What happens when my offer is accepted?
When navigating the property market in New Zealand, it’s crucial to pay attention to the finer details. Whether you’re a novice stepping into the world of property investment or a seasoned investor, the process post-offer acceptance can be intricate. This guide is designed to walk you through the essential due diligence checklist following the acceptance of an offer in New Zealand’s real estate market, ensuring that you manage your transaction with confidence and clarity.
Communications Post-Offer Acceptance
The initial step after your offer has been accepted is crucial: all communications with the vendor should now be conducted strictly through lawyers. This is essential for maintaining professionalism and ensuring that all discussions and negotiations are legally sound. This approach not only minimises the potential for misunderstandings but also adds a layer of legal security to your transaction.
Initial Steps in Due Diligence
Proceeding with Lending
Upon acceptance of your offer, it’s important to immediately send the sales and purchase agreement to your mortgage broker. This kick-starts your lending application, a process that might take over a week to show indications of progress, so promptness is key.
Scheduling Property Inspections
Next, book a builder and any other necessary tradespeople or professionals to inspect the property. This should ideally be done a week or so in advance. Ensure you test the property for methamphetamine contamination on top of the standard building inspection.
Consultation with Property Management
It’s also crucial to speak with a Property Manager to verify achievable rent and the timeframe for renting out the property. They can also advise on rent increases for periodic or fixed-term tenancies.
Requesting Council Documents
A vital step involves requesting a property file or a Land Information Memorandum (LIM) from the local Council. Be aware that fees apply for these documents, but they provide essential information about the legal and environmental aspects of the property.
Valuation for Lending Purposes
If your mortgage broker indicates that it’s required for lending purposes, you will need to obtain a valuation of the property. Your broker can guide you on this and may suggest specific valuers.
Legal Checks Before Going Unconditional
If you are positive about the conditions and financing, and confident about proceeding, instruct your lawyer to review the title and LIM a week before the deal goes unconditional. This ensures that everything is in order before you fully commit.
Finalising Settlement Entity
Lastly, inform your lawyer about the entity (like a Trust or company) under which the property will be settled. This is crucial for the legal and financial preparation of the settlement.
Post-Unconditional Contract Steps
After the contract goes unconditional (notably important for overseas investors who need to allow ample time for documents to be couriered back to New Zealand), follow these steps:
Preparing for Settlement
Prepare the entity you wish to settle the property into (e.g., Trust, Company) with a bank account and IRD number. This is necessary for the loan and for receiving rent.
Co-ordination with Lawyer and Lender
Inform your lawyer of your lender/broker’s details so they can instruct the lender to send out the lending documents. overseas investors, in particular, should find a notary (or a Justice of the Peace) for signing the documents, and ensure all originals are couriered to New Zealand prior to settlement.
Insurance and Property Management
Organise insurance either through your mortgage broker or directly with providers in New Zealand. It’s also time to engage with a Property Management company for tenancy management.
Planning for Renovations
If renovations are required, co-ordinate with your builder/project manager to organise tradespeople and set a plan prior to settlement.
Settlement Day Preparations
One or two days prior settlement day, arrange for the Property Manager or other trusted person to do a pre-settlement inspection of the property. This is to ensure the property is in the same condition it was when you went unconditional. Check for any damages or unwanted materials on-site. Report any issues immediately to your lawyer to inform the vendor.
Once you have confirmed all is in order, confirm with your lawyer to proceed with the settlement. The Property Manager /Project Manager will then take over the keys and manage tenancies or organise rental advertising.
Settlement is a bit of an anti-climax, your lawyer does all the work in the background, communicating with the vendor’s lawyer and the lender. There is very little that you actually have to do.
Navigating through the post-offer phase in New Zealand’s property market requires a keen understanding of the process. This checklist aims to guide you through each step with precision, ensuring a smooth transaction. For those seeking to deepen their knowledge and connect with experts and fellow investors, attending a Wealth Mentor event is an invaluable opportunity. Our events offer insights into the latest trends and strategies in real estate, providing a platform for learning and networking. Join us at our next event to enhance your understanding and skills in property investment. Check out our events page for the next event.