Jessica Wilson is a researcher and writer who works on consumer law and other topics.
OPINION: Have you heard of the real estate agent who claimed that a one-bedroom house with two storage units with no windows was a three-bedroom property? Unfortunately, it was not a joke.
The case came to light after the unlucky buyer of the house filed a complaint with the Real Estate Authority (REA). As expected, the authority found the agent’s behavior to be misleading and fined them, albeit only $2,500.
It would have been difficult to find the behavior anything but misleading, given that the agent had obtained a copy of the plan of the council building, which showed that the property was licensed as a one-bedroom dwelling.
The buyer only found out about this after she moved out. More bad news came when an engineer later reported that it would not be possible to install windows or make other structural changes to convert the storage units into licensed bedrooms.
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Unfortunately for would-be homebuyers, the case is not an isolated incident.
Despite efforts to improve the industry, complaints about agent behavior continue to come in. In a cooling real estate marketArguably, the risk of underhanded tactics will only increase as agents looking for their next sale are tempted to cut corners.
in a recent shipment For the industry, the REA itself felt compelled to remind agents that they are expected to understand the property they are selling and to disclose all relevant information to buyers.
Whether that reminder does anything to stop the complaints remains to be seen. The available data does not suggest that there is much reason for optimism.
According to a research survey published by the REA, as many as one in six people who bought or sold a home last year had problems with an agent.
The latest figures show that about five people a week, 271 in total, filed a formal complaint with the authority in the 12 months to June.
High on the list of complaints: agent misrepresentations. Examples of past indiscretions range from misleading a prospective buyer that there were no other offers on a property, to failing to disclose that a new building was to be built next door.
It’s a healthy reminder, if need be, not to trust the agent’s sales pitch and do your own due diligence on the property you’re thinking of buying.
But that doesn’t mean you just have to put up with being caught up in an agent’s spiel and running out of money.
Under the rules that govern the industry, agents are expected to have done at least some homework on the property they are selling.
They should be able to give you relevant information about the house, for example if it is approved as a one or three bedroom dwelling. Not too much to ask, you would think.
They are also expected to be vigilant in identifying any hidden or underlying defects: if the property has all the hallmarks of a leaky building or asbestos roof, the agent cannot keep quiet about it.
The rules stop short of requiring an agent to pay for their own reports to identify problems.
However, they are expected to obtain evidence from the seller that the property is not subject to the defect, or to advise prospective buyers of any significant potential risks.
While some agents may wish otherwise, a “don’t ask, don’t tell” policy won’t work.
Similarly, if they know there is a major new development planned in the neighborhood, they are expected to let you know.
They also cannot simply blame the provider for any misleading information. Previous cases that have come before the REA have criticized officers for attempting to do exactly that.
Despite the huge sums of money involved in real estate transactions, exposing dubious behavior in the marketplace still relies heavily on consumer complaints.
When a complaint is admitted, the Disciplinary Court of Real Estate Agents it has the power to award up to $100,000 in compensation, although that is generally reserved for cases considered to be on the more serious end of the spectrum. The agent may also face other penalties, including fines.
However, it is not the fastest process.
The woman who paid $629,000 for the one-bedroom house with two windowless deposits filed her complaint with the REA in July 2020. It was not until May of this year that the authority’s complaints committee published its decision on the fine imposed on the agent .
In the meantime, the woman had taken her complaint to the Contentious-Administrative Tribunal, which ruled on her case in November 2020. She reportedly received $29,486, close to the maximum of $30,000 the court can award.