How much below asking price should I offer?

There's no fixed rule - it depends on market conditions, how long the property has been listed, and comparable sales. In a hot market, offering below asking may not be competitive. Research recent sales in the area and consider the property's condition when deciding your offer price.

What conditions should I include in my offer?

Common conditions for first home buyers include: finance condition (to secure your mortgage), building inspection, LIM report review, and solicitor approval. Some buyers also add insurance and valuation conditions. Your lawyer can advise on appropriate conditions.

Can I make an offer without pre-approval?

You can make a conditional offer without pre-approval, but you'll need a finance condition. However, having pre-approval makes your offer more attractive to sellers as it shows you're a serious, qualified buyer who can likely complete the purchase.

What happens if my offer is rejected?

If rejected, you can submit a higher offer, negotiate on terms, or walk away. The seller may counter-offer with different terms. Your real estate agent can help you understand what the vendor is looking for and whether negotiation is worthwhile.

Making an Offer on a House

Making an offer on a house is both an exciting and nerve-racking time! What's the right amount to offer? Is it too much or too little? What conditions should you include? Finding the right balance between a competitive offer and one that fits your budget is crucial, and should be carefully considered.

After all, buying your first home will likely be the biggest, and most expensive, purchase you'll ever make. Here's 6 steps to help guide you through the process:

Step 1: Know Your Finances

Determine Your Budget

First and foremost, it's imperative that you understand your financial situation and set a realistic budget for the house you want to buy. Your offer should always align with your financial capabilities.

Pre-approved Finance

Before making an offer, it's advisable to have a conditional pre-approved home loan limit from your bank or lender. Conditional pre-approval is usually free and lasts for 3 months. This shows sellers that you are a serious and qualified buyer.

Note: You must have conditional pre-approval if you are taking out a home loan to purchase a property at auction.

TIP: Speak to a mortgage adviser for independent advice, and they can often get you a more favourable finance package.

Government Help

If you intend to access KiwiSaver first-home withdrawal, First Home Loan, or Kāinga Whenua loan, ensure you know the details and timeframes to successfully process your application.

Additional Costs

Buying and moving to a new home comes with additional costs that you will need to factor into your budget. These include lawyer or conveyancer fees, building inspection reports including a council LIM report and a building inspection report, and any bridging finance costs. You should also budget for moving costs including reconnecting services, as well as on-going costs like maintenance, rates, insurance and body corporate fees if your home is in a complex. Note that you'll need to pay any legal fees and inspection costs even if you're not successful in buying a property you're considering.

Step 2: Engage the Professionals

Find a lawyer or conveyancer before you start looking at properties … buying can move fast when you find something you like. Before you sign a Sale and Purchase Agreement, seek independent legal advice - once an offer has been signed by you and accepted by the vendor it is very difficult to alter the agreement.

Engage a property inspector: A qualified property inspector will tell you about the condition of the property. It's a good idea to select a property inspector and/or engineer at an early stage of your home buying process so you are ready to arrange an inspection when you find a property you want to buy.

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Step 3: Understand the Process

Sale & Purchase Agreement

You must sign a written sale and purchase agreement when you buy a property. To ensure that you have a good understanding of the document you are about to sign, review our guide to the key clauses.

TIP: Before you sign the agreement it is strongly recommended that you ask your solicitor to review the agreement – that way you ensure that all the conditions you require are included in the agreement, as well as the correct timeframes.

Method of Sale

Before you can make an offer, you'll need to know the method of sale being used for that home. Most property sales in New Zealand are by advertised price, deadline sale or negotiation but homes can also be sold by other methods such as auction or tender.

Step 4: Do Your Market Research

Assess the market: In a seller's market (high demand, low inventory), you may need to make a more competitive offer. In a buyer's market (low demand, high inventory), you might have more room to negotiate.

Check out recent sales: Look at recent sales of similar properties in the neighbourhood to determine a fair market value for the house you are interested in. Also take into account the condition of the house, if it needs significant repairs or updates, as you may want to factor those costs into your offer.

Property Research Tools:

Using online property tools such as Homes.co.nz, QV, and OneRoof can help you find:

Estimated property value
Rating Value
Previous market sales
Recent comparable sales
Market insights for the suburb
Property details including the capital, land and improvement value
The title detail

Step 5: Submit Your Offer

Your real estate agent will help you draft a formal offer (Sale & Purchase agreement), and submit the offer to the seller.

How Much to Offer

Knowing how much to offer is always a tricky question. Some say you should start really low as you can always go higher, however, while you want to get a good deal, submitting an excessively low offer may offend the seller and hinder the negotiation process. Consider making a reasonable offer based on market conditions.

Include Any Conditions

Attaching conditions means that your offer isn't finalised until these conditions are met, usually within a set timeframe. Common buyer conditions include a satisfactory building report, finance satisfactory to you, an appraisal condition, an insurance condition, and a due diligence condition. Once the offer has been submitted to the seller, they can accept the offer, reject it, or make a counteroffer.

Step 6: Be Prepared to Negotiate

Negotiation: Have a strategy for negotiations and be prepared for counteroffers. Decide in advance how much you are willing to negotiate.

Multiple-Offer Situation Tips:

If you find yourself in a multiple-offer situation, here are ways to make yours more attractive:

Be flexible on settlement date
Be prepped with your finances
Show commitment to working through your conditions
Keep your timeframes as short as possible

Once all conditions are met, you'll move on to the closing process. This involves signing the necessary paperwork, transferring funds, and officially taking ownership of the property.

Learn More: Negotiation Strategies for First Home Buyers