Real estate agents are opposing changes to consumer laws that would require them to tell the truth about properties.
The Real Estate Institute of New Zealand is taking issue with changes that would make it illegal for agents to make unsubstantiated claims, saying the changes could open "floodgates of complaints".
The proposed change does not require absolute truth, but it does require that when a representation is made to a consumer, the seller should have "reasonable grounds" for believing it is true.
A submission to Parliament by REINZ chief executive Helen O'Sullivan said the Consumer Law Reform Bill could cause confusion, rather than protect consumers.
She said it was too onerous for real estate agents to have to substantiate their statements at the time of making them.
"A salesperson might convene an open home under remote supervision by the branch manager, and make representations to those that attend.
"But the representations might need to be substantiated after the open home by checking with the client, branch manager or an agent holding the necessary information, or with the relevant territorial authority on the next working day."
Her submission said buying a property could be stressful and people might have different recollections of what was said. Professional conduct rules also applied to disclosures to ensure they were made "to a certain standard".
But Consumer New Zealand researcher Jessica Wilson said that wasn't good enough.
"The argument that it is too onerous does not stack up with us," she said. "Consumers expect that either claims can be substantiated, or people shouldn't make them."
Wilson said the institute advertised agents as the experts, and she would expect them to use that expertise to provide good quality information, and to do due diligence.
Home buyers doing the open home circuit in Auckland yesterday said the most exaggerated aspects of home buying were space, price estimates and suburb.
Katherine Wilkie said in the three months she had been looking at homes she had stopped going to auctions as the prices agents estimated were often exceeded by $100,000 or more.
House descriptions were mostly accurate, she said, but tricky photography often made rooms and backyards look vastly bigger than they were.
A couple at a Westmere open home, who asked not to be named, said the suburb a house was in was often misrepresented – the borders of desirable suburbs tended to grow in real estate agents' minds. They had even gone to the Real Estate Agents' Authority to complain about an advertisement that said a house was in Mt Eden when it was 11 houses inside the boundary of slightly less-desirable Sandringham and therefore about $100,000 less when it came to resale value.
All home buyers said Google and Trade Me had changed the game as people were able to do their own research and see multiple pictures of the houses – a different situation from the days when a single picture was accompanied by an agent's often prosaic description.
In REINZ's submission to Parliament, O'Sullivan said the new requirements should be "balanced by the commercial reality that the agent is in the business of selling property". "Agents are, by their name, acting on behalf of the vendor."
That did not give them free rein to take advantage of a customer's "information imbalance", she wrote, but nor should it allow the customer to abdicate responsibility for satisfying themselves that a property met their expectations.
"The institute would like to see the provision made subject to enforcement thresholds, and policies to ensure any complaints are well-founded before investigations are undertaken."
She also wants the definition of "reasonable grounds" to include vendor instructions to an agent, including property description sheets.
WORKING HARD WITH WORDS
Spare a thought for this real estate agent. Under the benign title of "Popular Local Club House" this Waipukurau home, above left, in the central Hawke's Bay has been listed on Trade Me since Thursday. The "well-known property" has been "set up for family and club gatherings" but the agent insists it could be converted "back to its former glory". If a magic real estate decoder programme could be run over the listing the unvarnished truth would read: "Mongrel Mob gang headquarters for sale."
The house on Takapau Rd is described as a "modest home" but "in need of a little `TLC' however".
Real estate agent Max Lyver has done a valiant job of presenting the property in a good light. The camouflaged perimeter in black, red, white and grey is "brightly coloured fences" that provide "privacy and security". "The large section with mature trees provide shelter where friends and family can gather for social occasions." The only hint that the property may have "baggage" was included in the last line: ''Ignore its colourful history; this property is in need of an urgent sale."
Lyver admitted selling the house could present "a bit of a challenge" but the gang, which rented the house, had not used it in months and the vendor is not part of the gang.
- © Fairfax NZ News
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