Interacting with Real Estate Agents
Getting the most out of your relationships with real estate agents
In the journey of acquiring a new property in New Zealand, a real estate agent often becomes your trusted ally. These professionals bridge the gap between buyers and sellers, offering valuable advice and navigating you through the complexities of property transactions. Recognising their role is vital to leverage their expertise effectively without overshooting your budgetary limits or compromising on your needs.
Rule 6.4 of the Real Estate Agents Act 2008 available at https://www.legislation.govt.nz/act/public/2008/0066/latest/DLM1151921.html states: A licensee must not mislead a customer or client, nor provide false information, nor withhold information that should by law or in fairness be provided to a customer or client. The process of buying property involves numerous stages - from initial exploration to final settlement. A real estate agent guides you through each of these stages: Understanding how to interact effectively with real estate agents can help you get the most out of this professional relationship. By understanding their role and maintaining a healthy interaction, you can ensure your real estate agent becomes a valuable asset in your property acquisition journey, rather than an added stressor. In New Zealand, the conduct of real estate agents is regulated by a comprehensive legal framework. The Real Estate Agents Act 2008 plays a pivotal role in this, stipulating strict standards of conduct that agents must adhere to. This legislation serves to protect both buyers and sellers, ensuring transparency and fairness throughout the property acquisition process. There are several key areas where misleading or deceptive actions are strictly prohibited: Agents must never misrepresent the selling price of a property. This principle is at the heart of all transactions and stands as a non-negotiable ethical standard. Real estate agents are obliged to present you with an accurate price, avoiding any misleading impressions about potential discounts or deals. In other words, they should not lead you to believe that the seller will accept an offer lower than the stated price if there's no basis for such a claim. This rule serves to protect both parties involved in the transaction - ensuring that buyers don't end up paying more than necessary, while sellers get a fair price for their property. Real estate agents are entrusted with representing properties accurately and honestly. This includes providing comprehensive and accurate information relating to all aspects of the property. This information can range from legal descriptions and land area to potential building issues or restrictions. Legal Descriptions: Formal, legal identifiers of the property including the exact address, lot number, block number and any relevant subdivision details. Land Area: The total area that comes with the property including total square footage, garden space, parking or garage space and other outdoor amenities like pools or decks. Measurements must be correct as they significantly impact property value. Potential Building Issues: The range of these issues can be broad, encompassing aspects such as structural damage, plumbing problems, or electrical faults. Any and all issues must be communicated by the agent. Property Restrictions: Agents must be forthcoming in disclosing any restrictions set on the property, including but not limited to zoning laws, historical designations or rules set by homeowners associations. Misleading prospective buyers about ownership details is another area that's off-limits for real estate agents. This includes misrepresentation regarding the current owner's identity, their relationship with the agent or any disputes concerning ownership rights. Lastly, let's delve into the topic of claims concerning buyer interest. It's crucial to note that real estate agents cannot legally make unwarranted or false claims about the level of interest from other potential buyers in a particular property. All interactions with your real estate agent should be rooted in honesty and transparency. It’s important to remember that open communication between you and your agent is not just desirable but essential. Building this trust forms the backbone of a successful partnership, paving the way for smooth transactions and less stress on your part. In your journey of buying a property in New Zealand, a clear understanding of the real estate agent's role is invaluable. One crucial aspect of this understanding pertains to how agents earn their income and who they're primarily answerable to. Real estate agents mostly work on a commission basis. This means they get paid a percentage of the property sale price. This percentage can vary, but it's typically around 3-5% in New Zealand. Agents are incentivised to secure the highest possible sale price for a property. The higher the selling price, the higher their commission. It's essential to keep this in mind during negotiations, as their advice might be subtly geared towards increasing the sale price. It's important to remember that traditionally, real estate agents are hired and paid by the seller. This means their primary responsibility is towards the seller, not the buyer. An agent might present a property in its best light to encourage a quick sale at the best price. While they must operate within legal requirements for honesty and transparency, they're naturally motivated to secure