What a tender is
A tender is a sale where buyers make a written offer by a set date and time, usually without an advertised price. Each buyer puts forward their best offer once, and the seller looks at every offer together after the tender closes.
Two things make it different from an auction. Offers are private, so no buyer knows what anyone else has offered. And buyers can include conditions, such as finance or a builder's report, which you can't do at auction.
Why so many Karori homes go to tender
Pricing a home is hard when the market is moving. Set the asking price too high and buyers scroll past. Set it too low and you've capped what you'll get. A tender lets buyers show you what they're prepared to pay instead.
The closing date helps too. Buyers who might happily watch a listing for weeks have to make a decision by a fixed time.
How I run tenders: At Ray White Karori, tender is usually where we start. Buyers view the home at open homes or by private appointment until the closing date. Once it closes, every tender is presented to you together, with the price, conditions, deposit and settlement date of each one side by side.
If you're buying
- Do your homework early. View the home, read the LIM and any reports the agent has, arrange your own builder's report if you want one, and get your finance approved before the closing date.
- Get the tender document checked. The tender document is a sale and purchase agreement, and it becomes legally binding if the seller signs it. Have your lawyer or conveyancer look over it before you submit.
- Decide on your conditions. You can make a conditional offer, for example subject to finance or a builder's report, or an unconditional one. Fewer conditions usually make an offer stronger.
- Submit before the deadline. Give your tender to the agent before the closing date and time, usually with a deposit (often around 10% of your offer). If your tender isn't accepted, the deposit is returned.
- Wait for the seller's decision. The seller usually has up to five working days to decide, and you usually can't withdraw your tender during that time. Be careful about making offers on other homes while you wait, because you could end up committed to two.
Price isn't the only thing that counts. A tender isn't simply "highest number wins". A slightly lower unconditional offer can beat a higher one that depends on finance or selling another house. Sellers are weighing certainty as well as price.
Also look out for the words "unless sold prior" in the advertising. They mean the seller can accept an offer before the closing date. If you're keen on a home, tell the agent, so you hear about it if that happens.
If you're selling
We agree a closing date together, usually about three and a half weeks after the home goes on the market, and it's marketed without a price until then.
When tenders close, you see every offer together, including its conditions, deposit and settlement date, not just the headline number. You don't have to accept any of them. You can accept one, decline them all, or go back to one or more buyers to negotiate. Any changes are initialled by both you and the buyer, and your lawyer should check the agreement before you sign.
Is tender right for your home?
Tender tends to work well when buyer demand is strong, or when a home is hard to price because it's unusual or there haven't been many recent sales nearby. If a home has a clear market value and plenty of close comparable sales, a priced listing or a deadline sale can work just as well.
The right method depends on your home and on what matters most to you: price, certainty or timing. It's one of the first things I'll talk through with you at an appraisal.
Thinking of selling?
I can talk you through which sale method suits your property, and give you a free appraisal based on real comparable sales.
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