You should not sell your biggest asset to a company set up to profit from buying significantly under market value.
Unfortunately, it’s something that happens with alarming regularity in New Zealand, and particularly in Auckland, Harcourts CEO Chris Kennedy says.
There are a number of private companies who advertise they will buy your house and save you up to $35,000 by cutting out the middle person, aka the real estate agent.
Kennedy says while this may sound like an attractive prospect, it means you are relying on the integrity of a company aiming to make fast and easy money, with no competition to drive up the price and no rules or regulations in place.
The risks of doing so were highlighted with the recent case of a seriously ill Mangere pensioner who signed away her family home of 52 years.
Within three hours she had signed a sale and purchase agreement, without advice from her family or lawyer, to Auckland House Buyers.
Her family is now fighting to stop the sale, which was for $560,000 – a sum which appears to be lower than current market value.
“The alternative is to sell your house using a licensed real estate agent. That way if you feel you have been treated unfairly, you have recourse through the Real Estate Agents Authority (REAA),” Kennedy says.
The REAA is an independent government agency which aims to protect buyers and sellers of property. If an agent is found to have acted inappropriately there are serious consequences, such as being struck off and a fine of up to $30,000.
Licensed sales consultants also are required to follow a Code of Conduct, which requires that a seller fully understands he terms of a sales and purchase agreement and makes an informed decision before signing.
It means you will not be signing away, for example, chattels you didn’t intend to, or unknowingly be obliged to fix defects on the property title which may have costs associated with it.
“For example, if there has been building work which doesn’t meet the current code of compliance, you could be required to bring the building up to code,” Kennedy says.
The REAA and the Code of Conduct were set up to protect people as they make one of the biggest financial transactions of their lives.
“Companies operating outside of these parameters should be regarded very warily.”