Legal and Negotiation Processes
Preparation and Planning
Settlement and Post-Purchase
The Market and Compliance
Viewing and Inspecting Properties

How To Use The Step Guides
Buyer Introduction
Your Current Scenario
Understanding Real Estate Market Dynamics and Influences
Assessing the Benefits of Owning vs. Renting
Assessing Your Readiness and Financial Planning for Homeownership
Establishing a Budget for Property Purchase
Deciding to Work With A Mortgage or Financial Adviser
Deciding on Whether to Proceed with Home Buying
Analysing Financial Capacity for a Mortgage in New Zealand
Getting Pre-Approved for a Mortgage
Proceeding As a Cash Buyer
Attending Property Seminars and Workshops
Exploring Various Mortgage Options in New Zealand
Property Sale Types in New Zealand
Anti Money Laundering Rules and Regulations
Determining Long-Term Goals and Future Plans for Property Buying
Costs Associated with Buying a Property
Creating a List of Must-Haves and Nice-to-Haves
Potential Purchasing Partners for Property Buying
Researching the Housing Market in Your Desired Area
Location and Commuting
Understanding Property Taxes in New Zealand
How to Compare The Values of Similar Properties
Exploring Property Listings and Conducting Online Research for Buying Property
Interacting with Real Estate Agents
Arranging Private Viewings of Properties
Guide to Attending Open Homes and Viewing Properties
Arranging Professional Property Inspections
Seeking Comprehensive Legal Advice Before Making an Offer
Choosing the Right Conveyancing Lawyer when Buying Property
Understanding Legal Obligations and Rights as a Buyer
Considering Community Amenities and Infrastructure
Conditional Offers Versus Unconditional Offers

Formulating an Offer Strategy
Buying a Property at Auction
Buyer First Mover Advantage Offer Strategy
Engaging in Negotiation of Purchase Terms
Ensuring Compliance with Agreement Conditions When Buying Property
Discussing Agreement Details with Your Legal Advisor
Undertaking a Geotechnical Report
Reviewing Property Inspection Reports for Potential Issues
Requesting and Analysing a LIM Report
Requesting and Analysing a PIM Report
Things to Do During Due Diligence Period to Prepare for Move
Advantages and Disadvantages of Using a Moving Company
Organising Home and Contents Insurance
Settlement Day Procedures
How to Deal With Settlement Delays in Property Transactions
Planning Interior Layout and Design
Settling In and Post Purchase Steps
Purchasing Necessary Furniture and Appliances
Tools and Services To Help Manage Your Property & Finances Post Purchase
Re-evaluating Your Budget Three Months Post-Property Settlement

Previous Step
Do you need help with this step?
Next Step
Do you need help with this step?
Buy / Step 34 of 54

Conditional Offers Versus Unconditional Offers

Do you need conditions or not?

The crux of a buyer’s offer is the sale and purchase agreements (S&P). A pivotal aspect of these agreements is the distinction between conditional and unconditional offers. This comprehensive guide aims to demystify these concepts, detailing the common conditions that are often incorporated into S&Ps.

A conditional offer in real estate is similar to placing a reservation on a property – it's an agreement that moves forward only if certain criteria, or conditions, are met. These conditions provide a safety net for both parties, particularly the buyer, to ensure that all their requirements are satisfied before committing fully to the sale. It also limits or eliminates the possibility of another buyer overruling your offer.

Finance Condition

Perhaps the most common condition is related to financing. This clause allows buyers a stipulated period, typically 10 working days, to secure a mortgage or other means of funding. If financing falls through within this window, buyers retain the right to retract their offer without legal repercussions.

Due Diligence Condition

A due diligence condition is broader in scope, allowing buyers to conduct comprehensive checks on various aspects of the property – legally, physically and financially – satisfying themselves that all aspects align with their expectations.

