Let the Seller Beware

bewareAgents and lawyers – they have always been down the list in the popularity stakes. Property developers have not fared much better.

Real estate agents have been working hard to improve their rankings. It’s impacting on sellers of property in an unexpected way.

REAA looks out for the consumer – the buyers and sellers of property. Through their disciplinary procedures they have changed the general expectation of what agents need to do.

It is easy to complain about an agent. It costs nothing. And the authority will treat the complaint seriously. They respond. They read the facts and make decisions. Decisions that impact on how property is sold. Decisions that, to many, go further than the law (or practice) have required previously.

Did you hear about the agent that went with a buyer to the buyer’s lawyer, pointed out to the lawyer that there was a covenant on the title that needed explaining but did not read and explain the covenant herself. It turned out that the buyers could not live in the property without breaching the covenant. They were too young. The REAA said the agent should have explained the covenant and slapped her boss with a fine.

The theme to the decisions is “let the buyer know what they are buying”. Be up front and transparent. That is a big ask, not just because of the breadth of information but also because not everything is objectively assessed. What matters to one buyer might not matter to another.

The information agents might be expected to deliver on a residential development include:

  • What is on the title
  • What has happened on the site historically
  • What is happening next door
  • What can happen next door
  • Whether HCNZ is moving into the development
  • The quality of management of common areas

And because of these obligations you as the seller will be asked to provide information. You will also be expected to give the agent an indemnity in respect of information you do not provide.

Listing agreements vary (although there is talk of a uniform precedent developing). Read them carefully, especially with complex development structures where the seller might not have all relevant information.

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