results that favour their client - the seller. While keeping information close is wise, building a good relationship with an agent can be beneficial. They're more likely to think of you when new opportunities arise that fit your criteria. Rule 10.7 of the Real Estate Agents Act 2008 available at https://www.legislation.govt.nz/act/public/2008/0066/latest/DLM1151921.html states: A licensee is not required to discover hidden or underlying defects in land but must disclose known defects to a customer. Where it would appear likely to a reasonably competent licensee that land may be subject to hidden or underlying defects, a licensee must either— a) obtain confirmation from the client, supported by evidence or expert advice, 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. Real estate agents primarily serve as intermediaries. They facilitate communication between the buyer and seller, ensuring each party's needs and queries are addressed promptly. Beyond mere facilitation, real estate agents can offer considerable assistance that can streamline your property buying journey. They can help by providing: Real estate agents have a variety of sales tactics at their disposal to persuade potential buyers into taking that final step. It's important to recognise these strategies to maintain a clear, objective perspective. One of the most common strategies is the creation of a sense of urgency. This tactic is designed to prompt swift decision-making, often capitalising on a buyer’s fear of missing out on an opportunity. They may use expressions such as "This won't last long!" and "We've had a lot of inquiries on this one." Remember: It's crucial not to let this urgency cloud your judgment or push you into exceeding your budget. While it can be easy to get swept up in the excitement, it's important to remain calm and composed throughout the process. Take some time to consider your options and make sure the property truly aligns with your needs and financial situation before proceeding. Everyone loves feeling special, and agents understand this all too well. In the context of real estate negotiation, they might hint at you getting exclusive access to a deal or property that others aren't privy to. While this might be true occasionally, it's usually a strategy designed to make you feel privileged and therefore more inclined towards making a quick purchase decision. Real estate isn't just about bricks and mortar; it's also about dreams and aspirations. Agents often play on these emotions by highlighting certain aspects of a property that resonate with your desires – whether it's a beautiful view, proximity to good schools, or a spacious backyard perfect for summer barbecues. While there's nothing wrong with falling in love with a property, it's essential not to let emotional appeal lead to an impulsive decision that might stretch your financial limits. Stay grounded: Keep a clear head and don't let the pressure rush you into making decisions. Stick to your budget: No matter how perfect a property may seem, it's not worth plunging yourself into financial stress. Seek independent advice: If you're unsure or feeling pressured, consult with someone outside of the negotiation process for unbiased advice. All agents must recommend you seek legal & technical advice, and give you sufficient time to do so. Being aware of these tactics can help you remain objective and focused during negotiations. Start with Research: Before speaking to an agent, do your homework. Learn about local property values, market trends and recent sales. Knowledge is power when it comes to negotiations. Set Your Budget – and Stick to It: Decide on your budget well in advance and resolve not to exceed it. Remember that real estate agents are often skilled negotiators trained to maximise the sale prices. Master the Art of Nonchalance: When discussing properties with an agent, stay calm. Showing too much enthusiasm can signal that you're willing to pay more than necessary. Communicate Clearly But Sparingly: Be clear about what you're looking for without divulging too much information about your financial situation or urgency. Ask Questions: Turn the tables by asking probing questions. This not only gives you more insight into the property but also keeps the agent from controlling the entire conversation. Don’t Show All Your Cards: If asked directly about your budget, provide a range rather than a specific figure, and keep that range below your actual maximum spend. Verify Information: Always verify information provided by real estate agents. This includes checking property titles, independent valuations and building reports. Get Everything in Writing: When dealing with real estate transactions, it's crucial that any claims, promises or explicit arrangements made by an agent should be confirmed and documented in writing. This principle is not just about fostering trust, but it also helps create accountability, providing a concrete reference point for all parties involved. Legal Protection: More importantly, having everything in writing provides legal protection should disputes or misunderstandings occur down the line. Remember - verbal agreements can be challenging to prove legally.
The Price of the Property
Details Pertaining to the Property
Information Regarding Ownership
Claims About Buyer Interest
Here are some red flags to watch out for:
Commission Structures: The Driving Force
The Agent's Primary Obligation: The Seller
Urgency
Exclusivity
Emotional Appeal
