Tony Brazier

www.braziers.co.nz

Tony Brazier

The Press - Tuesday 26 May 2009

Making the Offer

With the myriad of ways that a property can be marketed it can be difficult for a purchaser to reasonably establish what the actual expected price is a times. Whether the property be offered for sale by; Auction, Tender, No Price Marketing, Deadline Private Treaty or Negotiable Over, all methods are an “invitation to treat”. In other words, “tell me what you think it is worth, my asking price or something close, and I’ll take it or leave it.” It is up to the purchaser to test it out. It is up to the salesperson to facilitate the asking.

If all of your homework has not yet been done ensure you include relevant clauses to add in the further conditions of sale. Basic clauses like checking the Title, LIM, tenancy agreements Resource Management Act issues are often inserted but you may still need to finalise or check finance, inspect part of the property or to organise a specialist to report on some aspect. Needless to say, the more condition clauses a purchaser inserts, the more opportunity the vendor sees that the purchaser may not complete the agreement. Be sensible.

The salesperson’s job is to create an enforceable contract for the vendor so don’t expect to insert broad clauses like “Subject to due diligence” or “Subject to my solicitor’s approval in all respects,” without being challenged as to what it is, specifically, you want checked out. Be specific. If you want favours like having access after confirmation to do up empty units, just ask. A good salesperson can create any relevant request into a condition of the agreement. However some requests are more asking permission of the vendor and are written as “warranties or undertakings”. Be careful here as a broken condition is cause for a contract to be cancelled but a broken warranty is not. However it still can enforce ‘specific performance’ and/or damages ie. do it or else it will cost you.

Keep your offer as ‘clean’ as possible but keep yourself safe. Don’t ever go cash and unconditional if you have not done all of your homework. Be very specific about what chattels you want to stay. Never presume anything. All salespeople have tales of chattels arguments to tell. Think carefully about the cost to you if you get the timing of your settlement wrong and whether you can gain possession at the same time or not. You may find it is easier to be the vendor’s tenant for awhile, (which is enjoying a different tenure to the property), than having to front up with the settlement money on an inconvenient settlement day.

Take care you know where the deposit money is coming from. Don’t presume the bank you’ve arranged will give you a ‘little bit’ now and the bulk on settlement. You may end up losing the property for non payment of deposit or having to load your credit card uncomfortably.

Be careful with the timing of your offer. Make sure the vendor is available today. There are risks in having to wait. Although your salesperson will have a very clear policy to adhere to regarding presentation of offers, if a vendor is not available it is an uncomfortable feeling knowing your offer is ‘out there’ somewhere waiting to be presented. Salespeople are often accused of ‘sitting on’ an offer when in reality they just can’t find the vendor. This becomes more complicated when your offer ends up being one of many to be presented by the time the vendor is found, ie. a multi-offer situation. These are great for vendors but uncomfortable for purchasers as your chance for negotiation just went out the window. You are now in effect in a tender situation where you will be informed of the other party’s interests (not details) and the need to play your ‘best shot’.

This is not the time to say to your salesperson “Well it’s a good place to start. I can come up a bit,” (Is there ever a clever time to say this?) because you may not be given the luxury of that opportunity. Be willing to lose it at the price you put in. The whole process should be transparent with lots of communication from your salesperson.

Be careful putting time frames on offers unless you really mean it, as where withdrawing an offer is as easy as leaving a message with the time recorded, so to in going passed a time frame means the offer just went out of existence and is not enforceable if signed thereafter.

Your salesperson owes their vendor a fiduciary duty as the one who pays them but they also owe you, the purchaser, a “Duty of Care”, which has become more onerous on them as time has gone by. If you want to know something just ask. If they don’t know put in a condition to find it out.

If in doubt about anything contact your solicitor before the offer is presented to check it out. Then look forward to your negotiation.