How to buy a house

The real estate agent works for the seller, not for you

Locating a suitable house to buy is best done through a real estate agent. You should remember that a real estate agent works for the seller, not for you, so you should not reveal anything to the agent that you do not want the seller to know.

Making an offer

The next step is to make an offer on the house for the seller to consider. If the seller is satisfied with the price offered then both parties can proceed to sign a contract for sale and purchase.

While it is not essential, it is a good idea to involve a lawyer right from the beginning to help negotiate the contract for sale and purchase.

What should be included in the contract for sale and purchase?

The contract should include:

• the particulars of the title
• any improvements to be made by the seller
• a list of chattels to be included with the house
• the price, including the deposit
• provision for adjustments to be made to land tax, council rates and water rates
• the rights of the parties to cancel the contract

Any special conditions should also be inserted; it is usually advisable to make the contract:

• subject to your solicitor’s approval of title
• subject to your approval after you have obtained a "Land Information Memorandum", which contains the local council’s records on the property (called a "LIM"; see How to obtain a Land Information Memorandum), and
• subject to you arranging suitable finance

Builder’s reports and pest reports

It is advisable to obtain a builder’s report on the structural soundness of the house. It is also possible to get a pest report on the house.

Arranging finance

You should preferably arrange finance before you make an offer on a house. This is especially important if you buy at an auction, as you are committed to the purchase and can be sued for damages if you pull out of the deal (see How to buy a house at an auction).

Valuations

You may wish to have the property valued by a registered valuer. Your lender may require a valuation as a condition of your mortgage.

Married and de facto couples

If you are buying a house with your husband or wife or de facto partner, it is generally best to put the property under both of your names. While under the PROPERTY (RELATIONSHIPS) ACT 1976 there is a strong presumption that the family home will be divided equally if your marriage or de facto relationship ends, this usually doesn't apply to marriages and relationships of less than three years: see How property is divided when a marriage or de facto relationship ends. So particularly if you are buying early on in a marriage or relationship, it would be wise to ensure that you share legal title to the house by having it under both your names.

Cautionary notes

• Buying a house is likely to be the biggest investment of your life, and there are many pitfalls. It is advisable that you protect yourself by hiring a lawyer at the beginning of the process.
• At present there are no specific capital gains taxes that must be paid in New Zealand. However, this may change in the future, so you should keep records of the purchase price of your house and the date of purchase in case these tax laws change.
• It is important that any special conditions of the sale be recorded in writing – for example, that the seller will complete the painting of the third bedroom before settlement, or that the rubbish in the backyard will be removed.