We believe most buyers in the Wellington real estate market would be shocked if they knew how many multiple-offer situations are won and lost, largely based on conditions. The amount of time you choose to specify for your due diligence and the number of conditions you insert, has a direct influence how attractive your offer appears.
Owners will often take the 2nd highest offer available because it is either unconditional, or has fewer conditions. From years of selling experience we would estimate this happens at least 50% of the time when multiple offers are presented.
In our experience, buyers look at conditions as a negotiating point eg. “I’ll put down 10 working days to start with but be prepared to drop to 5 if I have to.” This is a valid approach but only works if you are the only person making an offer. As soon as you are in a multiple offer situation, you need to do everything you can to make your offer as attractive as possible straight away.
When buyers are trying to decide how many days they need for finance / builders reports etc, their first port of call may be the mortgage broker or bank or building inspector they plan to use. This is a good place to start, however it is worth noting that these advisors will usually err on the side of providing a conservative estimate but will often move faster when required. Similar to when you arrive at a busy restaurant and they advise the wait time will be 30mins – often it will end up being much shorter but it is always better to over promise than under deliver.
Most building inspectors will quote 10 working days to provide a builders report, however if you call them and say “I need a builders report done in 2 working days, can you do it?” Most will come to the party.
No one likes to turn down business. In our experience we have found this applies to mortgage brokers and valuers as well. We are not trying to upset these providers, but are simply trying to offer you the best real world advice we can, to help you secure your dream home.
Note: We are not for one minute suggesting you remove conditions from your offer without completing the necessary due diligence. It is critical that you consult (at the very least) a solicitor, a building inspector, a mortgage broker or your bank and a valuer if required before making an unconditional offer or removing any conditions.
When buyers come into our office to place an offer we gently advise that excess time on conditions may weaken their offer, however it is hard to emphasise how much of a difference it makes when we cannot advise them to remove conditions. To give yourself the best chance of success, please seriously consider the length and number of your conditions next time you place an offer. It is often just as important as the price.
To answer the question you might be thinking right now…
“What do most successful buyers put down for their conditions?”
In a competitive-offer situation, most successful purchasers have obtained a building inspection either before they offer or they have placed it in their offer as a 3 – 5 working day condition. Most successful offers also have conditions for finance, usually for 3 – 5 working days. This usually always proves to be ample time to complete the process, especially if their finance is pre-approved.
The other important checks to complete are a title search (this can be done quickly by your solicitor before offering), and an investigation of the Council LIM Report. This should be provided by the Owner so your solicitor can review it prior to your making an offer. If you would like to order a new LIM or if one is not already available we suggest putting this in your offer as a condition as well.
Thanks for taking the time to read! We wish you the best of luck securing your future home next time you make an offer.
As always, stay safe out there and make smart property decisions people!