If thinking of selling your home privately, make sure you appreciate the legalities before you set out. Our advice and a checklist of the legal documents you might encounter will help you better understand what is involved.
Buying or selling real estate is a legal process which can become unexpectedly complicated. The value of real estate agents is that they are trained to navigate the complexities which are often underestimated by private home sellers.
If you need to speak with a free independent advisor, get in touch or call 0800 789 532 - we're here to help.
Home for sale by owner - pros and cons
If you're short on experience with selling a house, we recommend you carefully consider the pros and cons of a private sale before taking that route.
Things might look simple but the most challenging part of selling real estate is not the marketing and advertising, but rather the period between signing the Sale and Purchase Agreement and the date the sale goes unconditional. This is where property sales often fall over - in particular private sales.
Home buyers now purchase property with greater caution and their legal or financial situations and information requests are not always straight forward.
Real estate agents liaise with lawyers, valuers, banks, mortgage brokers, insurance companies, councils, building inspectors and do whatever else it takes to close a sale. Can you manage all this?
As an owner, selling a home is rarely straight forward so it pays to be aware of the pros and cons in detail before you make this important decision - including the opportunities you could miss out on.
Are you an Auckland home owner? The difference between offers you could get for your home could be in the hundreds of thousands of dollars if your property is not marketed to the right potential buyers now that some areas are zoned for development under the Auckland Unitary Plan.
Private home sale - the legal documents
Private home sellers will encounter a number of real estate related legal documents.
Whether you are using a real estate agent or selling privately, some or many of these will be part of the picture. There may be others, depending on your property type or description.
If you intend to buy or sell your home privately, you will need to know how to navigate these yourself which is why so few take the risk and go it alone.
Even lawyers and real estate agents use real estate agents.
Real Estate Commission The Bone of Contention
Kiwis often want to sell their home privately because of real estate commission and fees.
If this sounds like you, find out more about commission including a scale of fee examples, what aspects of commission and fees can be negotiated, how to get the best sale price and minimising costs.
Understand your legal obligations
Is your home structurally sound?
- Structural integrity of a building is one of the most common inspections included in the conditions of a sale. Make sure you use a qualified building surveyor.
- A word of warning, make sure any building inspection report is addressed to all who will be relying on its accuracy. If it is not addressed to you, you have no come back if errors are made.
Buyers might search or request information on:
- LIM – the Land Information Memorandum covers all information held by the council on a specific property.
- PIM – A Property Information Memorandum covers all work that requires building consent.
- Survey Plans (Title Sheet) show legal boundaries, area and dimensions including easements.
- COC - Code of Compliance Certificate is issued when a building project is finished, for instance renovations, extensions or repairs that required council consent.
- Electrical Code of Compliance - Electricians must issue a Certificate of Compliance (CoC) to customers when doing any fixed wiring work, including fitting new power points.
- Insurance companies are now requiring Electrical Inspections Certificates for properties built pre-1938. Check with your insurance company sooner rather than later.
Agreements can fall over because a buyer can't get insurance on your property.
- Moisture Reports can be sought if required to satisfy any doubts about the cladding or moisture issues.
- Methamphetamine testing
Private home sale - further homework
- Cross lease titles and Unit Titles - understand the ownership concepts involved.
- If selling a unit in a unit title, Tenancy Services provide buyers with advice and expectations for buying this type of property and sellers will understand what will be asked of them.
- Architectural drawings or other proof if marketing a house as ‘architecturally designed’. If your house has not been designed by a registered architect, it has not been architecturally design.
- The Sale and Purchase Agreement - conditions, clauses and any associated risks to you.
- For GST and whether it applies to you, see the Inland Revenue Department website.
- Pre-Settlement Inspections of the property are done just prior to settlement to ensure all matters are attended to as per your Sale and Purchase Agreement clauses. This includes the chattels.
- Independent Property Valuation Reports v Council Rating Valuation and online valuations
- Property Conveyancers are qualified to manage the legal process of transferring the ownership of property or real estate from one person or entity to another.
This is not an exhaustive list but will primarily cover most real estate property transactions. For professional advice, talk to your lawyer.
Alternatively, if you decide you want to use a licensed real estate agent, there is free advice available about where to start.
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- Independent real estate advisor cuts to the chase
- How to find a competent agent
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Article updated March 3, 20201 | About