Your First Home Buying Companion: NZ

Hi all, I’m a first home buyer who just came out of the chaos and decided to put together a document of house buying tips for a friend - it ballooned and the result is this guide!

It’s got all the tips of things we wish we’d known earlier, step-by-step guidance, and stuff we’ve learned from our extensive research. We learned a lot from friends and family, reddit posts, facebook posts but I wished that there was just one good resource that covered everything.

Other free guides we found were pretty sparse on the exact step-by-step details, and sometimes focused only on one aspect (e.g. ones from the bank focused mostly on the finance side of buying a house). We also saw the same questions being asked over and over on the internet, and people being told misinformation at open homes.

I suggest using it as a step-by-step companion as you go - it's a lot to read all at once and makes more sense as you go. For a great simple introduction, try Settled.govt.nz or Kāinga Ora’s guides.

We were lucky to have a builder and engineer in the family who helped write some of the more technical sections. However please note this website is not a replacement for professional advice - please do your own due diligence.

This guide is completely free of charge and has no affiliation with any linked resources.

It’s my personal hobby project so time is short (I'm a healthcare worker) but would love to hear what you think and any feedback. Cheers!

-CQ

An overview of the step-by-step process:

1. Deciding to buy

   1. Consider if you're planning to live where you want to buy long term, and how stable your income is (e.g. plans for future study, long term travel). Buying gives you stability and not needing to rent but has downsides of being inflexible. Don't buy just because others are if it's not the right time for you.

2. Preparation

   1. Budget: Set your finances in order and decide a price range you think you can afford/want, preferably make a budget of all your weekly expenses and see how the mortgage would fit into that, and budget for expected expenses like lawyer fees, building reports, house insurance, future kids etc.

   2. Preapproval: Ideally get this from the bank before you get serious. It's an approximate amount the bank will lend you. It’s not final, you will need to confirm full approval later for your chosen house and price. Keep in mind what the banks will lend you is not necessarily what is affordable for you! You can do this yourself or with a mortgage broker.

   3. Team: Line up a solicitor, building inspector and mortgage broker (if desired) to be ready when you want to make an offer. Optional but nice for peace of mind. Use recommendations from friends/family, google search. Compare prices but it can pay to pay and not cheap out (you may save thousands of dollars if a good lawyer picks something important up).

3. House Hunting

   1. Start going to open homes casually.

   2. Learn as you go what you want in a house, and looking for indications of a poorly maintained house.

   3. Make a checklist. We made a list of our personal preferences for a house - link to my checklist. For indications of the status of the house, we liked Kainga Ora's checklist.

   4. Track sold prices and past sales to get a feel for the market.

   5. (It's an ongoing process - as you go along, you get more information about what you want and what's realistic. Take your time.)

4. Valuing a house

   1. With experience you'll be able to estimate the value of a house yourself. The RV is a very loose benchmark but can sometimes be quite off what the true value is. 

   2. Get to understand the things that add and detract value. Get to know the suburbs you're interested in and track sale prices.

5. Due Diligence

   1. Due diligence happens before an auction, or after a conditional offer is accepted. There are a few basic checks you can do yourself to scope out major issues that would make you rule out the home (e.g. identifying unconsented works), before paying a building inspector or lawyer.

   2. Finance: Secure final bank approval (or try non-bank lenders like Simplicity, however you want to have a main bank as security if you're going to auction). You may use a mortgage broker or deal directly with the bank.

   3. Legal: Lawyer checks title and LIM. You can request council files (~$40) for extra info.

   4. Building: Get a builder's report.

   5. EQC: Request report from the agent if applicable (previous EQC claim).

   6. Home Insurance: Lock it in BEFORE you go unconditional for peace of mind (can be a disaster if insurance declines you after you've bought the house).

   7. DIY checks: Always do some of your own checks - research flood/earthquake risks online, visit the area, chat with neighbors.

   8. Personal legal agreements: If you're in a partnership, get a contracting out agreement to protect you both if funds are unequal. Consider getting wills written up. If you're buying with friends/family, get a legal contract stating what will happen if someone loses their job, someone wants to sell, etc.

