When properties are listed as "Price by Negotiation," sellers invite offers without setting a fixed asking price, unlike auctions with set timeframes. This approach is widespread across New Zealand, particularly outside Auckland, and is becoming increasingly common in Auckland's cooling market.
How It Works
Once a vendor accepts an offer-conditional or unconditional-they cannot consider new offers unless that agreement falls through. Timing becomes critical; delaying your response risks losing the property to another buyer.
The agent typically presents your offer to the vendor, who can accept, decline, or counter-offer. This back-and-forth continues until agreement is reached or negotiations break down. Unlike auctions, there is no public bidding-negotiations happen privately between you and the vendor through the agent.
Unconditional Offers
Unconditional offers represent the strongest option, committing to purchase the property as-is with no contingencies. However, they carry substantial risk since you cannot withdraw after acceptance. Only make unconditional offers after completing due diligence, securing mortgage approval, and having your lawyer review the contract.
Conditional Offers
Conditional offers are more common, especially for first-time buyers. Common conditions include mortgage approval deadlines (typically 10-15 working days), satisfactory building inspection reports, sale of existing homes, or valuation approval. Once all conditions are satisfied, your agreement becomes binding and your 10% deposit becomes payable.
Standard conditions to consider include finance (allowing time to finalise your mortgage), building inspection (typically 10-15 working days), LIM report review, and solicitor approval of the title. Your lawyer can advise on appropriate conditions for your situation.
Preparation
Preparation strengthens your position. Obtain mortgage pre-approval to demonstrate seriousness, research comparable sales to inform your offer, and engage a lawyer early to navigate the legally binding Sale and Purchase Agreement.
Practical Negotiation Tactics for the NZ Market
1. Research Comparable Sales First
Before making any offer, research what similar properties have sold for recently. Use websites like homes.co.nz, PropertyValue.co.nz, or your bank's property valuation tools. Look at sales within the last 3-6 months in the same suburb with similar characteristics (bedrooms, land size, condition). This gives you a realistic baseline for negotiation.
2. Understand the Vendor's Motivation
Ask the agent directly why the vendor is selling and how long the property has been on the market. A vendor who has already purchased elsewhere or who has had the property listed for months may be more motivated to negotiate. Properties listed for 60+ days often have more room for price discussion than fresh listings.
3. Start Below Your Maximum
Your first offer should leave room to negotiate upward. A common approach is to offer 5-10% below your maximum price, depending on market conditions. In a buyer's market (low competition, high stock), you have more room to negotiate. In a seller's market (multiple interested parties), starting too low risks losing the property to another buyer.
4. Use Conditions as Negotiation Tools
A higher offer with more conditions may be less attractive than a slightly lower unconditional offer. If you cannot compete on price, consider offering faster settlement, fewer conditions, or flexibility on possession dates. These can add significant value to the vendor without costing you more.
5. Do Not Reveal Your Maximum Budget
Agents work for the vendor and are skilled at extracting information. Avoid telling them your maximum budget or pre-approval amount. Keep your cards close-share only what is necessary to demonstrate you are a serious buyer.
6. Get Everything in Writing
Verbal agreements mean nothing in property transactions. Every aspect of your negotiation-price, conditions, chattels included, settlement date-must be documented in the Sale and Purchase Agreement. Never assume anything is included unless it is written down.
7. Be Prepared to Walk Away
The strongest negotiating position is genuine willingness to walk away. If the vendor will not meet reasonable terms, there will be other properties. Emotional attachment leads to overpaying. Set your maximum price before viewing properties and stick to it.
Understanding Agent Tactics
Real estate agents use various tactics to encourage higher offers. Be aware of phrases like "the vendor is expecting offers around..." (this is often above market value), "there is another interested party" (may or may not be true), and pressure to submit offers quickly. Take your time, do your research, and do not let artificial urgency drive your decisions.
Advantages and Disadvantages
Advantages include flexible timeframes, negotiable terms, time for thorough due diligence, and less competitive pressure than auctions. You can also include conditions that protect your interests and negotiate on chattels, settlement dates, and other terms beyond just price.
Disadvantages involve uncertain market values (no public bidding reveals what others will pay), reduced urgency potentially causing delays, and disappointment if another offer gets accepted while you deliberate. The private nature of negotiations means you never truly know if you could have bought for less.
When to Use Different Strategies
In a buyer's market (high stock, low demand), be patient and negotiate firmly. Properties may sit on the market for months, giving you leverage.
In a seller's market (low stock, high demand), move quickly with strong offers. Being first with a clean offer often beats waiting to negotiate.
In a balanced market, thorough preparation and reasonable offers typically succeed. Focus on demonstrating you are a serious, reliable buyer.
Need Help With Your Mortgage?
Our expert advisers are here to guide you through every step of your mortgage journey. Get in touch for a free, no-obligation consultation.
Talk to an Adviser
