[Author – Tim ODwyer]
Think you might, sooner or later, want to buy or sell some Sunshine State property? Some plain-English guidance on pitfalls to be avoided and how to make informed real estate decisions may now be available – whether you are a Queenslander or not.
The Queensland government has produced Real Estate Realities, a 74-page guide aimed at saving real estate consumers “money, stress and heartache.” On its release the Fair Trading Minister said this was “the key to making smart decisions about property in Queensland”, and would be “invaluable” for anyone buying, selling or investing.
While the Minister claimed the guide reflected the Beattie government’s commitment to consumer education and protection, The Courier Mail reported what may have been closer to the truth: that the government hoped also to “give the market a shot in the arm plus reduce paperwork for the Office of Fair Trading.”
Meanwhile real estate remains one of the Office of Fair Trading’s highest complaint categories. In the Minister’s view, these complaints often stem from consumers’ failings: “ignorance of their rights and responsibilities, and not doing enough homework when buying or selling … or dealing with agents.”
Hence the guide gives buyers some wise warnings:
“… the agent acts for the seller and no matter how approachable, friendly or co-operative they appear, they are not working for you.”
“If requested, the agent has a duty to reveal any pertinent information to you about the property.”
“Don’t rely on the provision in the standard … (REIQ/ Law Society) …contract for the sale to be subject to a satisfactory building and pest inspection.”
“Don’t be pressured into signing …”
“When you are ready to sign a contract, take a copy away and discuss it with your solicitor.”
“… appoint your own independent service providers, such as solicitors, valuers, finance agents and building and pest inspectors. Check … that they are not associated with the agent or the seller.”
“… the agent is not qualified to give legal advice on the contract or to modify or vary it.”
And some top tips for sellers:
“Once you choose your agent, they are working for you and not the buyer.”
“It is highly recommended you use the services of a solicitor … to draft your contract”
“You can negotiate the rate of commission … and shop around for the best deal.”
“Not all properties are suited to the auction method”.
Sellers are also given some agent-friendly advice:
“To get the best price for your property select an effective and ethical agent.”
Selling without an agent? The guide sternly warns that you must still follow the law. There is no specific warning about the importance of sellers’ seeing their solicitors before appointing agents. Only this:
“Don’t allow the agent to deter you from seeking legal advice before signing a contract or an agency appointment.”
Investors are warned to be careful when choosing agents to manage their property, to read agents’ management agreements carefully and, very emphatically, to “seek independent legal advice before signing”. Thinking of managing your property without an agent? You must “act fairly” and be aware of and follow the “rules and processes” of the Residential Tenancies Act.
Commendably, the guide highlights the “dangers of wrap loans and vendor finance”. Full marks for this advice on “rent/buy” deals:
“Don’t let the dream of your own home influence you to sign a contract you might regret. Vendor financing arrangements may seem like an easy solution, especially if you are having trouble obtaining finance elsewhere, but they have the potential to deprive you of your hard-earned savings and leave you with nothing … Approach vendor finance contracts with extreme caution.”
Tempted to buy off-the-plan? The guide details “several pros and cons compared with buying an existing property.” Predicting future market highs and lows, it suggests, can be “a gamble”.
While few shonky spruikers or overpriced property marketeers have been successfully prosecuted, investment seminars and schemes clearly can be scams:
“Some companies have marketed investment properties at premium prices to interstate and overseas buyers who aren’t aware of local property values.”
Investors should independently verify all information about market rental, outgoings and potential capital growth, and be wary of “agents or investment marketeers promising or predicting unsubstantiated high rates of return and growth.”
“In the case of guaranteed rental returns, assume the properties may not provide the same rate of return after the rental guarantee has expired …Beware of the hype of marketing seminars and don’t get sucked into the excitement and lofty promises … Be wary of accepting advice from professional experts closely associated with the seller.”
“Invaluable” though this guide may be, how accessible will it be for local, interstate or overseas buyers, sellers and investors in Queensland property? According to the Minister, “Real Estate Realities is available free from your local (Queensland) Office of Fair Trading (call 1300 658 030 to request a copy) or download it fromwww.fairtrading.qld.gov.au”
This means, of course, that few at-risk real estate consumers will ever see this guide, let alone read or heed its fairly sound but wordy warnings.