you start out on the home buying process, the less stressful it should be.

The House Buying Process in New Zealand

The system for buying a house in New Zealand is relatively straightforward even for the beginner, with gazumping and gazundering unheard of, and the wholesale stripping of fixtures and fittings very uncommon.

Methods of buying and selling houses in NZ:

By Negotiation

This is the most common method of buying and selling homes in New Zealand. Once you have found a house you like, you contact the agent to make an offer on the property. The agent then negotiates between the two parties (vendor and prospective purchaser) to agree a price. It is common to offer several thousand dollars under what you are willing to pay, then be prepared to move up with each offer. Prospective purchasers typically make a couple of offers this way then put in a full and final offer.

Estate agents typically conduct this process in person with each party if they are in the same city, which can stretch on into the night.

With each offer, the prospective purchaser signs a contract, and states any conditions and the price they are willing to pay. The vendor then considers this and either accepts, declines or comes back with a counter offer. It is important to understand that the contract is a legally binding sale and purchase agreement, which immediately puts you in almost the same position as exchange of contracts in the UK – the main difference is that title searches and builder’s reports are conducted after the offer is accepted.

Very common and entirely sensible conditions usually entered by prospective purchasers are “subject to finance”, “subject to title search” and “subject to builder’s report”. For more information on these conditions and some further recommendations, please see our legal guide to buying property in New Zealand .

Once you have reached an agreement, and the contract has been signed by both the vendor and purchaser, the agreement is binding and you will need to pay a deposit to the estate agent. This deposit, usually 5%-10% of the purchase price, is held in trust until the sale is completed. The term for this part of the process is that the house is “under offer”.

Once you have sorted out finance, had your lawyer check the contracts and conduct and check the title search, and had the house checked by a builder and/or engineer to your satisfaction, the sale goes “unconditional”.

From this point, the legal checks and preparation continue, until “settlement” – the date when the keys are handed over and you move in. For more information on what happens during this time, we again refer you to our legal guide to buying property in New Zealand.

By Tender

With a tender, the vendor sets a final date for offers to be presented, then considers them all at the same time. Prospective purchasers put in their best offers, which can include conditions. The vendor then negotiates with the prospective purchaser/s through their estate agent, and the sale proceeds much the same as above.

At Auction

When you buy at auction you buy unconditionally, and need to pay a deposit (typically 10%) on the day. This means that you need to have your finance sorted and, and have completed any builders reports, title searches and valuation reports in advance.

If the property does not meet its reserve price at the auction, a process of negotiation will begin with interested parties. This is when most properties offered for auction actually sell.

New Zealand Real Estate Agent Fees

Real estate agents charges higher fees (around 4% plus GST and advertising costs), though there are some private sales, discount estate agents and even set-fee estate agents. As in the  UK, the vendor pays these fees. There is no stamp duty, and  banks are relatively keen to lend money even to new immigrants  as long as they can supply a reasonable deposit.

To find out more, request a free copy of our Financial and Pension guides for New Zealand.