Dawn of real estate's new deal

Shonky wide boys - or fair-dealing citizens? That's the question being asked about real estate salespeople as their industry enters a new era of strict new standards. Rob Maetzig reports.

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Tougher rules: More protection for the public also means a lot more paperwork for vendors.

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Real estate is a funny old industry. While the general public perception is that it is full of dishonest people, hardly any people can actually come up with any examples.

The official figures tend to back up the reality, too. Of the up to 120,000 property transactions that take place in New Zealand each year, less than 0.5 per cent of them end up in dispute.

And yet the real estate industry carries an unfortunate reputation.

Maybe it's because houses represent the single biggest investment for most New Zealand families, or maybe it's because of the knowledge that every house sale results in a hefty commission of between 3 and 4 per cent for the real estate company involved.

But the general perception is that it leaves a trail of customers disgruntled that they either didn't get enough for a property just sold, or that they paid too much for a property just purchased.

This was one of the reasons why early last year, the then Associate Justice Minister, Clayton Cosgrove, introduced the Real Estate Agents Bill, to reform the profession by stripping it of its ability to self-regulate.

Debate over this legislation got quite strident - to the extent of a government select committee being told that the Mafia had more credibility than the Real Estate Institute of New Zealand.

The resulting Real Estate Agents Act 2008, which replaces legislation enacted in 1976, takes full effect tomorrow.

The big change is that the functions of the REINZ have been replaced by an independent Crown entity called the Real Estate Agents Authority which will deal with both real estate licensing and complaints against agents.

The authority's job is to protect the interests of consumers, and to promote public confidence in the performance of real estate agency work.

The REINZ will continue to exist, however, and the national president is Stratford real estate agent Peter McDonald.

He is in two minds about the new legislation - while he is happy that it will improve the public confidence, he says it is quite unfair that the lack of confidence is there in the first place.

"I've always felt that this change has been a political thing.

"It's easy to bag the real estate industry, when in fact the vast percentage of agents and salespeople are ordinary mums and dads who are very much part of their local communities and who are simply trying to do their best for their clients. I'm reminded of a recent survey which asked what people thought of real estate agents.

"Most said they didn't trust them - but no-one knew of any agents who had ripped anyone off."

However, any initiative that will improve confidence in the real estate industry has to be a good thing, he says.

"We welcome the change, because it will introduce much more transparency. We're hoping the end result will be real estate reputations that will be greatly enhanced."

And while the new era will mean more protection for the public, it also means a lot more paperwork for vendors.

They now have to provide written material to their agents on subjects that will range from assurances there are no ongoing disputes with neighbours, to guarantees that the house being sold is watertight.

"Essentially from the public's point of view it will be business as usual, but there will be a lot more paperwork to be done," Mr McDonald says.

"But we in the industry are not concerned about that.

"The public is entitled to feel more comfortable about buying and selling houses.

"There will be full disclosure and full protection - and that will go both ways."

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