26 Apr What an agent must tell you about a property before you buy – Tim O'Dwyer
Where do you stand if you find that an agent who sold you a property knew something that would have influenced your decision to buy that property and the agent didn’t tell you? That is one of the topics covered in a book written by consumer advocate and solicitor Tim O’Dwyer. Tim is sometimes called the ‘contract killer’ and you will find out why in our chat with him.
Transcript:
Kevin: I want to talk about agents withholding facts – facts like someone dying in a property or material facts that may affect the property, being in a flood zone and so on. What are the requirements for agents? What do they have to tell buyers?
Tim: They have to tell the truth, and what they must not do is they must not mislead or deceive actively and they must not mislead or deceive by silence, and that’s the gray area for real estate agents.
Kevin: It’s very gray.
Tim: And for their clients, the sellers.
Kevin: You have to prove that the agent knew the fact and was silent about it, Tim, which would be pretty hard to prove I would have thought.
Tim: Yes, but often you can show that the seller knew about it. If you’re a buyer and you’re looking at suing someone because you’ve been misled or deceived, or you’re looking at getting out of a contract on that basis, it’s either the agent or the seller who may have misled or deceived.
Kevin: But isn’t it buyer beware?
Tim: Time was, but that’s increasingly changing, and there’s an awful lot of law now protecting buyers.
Kevin: In your book, you deal with this in some detail. Page 50, “Two tales of real estate’s willful silence.” Let’s talk about that. Not mentioning termites I guess is a classic one, because that’s front and center in your book.
Tim: Yes. There are a couple of stories in there. Sellers find termites in their house, do repairs, and then don’t disclose to their prospective buyers that there had been termite damage.
Kevin: But why would they have to do that? If they’ve found a problem and they’ve sorted it out and fixed it, why would they have to disclose that?
Tim: The law is concerned about material facts. Essentially, it says if you’re a seller or an agent, you should disclose material facts. And the lovely question is what is a material fact?
Kevin: I was going to ask you that question.
Tim: This is something that your average buyer would want to know and may dissuade them from proceeding with the purchase if they were told that.
Kevin: Hang on just a minute here. This is where you and I are probably going to start crossing swords. Surely, if a buyer is going to get a building and pest inspection done, shouldn’t that be disclosed in that building and pest inspection? How far does it have to go?
Tim: I think it has to go almost as far as possible, Kevin. I’m a big fan of what the law is in America, and there’s a little bit of this law…
Kevin: Goodness, I hope to hell we don’t go that far, Tim.
Tim: Well, the law of real estate, where full disclosure is the name of the game. You tell the truth, the whole truth, and nothing but the truth – attractively, if you can.
Kevin: Peter is on the line too. G’day, Peter.
Pete: Good morning, Kevin. I want to know, is the law saying disclose everything. If your hold home had a little bit of asbestos and you say, “Well, I’m not going to rip it out because it’ll disturb it, and I’ll resheet over it.” Now you have to declare everything like that?
Kevin: No. We’re not saying you have to do it now. What Tim is saying that that’s the way it should be.
Tim: Exactly. I’m talking about the ideal, which will make sales more secure, which will make buyers more informed, and which will make real estate agents happier.
Kevin: You see, Peter, this is where Tim and I disagree. I don’t believe that that should be the case.
Pete: I disagree with him too.
Kevin: Good on you. I’m with you, Pete. Okay, thanks for your call.
Tim, I want to move the focus just for a moment, because there is another thing, and that’s competing offers. The scenario is that a buyer may be interested in buying a property. As an agent, I’ve seen this many times.
Buyer is interested in buying a property, puts an offer in, the offer is being negotiated, and in the meantime, another offer comes in, a competing offer. Then you have to go back to the original purchaser and say, “Look, there is another offer in.”
Sure, this is just agent hype. How does a consumer protect themselves against that? What should be the discloser responsibilities, and how do you avoid gazumping?
Tim: When you make your offer, probably make your best offer on the basis of sensible thinking and reasonable information. Don’t make ridiculous offers, because you’ll be out of the game entirely. If your offer has to be subject to a prior sale or subject to finance or building and pest, then that should be made very clear right from the start.
But usually, the main question is how much? The real estate agent has a duty to get the best price for their seller, and they do that by asking prospective buyers, “Give us your best offer.” Now and again, this is true. A seller will not necessarily accept the highest offer. Sometimes, they like the sound of a lower priced offer.
Kevin: It’s not always about price. Sometimes, it’s about conditions, it’s about finding out when the seller wants to move out. It may suit them to have a longer settlement because they may have to look for another property. So it’s more than just price on competition.
We’ll have to leave it there, Tim. Thank you very much for joining us in the show. That book is called Real Estate Escapes. You can get it at all good book stores. It’s written by Tim O’Dwyer, or you can go to the website RealEstateEscapes.com.au.
No Comments