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Making an offer - what do these terms mean?

Making an offer on a property is one of the most exciting parts of buying a home. You've found a place you love and you just want to move in - but first there might be a bit of negotiating and that huge long legal document we call a Sale and Purchase Agreement, which we'll talk about here today. 

Let's break that down for you and explain what all these terms mean;

Sale and Purchase Agreement

This is the contract between the seller (vendor) and buyer (likely you!) to transfer the ownership of the property. This must be signed and dated by both parties to be legally binding.

Conditions

Many agreements will have some things for you to do before you commit fully to purchasing the property. These can be numerous and are listed as follows.

​Finance

Many buyers will need approval from a bank to confirm they can buy the property. This is where we come in! It can also involve getting a Registered Valuation on the property, as well as confirming that you're eligible to receive your Kiwisaver and Home Start Grants. Finance is a very common condition and 10 days is normally an average length finance clause. Talk to us or your lawyer about how long you need for finance confirmation.

​Builder's Report

Getting a builder to check the property out is very highly recommended. They will check the property is structurally sound, as well as for any moisture build up or any potential problems you could face down the track. These can cost a little bit to get but are hugely beneficial given they could save you thousands down the track if there is something wrong with the property you don't know about.

​LIM Report

LIM stands for Land Information Memorandum.  Essentially this is a document which details the council history with your property.  It includes building consents and other details which effect your property directly.  We always recommend you get a LIM report and have it looked over by your solicitor.

​Meth Test

These are becoming a lot more common in agreements, where purchasers want to ensure the property has not been contaminated with methamphetamine. Some of the most unlikely properties show up positive meth tests, and they can be hugely expensive and stressful to "clean" so again it's highly recommended to get a quick test done to make sure you know what you're buying.

​Solicitor's Approval

This is a clause that allows your solicitor to look over the title of the property, check there is nothing unconsented you don't know about, and ensure there are no legal problems with the property. Often buyers insert this clause if their solicitor has not had a chance to view the offer before it is signed.

As you will often be signing an offer with a Real Estate Agent, (most of whom are fantastic at explaining the process) ensure you ask plenty of questions about what you are signing and that they insert the correct clauses and explain the agreement to you. Make sure your solicitor has a chance to look over the agreement before it's signed.

Making an offer should be a fun experience - so let us help!

Contact us at My Mortgage today and we'll make the process of finance for your first home easy!

Claire, Greg, Adam, Amber & the My Mortgage Team



 

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