Due diligence vital to avoid a case of buyer’s remorse

BUYER’S REMORSE is bad enough when you regret a hasty purchase over the Internet.

But what are the consequences if your purchase is as big as a house?

Real Estate Authority chief executive Kevin Lampen-Smith says buying a dream home that turns out to be a nightmare can seriously impinge on your family and financial wellbeing.

So buyers should do due diligence before signing on the dotted line.

‘‘We believe it’s much better to spend a few hundred dollars on an independent report by an accredited building inspector than face having to spend thousands of dollars on fixing any issues after the fact,’’ Lampen-Smith says.

‘‘It can be tempting to settle for the easy option of using a preprepared report, but if you haven’t paid for it yourself you have no way of ensuring that it’s legitimate or being able to take action against the inspector for an inadequate assessment.’’

He recommends buyers find out as much as they can about a property and understand the outcome of any report on the building or land.

‘‘In some cases, issues are noted on property reports but buyers are in such a hurry that they miss them,’’ he says.

If a report uncovers an issue, get legal advice first if you want to negotiate with the seller on price.

If you buy a property and discover a serious issue that you think the seller or the real estate agent should have told you about, write down what happened when you did the deal, Lampen-Smith says.

‘‘Gather all the relevant documentation, such as the building report, the LIM and the sale and purchase agreement.

‘‘If the property was sold by a licensed real estate agent, make notes of any conversations you had with them.

‘‘If the property was sold privately, make notes of any dealings with the seller.

‘‘Add any new information you have about the property, such as a building report or assessment that notes the problems you’ve found.’’

Also consider your best-case scenario outcome: do you want an apology, compensation, or remediation (or all three)?

Lampen-Smith says it’s important to get legal advice to fully understand your options.

‘‘A lawyer will advise you on whether you have a case against the seller and what your next move should be, based on the information you’ve gathered.

‘‘If appropriate, they can help you negotiate with the seller or act against them.

‘‘Be aware that you may not be in a very strong position unless you can prove that the seller or the real estate agent knowingly covered up the issue.’’

If it appears that the real estate agent is responsible in some way, Lampen-Smith says it’s best that you deal with them directly.

‘‘If you can’t resolve things this way, the REA handles complaints against licensed real estate agents and we can also help you understand expectations on real estate agents regarding disclosure of property defects.

‘‘Check out rea.govt.nz for more information on making complaints.’’