[jen]

Sorry if this has been explained before, but my forum search didn't turn it up.

We've been spending our Sunday afternoons on the Open Homes circuit & yesterday at one place a woman asked the hosting realtor if the sale was "open or closed tender". He said it was closed tender. So what does that mean? The only thing my OH found looking it up was referring to industrial contracts, when closed tender means not all bids for a job will be accepted - that doesn't seem to be what we're looking for so we'd appreciate help from you experienced buyers out there!

Thanks,
Jen

[sizzlingbadger]

Closed Tenders are where a bid needs to be in by a certain date. Open tender there is no particular deadline and the property could sell at anytime.

HTH :D

[jess]

We bought our house on a closed tender. As sizzlingbadger says, you make an offer on the house by a set date without knowing how much (or if) others are bidding. At the tender date the agent and the sellers (vendors they always call them here) sit down and open all the offers. They can then pick the best offer and negotiate from there, or they can turn them all down.

Agents do closed tender to try to get you to make your best offer the first time out, and then they will sometimes negotiate you up from there if you're the highest bid. If you're the second best offer, you usually don't get to negotiate on the house at all unless the vendor can't get what they want from the person who put in the best bid.

It turned out we were the only one to put in an offer on our closed tender, but they still came back to us with a counter offer. We weren't willing to go that high, so we picked a number in between and signed and said to tell them that was the end. They took it.

In addition to pressuring you to put in your best offer, the agents will also often pressure you to pay for the title search, LIM, inspection, and whatever else you want done up front so that you can know the status of the house beforehand and put in an unconditional offer. (An unconditionall offer can sometimes beat out a higher $ offer that has a lot of conditions on it, because the latter is not a sure thing. If they sign your unconditional offer, you're legally bound to buy.) The trouble though, is that it gets expensive to spend hundreds up front without knowing whether you will even be high enough to get to negotiate once the tender closes. We resisted efforts to get us to inspect up front, and instead we put in a conditional offer so we didn't have to pay $500 for an inspection unless we were the ones whose offer was chosen. In our case, we were the only bidders, and it turned out fine.

It's a balancing act between how much you want the house, and being fiscally careful. Fiscally careful is, in my opinion, always better, even if you think you can't live without the house, because you will always find another house you love eventually if the one you're looking at falls through, and it's a huge financial commitment.

Just my thoughts having gone through it. Hope it's helpful! :D

[jess]

me again. :o

Should have added that we spent 2 months looking at open houses and going to auctions to find out how much the kind of property we were looking at should cost. Otherwise it's hard to know what to offer on a closed tender. (Originally I was only going to look at houses where the price was given, but it seemed to be the minority here and was seriously limiting our search.)

[wilson182]

Really sound advice from Jess there. Another way to find the approx value of a property is to look at the QV report www.qv.co.nz. This report will give you all kinds of details about a particular property including approx market value, but, it costs about $30. Again, it depends on how much you love the house for sale, but as Jess said, there will always be another house (Im talking from experience here lol)

[jen]

That's all REALLY helpful, thanks!

My OH emailed the agent and he said "we're expecting the offers to be high and unconditional" - sounds like that's a normal sales pressure tactic, hmm. There's no way we'd buy a property without an inspection and I don't think we're serious enough yet to pay for one up front when we'll probably bid too low at this point.

It's a balancing act between how much you want the house, and being fiscally careful. Fiscally careful is, in my opinion, always better, even if you think you can't live without the house, because you will always find another house you love eventually if the one you're looking at falls through, and it's a huge financial commitment.

That's great advice; we were originally going to house-hunt for at least 3 months & learn the market but "fell in love" with this house (at the top of our price range too of course!) so are suddenly scrambling to think how much it'll sell for, how do we deal with the 5 months left in our lease, what country IS our deposit money in anyway, etc! Oh well, best to believe we'll love again :laugh

Jen

[jess]

The first house we "fell in love with" was at the top of our range too (of course). Open tender. We were the second highest bid, but they couldn't get the first bidder to go up on their price, so they came back to us. The agent had told us to put in our absolute best offer - which we had - so I was a bit thrown when he called to say we could negotiate for the house, but the vendors were holding out for at least $60,000 more!!! :exit

We managed to fall OUT of love with that house pretty quick!!! :laugh