It’s common at the moment in Wellington to sell properties by tender, and there are certainly advantages. Most obviously:
- Selling by tender can encourage people to offer their best price and also to limit the number of conditions they put on the sale – they want to give their offer the best chance of being accepted.
- There’s no negotiation during the tender period, which saves time and hassles.
- The sales campaign will be reasonably short (though it might be fairly intense) – at least you won’t have people traipsing through your house for months.
As with any process, though, there can be problems if the documents aren’t right, and you need to understand exactly what’s involved.
So talk to us before you sign the draft tender documents that your real estate agent gives you, and get our advice.
Here are some common issues that need to be checked.
- Make sure that your names are recorded correctly and match the record of title. It can be seriously inconvenient to find out there’s an error closer to settlement day!
- The name of a family trust will not show on the record of title. If a trust is involved, all the trustees must sign to have an enforceable contract.
- Check the list of chattels to be sold along with the property – do you really intend to sell them? Buyers rely on that list to see what they’ll get for the price they offer. Delete any chattels that you don’t want to sell. You can also add any that you do want to sell but that aren’t on the standard list.
- Do you have a tenant? The contract must state whether the property will be sold with vacant possession or with sitting tenants.
- Does the settlement date suit you? This is the date when the legal ownership of the property will change hands and the buyers can move in.
- The general terms of sale include vendor warranties. These are promises that you make to the buyers and they’re important. Read them carefully, and let us know if you have any concerns. Common problems can include situations where work has been done to the property without council consent, or where there are appliances being sold with the property which are not in reasonable working order.
- Talk to us if you have supplied any information to prospective purchasers, such as the LIM or builder’s reports. We can supply the agent with a clause to limit your liability so that any errors by the report writer do not become your problem!
- Make sure you discuss with the agent how the tender will be conducted, so that you understand the process – what do you have to do, what will the agent handle for you, and what must buyers do? For example some buyers might think they can negotiate with you, but that often won’t be the case.
Another issue that can crop up with tenders is that the buyer usually needs to pay a deposit to the agent (usually 10% of the price).
If the buyer has made an unconditional offer, then the deposit has to be paid as soon as both you and the buyer have signed the contract. If it’s a conditional offer then the deposit is usually payable as soon as all the conditions are met.
If the buyer fails to pay the deposit, you may be able to cancel the agreement – talk to us about this so we can advise you about your options.
Remember your property is probably your most expensive asset, so it pays to take care. We’re here to help!
Image credit: “Lübeck, An der Mauer” by Dietmar Rabich (CC BY-SA 4.0) https://commons.wikimedia.org/w/index.php?curid=60337351