6. Making an Offer

   1. Conditional Offer: Offer with conditions (e.g., finance, building report). If met, you’re committed.

   2. Unconditional Offer: No conditions—vendor accepts, you buy, no matter what. (All auction offers are unconditional.)

   3. Due diligence comes first for unconditional, after for conditional.

   4. Presenting Conditional Offers: Agents provide a standard S&P agreement—add conditions and check with your lawyer. If it's accepted, then do due diligence.

   5. Bidding at Auction: After sorting all due diligence ahead of time, you just go and bid.

7. Preparing for Settlement

   1. Finalize your loan with your bank/mortgage broker.

   2. Lawyer handles paperwork with you.

   3. Do a pre-settlement inspection to confirm all’s as expected—dispute issues if not. Confirm chattels and fixtures are as stated in the S&P and in the same condition, same make and model.

   4. Organize electricity and internet service for your home.

   5. Most things are organized before settlement day (the day the house is officially handed over to you).

   6. On settlement day, lawyer confirms, and you grab the keys from the agent.

Key Takeaways (Our Opinion)

• Take your time - spend some months just looking and learning before you commit. It's a huge financial commitment which can be painful to buy or sell!

• Costs add up - not only upfront, but costs for due diligence, hidden costs of maintenance ($20-40k for a roof) that pop up.

• Buy a house that suits you and your lifestyle, and within your budget. A 'better area' does not guarantee better value for you.

• Avoid overstretching your finances. Make a budget and try to buy a house that fits. It's a 30 year commitment and being "house poor" isn't fun. Account for future expenses like maintenence, rates, insurance, future children etc.

Just some basic terms to get started, definitely not an extensive list!

• Mortgage: A loan for your house. If you can’t repay it (plus interest), the lender can take and sell your property.

• Mortgage Repayments: Regular payments to pay back your mortgage (e.g. $1,000/month).

• Real Estate Agent: Help the process of buying or selling a home. Sellers agents host open homes; buyers agents can help your house search (though with some pros and cons).

• Vendor: The current owner selling the house.

• Mortgage Broker: Can help process of getting a home loan by comparing banks/lender. Can save time if they go to multiple banks, but you can DIY yourself with the banks too.

• S&P (Sales and Purchase Agreement): The big legal contract you sign when you buy the house, which has all the terms and conditions between you and the seller.

• Private Sale: A house sold directly by the vendor, no agent involved.

• Conditional Offer: An offer with conditions (e.g., finance approval). You must buy the house if those conditions are met.

• Unconditional Offer: An offer with no conditions -  i.e. if the vendor accepts it, then you must buy the house no matter what is wrong with it, or whether you can afford it or not.

• Deadline Sale: A sale with a set deadline for offers. The vendor picks the best one (or none) after the date. You can offer at any time. Offers can be conditional or unconditional.

• Auction: A public bidding event. Highest bid wins if it meets the reserve price. All offers are unconditional, so due diligence must be done beforehand.

• Passed In: A house that doesn’t sell at auction.

• Settlement Date: The date the house officially becomes yours, usually weeks after offer acceptance. Delays mean paying penalty interest.

• RV (Rateable Value): A value used to calculate rates by the council. The RV is a very crude calculation and does not indicate how much a property is worth. It might be a few years old, and doesn't reflect anything individual about the house like renovations. It's based on crude measures such as land and house area

• Rates: A regular payment you make to the council when you own a house, which pays for essential services like rubbish collection, road maintenance etc.

This is a list of resources - some of which we've linked elsewhere in the document - so you have them all in one place.

Places to ask questions

• Kiwi First Home Buyer Group on Facebook: Overall a helpful page with a decent mix of advice. A couple of the regulars seemed quite knowledgable. Lots of mortgage brokers and real estate agents around. Keep in mind that some people may plug colleagues (I have recognized some people using their personal Facebook profile to comment rather than their professional one).

• r/PersonalFinanceNZ on Reddit: Anonymous forum for finance (not just housing). May be better for detailed questions thanks to longer post formats than facebook. Generally found answers quite reliable and insightful.

