Selwyn Times: December 19, 2018

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[Edition datE]
REA – Do I need to tell potential buyers
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everything about my property?
Recent research by the Real Estate
Authority (REA) has shown that many
people have a very relaxed approach
to being honest when they’re selling a
property. Some people justify not coming
clean about everything because they
think the onus is on the buyer to do their
homework, or that if they can get away with
it then it’s ok not to tell the full truth.
“People tell themselves this behaviour is
ok because they believe that successfully
selling their property is the only thing that
matters,” says REA chief executive Kevin
Lampen-Smith.
“The need to sell, and to get a good price,
is often seen as a higher priority than the
need to be completely honest.”
Lampen-Smith says sellers thought that
full disclosure would have an impact on
whether the sale would go through.
“One respondent said they didn’t want
to open up any potential problems and
that they were completely selfish about
it,” he says. “They were concerned that
being honest about any problems with the
property would mean that no one would
want to buy it.”
If, like most New Zealanders, you are
selling with a licensed real estate agent, they
will play an important role in this process.
“When you sign an agency agreement (the
legally binding document that sets out the
contract between you and the real estate
agency) you are asked to disclose or be
honest about any known defects,” Lampen-
Smith says.
“If you tell the agent about a significant
problem with a property but ask them not
to tell anyone else, they may need to cancel
the agreement and walk away.”
Lampen-Smith says that when you’re
talking to an agent about selling the
property, the best course of action is to
tell them everything you know about the
property, no matter how small you think it
is.
“They’re the experts and their professional
reputation is at stake if they mislead
a buyer. If you’re still not sure what to
disclose, the real test is to put yourself in
a potential buyer’s shoes. If you were the
buyer, would you want to know about
unconsented building work, potential leaks
or unstable ground?”
In an ideal world, every potential buyer
will do all the necessary research about a
property (Lampen-Smith suggests visiting
settled.govt.nz for more advice). The
consequences of not doing so are very
real. Selling a property is stressful enough
without adding in the threat of the sale
being cancelled or of possible legal action
further down the track.
“At best, any serious problems will be
uncovered by due diligence and you’ll look
like a bit of a fool, but the buyer will either
walk away or begin negotiations that take
these defects into account,” Lampen-Smith
says.
“At worst, if the sale goes through and the
buyer then discovers that they’ve been sold
a lemon, you may end up in the Disputes
Tribunal or engaged in more serious court
action.”
Neither scenario will leave you feeling very
positive about the experience and has the
potential to have a negative impact on your
future.
If you’re upfront with your real estate
agent about everything (and you talk to
the council about getting any additions or
alterations certified), you’ll be on a surer
footing when it comes to negotiating with
potential buyers further down the track. It
might seem unfashionable in the era of fake
news, but honesty is always the best policy.
For independent guidance and
information on buying or selling, check
out settled.govt.nz.