For agents ignorance is no excuse
Everyone knows the old cliché that buying a house is likely to be “the biggest financial decision most people will make in their lives”. However, many estate agents do not take seriously enough their pivotal role in assisting their clients with this huge financial decision, says John Graham CEO of HouseCheck.
Graham says that while the point of a home inspection is to assist the potential buyer in making an informed decision, many estate agents are very skittish about their responsibilities under the Consumer Protection Act (CPA). This new law requires agents to assist buyers by providing them with adequate information on which to base a buying decision.
Graham says many estate agents will only grudgingly recommend a home inspection to their buyers and sellers. This is because the home inspection is often viewed as a potential “deal-breaker”.
Because some estate agents are commission driven, the last thing such agents want is anything which may slow down or even stymie the sale. Graham says that instead of embracing the new consumer culture of transparency and full disclosure, some estate agents have adopted the “astonishing” view that the least they know about defects in the property they are selling the better.
However, Graham points out that ignorance is no excuse for the professional estate agent. He says Section 55 (2) (a) & (b) of the CPA makes it clear that home buyers, as consumers, are entitled to receive properties which are: “reasonably suitable for the purposes for which they are generally intended and are of good quality, in good working order and free of any defects.”
Graham says Clause 55 of the CPA places a legal duty on estate agents to take reasonable steps as professionals to acquire and disclose to potential buyers all material information pertaining to the condition of the property. He adds that the estate agent’s only escape from potential liability is to be found in Clause 55 (6) which states that sub-sections 55 (2) (a) & (b) do not apply if the consumer has been expressly informed regarding the defects and condition of the property and has expressly agreed to accept the property in that condition.
Graham points out that estate agents cannot run away from their liability under the CPA to assist the buyer in making an informed decision. He says that in the light of the CPA, a home inspection report should now be routinely recommended by the agent – both as a means to protect themselves and also with the honourable intent of assisting the buyer “make the biggest financial decision of their lives.”
Graham says there is no doubt that informed buyers are going to become increasingly militant and complain to the Consumer Protection Commission if they feel that they have been deceived by the agent or by the seller.
He says that this challenge also presents an opportunity for ethical agents to enhance their reputations and increase trust by embracing transparency and recommending home inspections to both sellers and buyers.
“In this age of consumerism every agent must decide whether they are self-serving or client serving,” says Graham. “Selfish agents, who are motivated only by commission will not prosper for long before falling foul of the CPA and losing the trust of buyers”.