Methods of Sale
Understanding the different methods of buying real estate
There are a number of different methods you can use to purchase your first home. The processes may seem a little daunting, but with the help of a real estate agent to guide you, you'll be just fine.
In New Zealand there are four main styles of sale: private treaty, auction, tender and expressions of interest.
Each state has different regulations and laws, so you should check with a real estate professional if you are unsure about the specific rules in your state,
Private treaty
Also known as a 'private sale', this selling method gives both the buyer and seller the most flexibility to negotiate price and purchase conditions.
Prospective buyers make offers on the property while the property is listed for sale on the market. Private treaty sales mean you have the option of attempting to negotiate the price or other selling conditions with the owner's agent.
There is no 'deadline' to a private treaty sale, but be aware that properties in high-demand areas can sell quickly - so if you are interested in a property you should make enquiries with the Century 21 agent who has listed the property for sale.
If the owner has accepted your offer, there is a cooling off period, during which you should perform any due-diligence on the property, such as securing home loan finance and having pest/structural inspections done.
Auction
An auction can be tricky to navigate and that is why pre-planning is essential. Ensure you are comfortable with the bidding process, set yourself a limit, avoid entering personal bidding wars — and take your chequebook with you!
In some areas, auctions are the most popular method of sale, and there is a chance that you can secure a property at a good price where there is low interest or competition from other bidders.
You can also make pre-auction offers to the owner through their Century 21 real estate agent. Whether or not your offer is acceptable to the owner will depend on a variety of factors - so it will help do your research about how competitive the local property market is.
You will need to register your bid on (or before) the auction day to participate as a bidder.
Most sellers will have set a reserve price - the lowest price that they are willing to accept for the property. If no bids are made at or over this reserve price, the property may be passed in. In the event that a property is passed in, you may have an opportunity to negotiate a sale with the owner.
Some contracts of sale allow part of the deposit to be paid at the end of the auction, with the balance payable on a specific date. Always check the contract of sale before you bid to ensure that you have the necessary funds to secure a property before you bid.
Unlike private treaty sales, properties sold by auction have no cooling-off period, and you cannot negotiate the conditions of sale. That means you need to complete any due diligence inspections prior to auction day and have your deposit cheque ready at the time of sale.
Tender and expression of interest
These sale methods are less common, and are usually associated with high-end or large properties. Both require that you make a single written offer that is passed through to the owner by their agent for consideration.
Tender
- You must submit a proposal in response to the seller's disclosed tender price, usually before a set deadline.
- You will be competing against other buyers by submitting offers, but you will not know how much others are offering, making the process similar to similar to a silent auction.
- Properties are usually sold to the highest bidder.
Expression of interest
- You must send an expression of interest (usually a document) before the specified deadline.
- The property price is not always advertised.
- As with tenders, properties are usually sold to the buyer making the highest offer.
Express Sale
Express sale is a property sales strategy which is unique to Century 21 and is intended to give properties a competitive edge and therefore speed up the sales process and achieve a premium price.
When selling your property it is important to stand out from the crowd and have a point of difference. The Express Sale method helps achieve this by marketing the property without a specific price when it is first listed.
By bringing keen buyers and keen sellers together using the Express Sale method the sales process becomes much more effective and efficient. Talk to your local Century 21 office to find out more.