LIM Report Condition

The LIM report condition is crucial as it involves obtaining a Land Information Memorandum from the local council. The LIM encompasses vital details about the property such as zoning, consents and any potential hazards or restrictions. Buyers usually have a set time frame to obtain and approve this report. As this is one of the hardest steps to control, is time dependent and is fundamental to the purchase it should always be added as a condition.

The LIM should be the first piece of due diligence that is completed after notifying your solicitor.

Building Inspection Condition

This condition is a safety net allowing buyers to bring in professional inspectors who rigorously evaluate the physical state of the property. This condition allows buyers to:

  • Hire professional building inspectors
  • Thoroughly assess the property's structural integrity
  • Detect any potential defects or significant issues.

Any major discoveries can significantly impact the buyer's decision. Armed with this knowledge, they have the power to either renegotiate terms or completely withdraw from the agreement without any legal consequences.

Sale of Another Property

This condition applies when buyers need income from selling their current property to fund their new purchase. The transaction hinges on whether they can sell their existing home within an allotted time frame. This can sometimes create a chain of interdependent offers based on the sale of the respective properties.

Title Review Condition

A title review ensures there are no legal barriers or encumbrances that could impede ownership rights or future use of the property. Buyers typically have a period after signing the S&P to review and approve the title documentation.

Insurance Condition

In regions prone to natural occurrences like earthquakes or floods, an insurance condition is paramount. This guarantees that buyers can insure the property adequately according to their standards.

Body Corporate Approval

For properties managed by a body corporate (e.g. apartments), this condition lets buyers assess and consent to rules and financial statements provided by the body corporate before proceeding with purchasing.

Valuation Condition

Sometimes buyers insert a valuation condition requiring a registered valuer's satisfactory assessment of the property's worth compared to its market price.

Specific Repairs or Improvements

Occasionally, agreements may stipulate conditions for sellers to complete designated repairs or enhancements prior to settlement – ensuring that properties meet agreed-upon standards before ownership changes hands.

Overseas Investment Act Approval

For overseas buyers purchasing property in New Zealand, securing approval under the Overseas Investment Act is essential. This condition requires buyers to gain consent from New Zealand authorities, ensuring the investment benefits the country. The approval process evaluates the investment’s impact on New Zealand’s economy, community, and environment. It's a mandatory step for completing the sale, aligning foreign investments with national standards and interests.

Toxicology Checks

Toxicology checks, often for meth contamination, are standard conditions to ensure property safety. Additionally, securing a Land Information Memorandum (LIM) within the offer's conditional period is crucial for comprehensive property insights. This involves allowing sufficient time for obtaining and reviewing LIMs, which detail the property's history, zoning, and potential issues.

Contrary to conditional offers, an unconditional offer is a decisive commitment made by the buyer, free of any explicit contingencies or stipulations. It's a clear-cut agreement that, once accepted by the seller, binds both parties legally to carry through the transaction with no room for backtracking – unless under truly exceptional situations.

Unconditional offers have certain unique characteristics:

  • Absolute commitment: The buyer guarantees to purchase the property as-is, without requiring any specific conditions to be met. This might involve accepting the property with its existing defects or waiving certain standard precautions like home inspections or financial checks.
  • Legal obligation: An accepted unconditional offer forms a legally binding contract between the buyer and seller. This means neither party can back out of the agreement without facing potential legal repercussions.
  • Faster transactions: Since there are no conditions attached, unconditional offers often lead to quicker sales as they eliminate the need for additional time-consuming processes such as professional inspections or securing financing.

Unconditional offers are typically more appealing to sellers because they provided an assured sale process with a swift conclusion and less admin work.

Which Offer Suits You Best?

Deciding between conditional and unconditional offers depends largely on individual circumstances and risk appetites. Conditional offers provide greater protection for buyers but may be less appealing to sellers especially in competitive markets. On the flip side, unconditional offers may expedite transactions yet carry inherent risks should unforeseen problems arise post-agreement.

Previous Step
Do you need help with this step?
Next Step
Do you need help with this step?