Buying your first home - the beginners guide



Purchasing your first home is an unquestionably daunting experience. It's a huge life decision and one that not many of us have had any exposure to the process of. Below we try to give a little bit of an overview of what you might expect in your first home buying journey.

I've found a house - now what?

The first part of the house buying equation is finding the house you want to buy. That in itself can be the toughest part of the process in the current property market in New Zealand. Once you've found a house that has been listed, you'll notice there are a few different methods of sale that real estate agents tend to use.

By negotiation - this basically means you can put your best foot forward with any offer and start a discussion with the vendors.

By tender - here you need to put your best foot forward by a certain date. On that date, the agent then presents all the offers to the vendor and they pick which one they want to take. Keep an eye out for the term "unless sold prior" on these listings though, as that indicates the vendor can accept an offer before that tender date.

By deadline sale - this is similar to negotiation, except there is an end date put on.

By auction - here the house will be sold on the day of the auction if it meets reserve. That means you need to have all your ducks in a row before showing up at an auction, as you'll likely need to go unconditional on your offer at that point.

Can I afford it?

Once you've found your house, you'll need to start thinking about whether you can afford to purchase it. You'll be able to get a gauge for how much the seller is wanting based on the listing itself, what the real estate agent is telling you, and what 'bracket' it is listed for online (search between two price points and move the top or bottom point up or down until the listing doesn't show to figure that bracket out). Armed with that knowledge you can think about how much you'd like to pay for that property and get in touch with your bank to organise pre-approval for finance. Getting a loan can also be daunting, but your bank manager or mortgage broker will be able to step you through the process, and there are plenty of mortgage calculators online to help you understand things like the interest you'll pay, and what your repayments might be.

How do I make an offer?

The real estate agent you are dealing with will be able to guide you through the offer and acceptance process as well. There is a good chance that when you make the offer, the agent will have you complete that offer on an Agreement for Sale and Purchase - so that if it is accepted, the vendor can just sign that document and seal the deal. When making your offer you'll be able to stipulate any conditions you have. As a general rule, the less conditions you have, the more favourable the offer will be, but you'll need to decide if you want to make the sale 'conditional' on things like:

• Finance - ie do you need to get confirmation from your bank about your mortgage?
• Solicitors approval - do you want to make sure your lawyer has an opportunity to look over the contract?
• Building report - do you want to have a builder check the house?

These conditions can be absolutely anything. They are basically things that you want to have happen before the contract becomes completely binding. They are very common, and agents are extremely used to putting conditions in contracts, and they will normally have a time period associated with them (eg conditional on finance being approved within 2 weeks).

What happens next?

Once you have your offer accepted, it's probably time to get in touch with your property lawyer. They will step you through the conveyancing part of the process, helping you get your Kiwisaver and First Home Grant if applicable and working with the other side to ensure the transfer of the settlement sum (what you owe for the house), and the house goes smoothly. Settlement date is the date you'll take ownership of the property and will be given the keys to your new home!

Just remember

It's daunting, but with the right professionals helping you through the process it can be an exciting and enjoyable experience purchasing your first home. Talk to your bank nice and early, and don't be afraid to put in conditions to suit your circumstances.