Mortgage A to Z

When you find a house within your budget that meets most or all of your needs, you’ll probably want to make an offer.

An “offer” is a formal step you take, documented on a sales and purchase agreement (some real estate agencies may have their own procedures).

The first step

Typically, you would contact the real estate agent to arrange a time to prepare the offer together.

Alternatively, you can request a copy of the sales and purchase agreement and draft your offer with the assistance of your lawyer.

As a legal document, it’s a good idea to have your lawyer review the contract before you sign it to ensure everything is in order.

A conditional offer – the most common offer type

You make a conditional offer when you still have some due diligence to complete before you can be sure the property is right for you.

You probably need to get your finance signed off by your bank before you can buy. You might need to sell your current house before you can buy this one. Or, you might need the new house to pass a building inspection. These are all “conditions” you can place on the offer.

If the conditions aren’t met in the specified time, you can pull out of buying the property.

Waiting to finish your due diligence until your offer is accepted can save you time and money.

The fewer conditions you have, the more attractive your offer may be, and vice versa.

If you need a mortgage to purchase the property, you must include finance as a condition in your offer. Even if you’re already pre-approved, the bank must still approve the property. This may require a registered valuation or other reports before final approval.

I typically recommend my clients include these three conditions in their offers:

  1. Finance
  2. Building inspection
  3. LIM (Land Information Memorandum)

For properties in Christchurch, EQC coverage is often an additional common condition. 

You can add or remove conditions based on your needs, but the vendor is not obligated to accept your offer.

You’ll also need to decide how many working days you’ll need to complete your due diligence.

The number of days you need will depend on whether you’re already pre-approved, the conditions you’ve set, which professionals need to be involved, and how busy they are.

If you’re pre-approved and the market is quiet, you might only need five working days. 

However, if you’re not pre-approved and the property market is busy, you may need up to 15 working days.

Always check with your mortgage advisor or finance professional to determine how many working days you need. If you need more time to complete your due diligence, you can request an extension, which is often granted unless a better offer has already been received.

Once you and your lawyer are satisfied that all conditions have been met, you can instruct your lawyer to confirm the contract and go unconditional. This is when you’ll typically pay the deposit.

Unconditional offers

As the name suggests, an unconditional offer has no conditions attached.

This type of offer is more attractive to vendors than a conditional one.

If your unconditional offer is accepted, the contract is confirmed, and you’ll need to pay the deposit.

It’s important to complete all your due diligence before making an unconditional offer, including getting the bank’s approval for financing the specific property.

When you bid at an auction, your bid is considered unconditional. Therefore, it’s essential to complete all your due diligence before placing a bid at an auction.


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