As real estate market commentators report a lift in market activity and values1 , the Real Estate Authority (REA), reminds buyers and sellers of the importance of doing their homework and obtaining information about the property and understanding the real estate process.
REA Chief Executive Belinda Moffat says whether buying or selling real estate, knowing the property and understanding the transaction process are key for safe and fair real estate transactions. The good news is that REA, an independent government consumer protection agency, responsible for oversight of the real estate profession, has a range of tools and resources to help consumers confidently engage in fair real estate transactions.
“It has been a challenging market with low stock and listings making real estate decisions difficult. Anyone considering buying or selling real estate should take time to ensure they have a thorough understanding of the real estate transaction processes, and to do their homework on any property they want to buy or sell. REA provides a wide range of information to help with this often daunting task.
Important steps including researching and understanding the different methods of sale, plus obtaining accurate and up to date information about the property from the salesperson, an accredited building inspector, the Land Information Memorandum (LIM) and council file. Seeking financial and legal advice at an early stage will also support a smooth process. The time and cost of these steps are important investments to mitigate the potential for higher costs and complex issues that may arise further downstream if good preparation, advice and information is not obtained at the outset.”
We recognise that some may be seeking to sell at the best price they can get, and others may be seeking to buy quickly to take advantage of the market conditions. Nevertheless, we urge all consumers to do their homework and ensure they know the property and understand the real estate process to ensure a fair and effective transaction.”
Where to go for information?
In addition to overseeing the conduct of licensed real estate professionals and their code of conduct, REA provides information for consumers participating in real estate transactions. REA provides a range of consumer resources, tools, and information, including the website Settled.govt.nz, which hare all designed to help consumers as they embark on what for many may be the biggest transaction they will ever participate in.
“Buying or selling property is one of the most significant transactions a person will ever undertake, and it comes with high emotional and financial risk. In that context it is critical that consumers are equipped with knowledge of what to expect along the way, and a detailed understanding of exactly what you’re buying and selling. Empowered with this information, a consumer has a better chance of avoiding surprises, making good decisions, and confidently completing a fair real estate transaction,” Ms Moffat says.
Licensed real estate professionals involved in real estate agency work are regulated by REA and must adhere to a code of conduct. This requires them to meet expectations of fairness to parties to a transaction, to make appropriate disclosures and to know the property.
“As a regulated profession, we expect all real estate licensees to support their customers and clients through the process. The information provided by REA will help consumers to engage in the process with confidence,” Ms Moffat says.
REA provides a range of resources including:
REA consumer guides in seven languages for sellers about agency agreements (a listing agreement consumers will sign if they use a real estate professional) and a guide to the residential sale and purchase agreement. Digital copies are available on Settled.govt.nz at no cost.
Settled.govt.nz which includes independent information on the buying and selling process, and a range of online tools, such as a Property Checker tool that generates a recommended list property features that should be checked, information on methods of sale used in real estate, explanations of different types of ownership as well as the rights and responsibilities of buyers, sellers and any licensed real estate professionals involved in a sale.
Specific guidance in seven languages for first home buyers, including a step-by-step guide to the home buying journey from first thinking about house-hunting through to making an offer, settlement and moving in.
Ms Moffat says that consumers should obtain comprehensive information on any property they are selling or seriously considering making an offer to buy.
“It was encouraging to see in our latest consumer research that New Zealanders are becoming more likely to seek out quality information on a property they are transacting. However, too many people still risk entering a major property transaction without adequate knowledge of exactly what they are buying or selling. Good property information can be obtained through robust due diligence, and REA urges consumers to use this information to support well-informed decision-making during the transaction process.”
Top tips from REA
For property sellers, REA’s recommendations include:
Know the condition of the land and property in detail and seek professional advice if uncertain, discuss these issues with your real estate agent.
Fix or disclose any defects to prospective buyers and prepare your home for sale.
Be transparent with buyers about any issues with your property, to support a fair transaction.
Seek appraisals from real estate professionals who know the area.
Seek legal advice before signing a real estate agency agreement.
Read REA’s residential agency agreement guide which real estate professionals are required to provide to prospective clients.
Do your research on the different methods of sale so you know what to expect.
For property buyers, REA’s recommendations include:
View the property.
Engage an accredited building inspector to provide a professional building inspection report.
Obtain and read the property Land Information Memorandum (LIM), record of title and council file.
Research the area/neighbourhood.
Consider the long-term costs of buying, including interest and maintenance.
Seek advice from a lawyer before making an offer and before signing a sale and purchase agreement.
Read the REA sale and purchase agreement guide.