There is a very real element of risk involved with buying a home privately, that buyers may or may not be aware of.

It is common knowledge that a Real Estate Salesperson is working for a vendor and the vendors interests.

What is often not widely known is the duty of care that we (Real Estate Salespeople) also have to purchasers.

 

Salespeople have a Responsibilty to Buyers

Under the new Real Estate Agents Act (Professional Conduct and Client Care) Rules 2009 there is the following rule under section 6 – Standards of Professional Conduct:

6.5 A licensee is not required to discover hidden or underlying defects in land but must disclose known defects to a customer. Further, where it appears likely, on the basis of the licensee’s knowledge and experience of the real estate market,1 that land may be subject to hidden or underlying defects, the licensee must either—

 

• (a) obtain confirmation from the client that the land in question is not subject to defect; or
• (b) ensure that a customer is informed of any significant potential risk so that the customer can seek expert advice if the customer so chooses.”

Source: www.reaa.govt.nz

What this basically means is that a buyer is protected by the Real Estate Salespersons knowledge, market and product expertise.  Which they don’t have to pay for.  If there is an issue or case for a complaint, it is very easy for a buyer (or vendor) to raise a complaint and at no cost to them.

 

The Vendors Responsibilty

A vendor is not required by any law to disclose a known issue –  or unknown issues (also known as potential risks).

This is a very important statement, if a vendor knows of an issue, they do not legally have to disclose it to a buyer on their own free will, or advise them of any potential issues or risks.

If the vendor is asked the correct questions they do need to disclose an issue, they cannot lie or remain silent. However, proving that a vendor knew of an issue would be very difficult and costly through the courts system.

There is a clause in the Sale and Purchase Agreement under section 6.2 (5) which relates to building consents and a vendor must disclose if there are any non-permitted works – that they are aware of.

 

What This Means for Purchasers

Real Estate Salespeople have a duty of care and a responsibility to inform them of any risks with a property by using their expert knowledge. Failure to do so, can result in very large fines and/or loss of license for the Salesperson.

A good agent will ask the right questions to the vendor at the time of listing a property to ensure that they are protecting themselves, and any purchasing coming in.

Buying privately you do not have the protection of the Real Estate Salesperson and the Real Estate Agents Authority disciplinary process. Infact you have no protection at all and are buying completely at your own risk.

You have been warned…

 

What This Means for Sellers

If you are considering selling privately, you need to be aware that buyers will stay away from your property for this reason.  This will limit your buyers coming through and will therefore effect your sale price.