There’s a new issue that’s got some in the real estate industry concerned, and it’s not the economy. While it might come as a surprise to many readers, some real estate agents struggle with the ethical balance of making a sale and treating clients fairly. Long seen as a ‘quick buck’ career, real estate’s attracted more than our fair share of salespeople prepared to stretch, shrink and omit when dealing with the facts of a property. We’d argue it’s a small minority but their negative impact can be huge for clients dealing with one of life’s major decisions, buying and selling a property. Similar to the experience of many industries, agency clients are today expecting much greater accountability and higher levels of disclosure. It’s a good thing, helping drive our industry to better service standards. And now there’s a new question for agents (and their seller clients) to consider.
In recent months NSW legislators have brought in new rules regarding disclosure to buyers. Prompted by the case of a North Ryde agent who didn’t disclose a murder had occurred in a house (actually the Gonzalez triple murder), tighter guidelines are in place for offering up “material facts”. We’re expecting these new standards to be adopted nationally, so while agents are appointed and paid by sellers, our duty of care to buyers is being ramped up.
So what’s a “material fact”? We’re guessing most buyers would want to know about a recent triple murder in the property. But what about some of the more subjective issues? Is a previous resident’s home occupation relevant? If the agent is aware a convicted paedophile lives nearby should that be mentioned to a buyer, or even a prospective tenant of the home? Late last year a highrise apartment resident in Brisbane CBD chose to suicide off the balcony. Is this relevant to the next occupant? The nationality or religion of previous residents? The apartment being built on the site of a previous suspected cancer cluster? Mobile phone reception’s not so good here?
The guidelines say an agent must volunteer relevant information… answering buyers’ questions fully is not enough. This “fairness” duty has existed for years but the disclosure expectations on agents (and their seller clients) are rising quickly. A good test for us is this: If a buyer knew about the issue prior to buying would it have effected their decision in any way? The challenge of course is working out what’s relevant to each buyer. And your opinion might differ on much of the above when you’re the seller/landlord, paying an agent to promote your property.
In our litigious society that principle of law, “caveat emptor” (let the buyer beware), now applies far less.