Is now the time to buy?

As the property market shows signs of stabilising, an increasing number of listings suggests now might be a good time for potential purchasers to make their move. Well-researched decisions and a solid sale and purchase agreement will help buyers sail into a smooth settlement.

With more listings, buyers gain negotiating power. More properties have price indications or are ‘by negotiation’, rather than the more pressured sale by auction, allowing more time for research and including appropriate conditions in the agreement for sale and purchase.

Conditions can be added to agreements for the benefit of the purchaser or the vendor, and each will allow a set number of days to satisfy them. The deposit is typically paid once all conditions are met.
Precise wording is vital, as vendors may be reluctant to let deals collapse when buyers are harder to find. As a buyer, key clauses to consider include a LIM (Land Information Memorandum). A standard condition, a LIM report can reveal critical details like unconsented work, zoning issues, environmental risk information and if there are any building consents or Code Compliance Certificates relating to the property.

Another standard clause is for the buyer’s finance. Your finance timeframe should align with the LIM.

This avoids issues if the LIM reveals something impacting ownership or finance approval. If relying on the finance clause to back out of a sale, be aware you may need to show that you couldn’t secure finance. If using KiwiSaver for your deposit, apply early (it can take four weeks to process your application) and be aware that you will also need to inform the vendor, as the funds will be held in trust until settlement. A builder’s report is crucial for confirming structural soundness or identifying repairs, and must be from a suitably qualified inspector, not just a ‘handy mate’.

The standard agreement for sale and purchase also allows your lawyer 10 working days to check the title of the property. You can object to the title in certain circumstances, but generally the scope for cancelling based on title issues is limited.

If you’re not 100 per cent sure about buying the property, a well-drafted due diligence clause is a must. If worded appropriately, this lets you make an offer and still cancel if you find something that changes your mind. Always talk to your lawyer before relying on a Solicitor’s Approval clause rather than a proper due diligence clause, as a Solicitor’s Approval clause is not a “get out of jail free” card and has limitations.

Even if the market is swinging in your favour, getting legal advice before signing an agreement to buy property is essential. A property is a big investment; and the right conditions can protect you if things don’t pan out.