Kevin Lampen-Smith
Wellington, February 15, 2018
If you believe everything you see in advertisements, buying a house is a blissfully easy process done by attractive couples who are moving into picture-perfect properties.
There will be moments of joy and laughter, and the only thing missing will be a unicorn grazing in the neatly manicured garden.
Pain and Pleasure
In real life, buying or selling a house can be a time for great rejoicing, but it can also be extremely stressful. Owning a home is still embedded in the Kiwi DNA, despite rising prices making it less attainable.
Buying a property is the biggest financial transaction most people will ever make in their lifetime and if it does not go well the results can be devastating.
Lifting standards
As the regulator for New Zealand’s real estate industry, the Real Estate Authority (REA) works to increase professionalism and public confidence in the sector as well as to protect, educate and inform home buyers and sellers.
In the last year we’ve done a lot of research into Kiwis’ experience of property transactions and the results have been sobering.
Our research has found that more than 50% of New Zealanders say that they lack the knowledge and information they need when trying to buy and sell property.
Many feel confused and find it difficult to find reliable information.
A majority (55%) said they lacked knowledge about the end-to-end process.
Potential risks
Unfortunately, this lack of knowledge means that many buyers fail to do the appropriate due diligence and expose themselves to significant potential risks.
We all know that someone who did not realise they would have to pay for a shared driveway, or who bought a house without getting a building inspection that would have showed it was full of borer.
Our survey found that while 83% of buyers got at least one report on a property, less than half (44%) got one from a certified building inspector.
These kinds of situations cost money and time, which are never in great enough supply for most people.
A lack of clear guidance could be partially responsible for the results of a second survey, which showed that 53% of potential buyers had problems when making an offer on a property.
Open Homes tough
About 35% of sellers found marketing the property and having open homes the toughest part of the process. Half of those who experienced trouble said it had a significant impact, causing them personal stress or financial woes. New migrants and first-time home buyers and sellers were the most likely to have problems, such as with understanding the value and the condition of a property.
While it may seem that there is a lot of information on buying or selling out there, it is often scattered and hard to understand.
Crucially, it often comes from sources with a vested interest in the outcome and people are understandably wary about whether they can rely on it.
This is where we come in. This week we launched a new website to help fill the gap.
Complex process
Buying a house is a complex legal process and things can be even more difficult if you’re not sure about how it works because you have never done it before or you haven’t done it for a long time.
We hope that the impartial and interactive information and guidance on settled.govt.nz will help people make better decisions.
We want to make it easy for people to do their homework so they feel confident and in control before buying or selling property.
When you have the right information at hand your experience is much more likely to resemble the dream sold in advertisements.
Kevin Lampen-Smith is the chief executive of the Real Estate Authority (REA).