My Resources

Open home checklist: We printed this out and took it with us, filled it out after key open homes. You can customize it to specific things you want in a house.

Budget spreadsheet: Helps to make a budget - if you're a spreadsheet and calculations kind of person. (Note: This spreadsheet is pretty convoluted and anyone who knows how to use Excel well can probably do better than me, but I thought I'd share it anyway)

Online Resources

Flooding risk

• Christchurch

• Wellington

• Auckland

Earthquake risk

• Christchurch

• Wellington

• Auckland (this one seems to take a while to load)

National records

• Record of state land

• Police crime record

• NZ deprivation index

• Kainga ora planned developments

FAQ about offering and buying questions I often see asked online. There's a copy of this on the "Offering and Buying" page as well.

Can I offer "X"?

• Lots of people ask if they're allowed to offer "X" amount, given the asking price is this, or the real estate agent said this, etc.

• You can offer anything, there are no rules. If you give a very low offer, the vendor may choose not to bother negotiating with you.

How to I tell the vendor I'm willing to negotiate?

• You don't need to tell the vendor this, just make your offer and if they want more, they'll offer back with a higher number (this probably happens most of the time).

Do I discuss my offer with the agent?

• Don't get into a discussion about what you're willing to offer, as you'll be talked up. Just send your formal offer.

I offered and the vendor counteroffered with a higher amount - now what?

• Again, don't get into a discussion. Just send your counteroffer back when you've decided what it is. You're allowed to counteroffer anything - even the original amount if you're not willing to go up.

• E.g. you offer 500k, the vendor counteroffers 550k. You can offer 500k again if you think that's more than fair. You could offer 525k if you think that's reasonable.

• Because of this, it is useful to make a reasonable offer but not go right up to your max - it's likely they'll want you to go higher. Alternatively you could offer your best and just refuse to budge.

What if someone else offers?

• The real estate agent will let you know if someone else offers, for sure.

The real estate agent is telling me there's another offer - what do I do?

• Ask if the offer has been sent, or if it's just another interested party - unless the other person has formally made an offer I wouldn't take it too seriously.

• If someone else has made an offer, ask for a 'multi offer agreement form' - this will provide proof the agent isn't just saying there is an offer when there may not actually be one.

• As well, the agent must tell you if other buyers in the multi offer process pull out and you're the only one left.

• See this page for more information - https://www.settled.govt.nz/buying-a-home/making-an-offer/understanding-a-multi-offer-process/

Can you back out of an offer?

• Not unless you've done a conditional offer and the conditions aren't met. E.g. say you make a conditional offer based on finance, building report, LIM. If there are no problems obtaining finance, and the building report and LIM don't have any new issues, then you have to buy the house. You may be asked to provide proof if something falls through - e.g. proof from the bank that they did not approve you for finance.

• An unconditional offer cannot be backed out of no matter what.

• Some people get caught out making multiple conditional offers, if more than one is accepted you're legally liable to them.

The real estate agent hasn't presented my offer yet?

• All formal offers must be presented to the vendor by the agent - real estate agents are not allowed to say 'the offer is too low, offer again' and not present your offer.

What conditions should I put on a conditional offer?

• The standard conditions are: Finance, building report and LIM check by lawyer.

• Finance is approval from the bank, this tends to include an insurance check (if you can't get insurance, the bank won't lend to you, so you usually don't need an insurance clause).

• Building report is an inspection from an inspector noting any structural issues with the building.

• LIM check from the lawyer looks at legal issues like consent issues, titles, etc.

I want to go to auction - how much time do I need to prepare?

• Going to an auction is a bigger monetary commitment, and requires a fair bit of up front work.

• You can get ready in a short time (I saw some people doing it in a week), but at that time frame I'd question whether it was a measured idea. Buying a house is a huge thing, so you want to do it right.

• We preferred having 2-3 weeks minimum to get finances/insurance/building report sorted, hash out any potential issues, have the mental space to decide what price we were willing to pay.