Lily Adrianne found her passion for property investment and now has bought 11 rental properties in the last year alone. Her life wasn’t always so easy. A few years ago she was broke with an abusive boyfriend. It wasn’t until she has the courage to pursue her modeling career that she was able to break free. After finding success in modeling, she applied her courage to property investment.
Having bought 11 properties all over New Zealand, she finds the property market rather friendly compared to other countries. The buying process is well-organized, taking 3-4 weeks to complete. It explains her ability to purchase 11 in one year. However, she explains that the buying process may take longer, based on the method of sale.
When buying property in New Zealand, buyers have four options to choose from:
1. Buy by Negotiation
Prices of properties sold using this method aren’t indicated. The premise for this practice is to encourage buyers to make the best offers based on the property’s market price. Typically, the seller doesn’t set deadlines and can negotiate with the buyer and accept a conditional offer. This method is more favorable to the buyer.
2. Buy by Deadline
This method of sale requires all buyers to submit an offer on or before a fixed date. Unlike auctions, the offers are confidential, prompting buyers to make their best offer. these sales are advertised using phrases like ‘deadline sale’ or ‘deadline treaty’ and the seller may include the words ‘unless sold prior’ as the property may be sold before the end date. Since the seller can accept an offer at any time, buyers need to be proactive at declaring their interest.
3. Buy by Auction
Buyers prefer this method as it’s more transparent compared to other methods where offers are for the vendor’s eyes only. Since buyers know their competition, they are more likely to make competitive bids. However, such intense competition may push the prices beyond the market price and their financial limits. Auction sales are unconditional so you need to learn as much about the property before you bid. Here some important information to research ahead of time:
- Determine the value of the property
- Get information about the property from the local council.
- Perform a title search
- Obtain an inspection report
- Perform a thorough search of the land, house, and neighborhood
4. Buy by Tender
When buying a property by tender, the buyers must send confidential written offers to the agent before a specific date. Vendors can’t accept offers before the specified closing date. Like sales made by auctions, the idea is to create a sense of urgency so this is usually done in extremely competitive markets.
After the expiration of the tender date, the agency collects the offers and presents them to the seller, who has five working days to accept a suitable offer. Buyers are warned against submitting additional offers until the seller responds. Submitting more than one offer before the tender end date turns the sale into a multi-offer process. If the seller accepts your offer, they sign a sale and purchase contract, which is legally binding.
Understanding the different methods of buying property beforehand helped Lily purchase multiple properties within a short period. Each buying process offers advantages and disadvantages or both the seller and the buyer. A better understanding of these differences put on the right path to acquiring good investment properties and reaching your financial freedom.