The Consumer Council is concerned with practices in the real estate sector where consumers are not being treated fairly by some real estate agents and even some lawyers in undertaking real estate transactions.
Consumers have raised concerns about pressure selling by some real estate agents and insistence by some to use their preferred lawyer.
The most common tactic used by some agents is to inform the prospective buyer or consumer that other people, particularly foreign (or recent resident) Chinese buyers have offered a higher price and if they don’t make a decision quickly the property will be sold to them.
Such behavior by some real estate agents pressure consumers into making hasty decisions to purchase the property. This significantly limits the consumers’ ability to make an informed decision and often results in inflated prices of the property.
The Council is concerned that consumers’ bargaining power is being weakened by the practices of some real estate agents where information is not disclosed and pressure selling is used.
Currently, there is a very high demand for residential properties but the supply is low such that some unscrupulous real estate agents are taking advantage of the situation by inflating prices and pressuring local homebuyers.
The Council is calling on real estate agents and lawyers engaged in real estate business to be transparent and provide the necessary disclosures to clients in regard to prices and other associated costs.
Consumers have the right to get a breakdown of costs charged for the services provided and in particular payments made to the lawyers’ Trust Account. Most consumers are willing to pay but they are also keen to know what they are paying for.The real estate agents and lawyers are required to provide written disclosures to consumers before finalizing the purchases.
We have also found that some real estate agents often recommend or insist that consumers engage certain lawyers or law firms with whom the agent often works with or are their own lawyers. Conflict of interest can arise and we have generally seen that when the same lawyer is involved, disputes do arise.
The Council believes that more training are required in the real estate sector for the realtors to understand the various provisions in Commerce Commission Decree 2010 to ensure consumers who use their life-savings to buy a home are given a fair go.
Chief Executive Officer