Is buying and selling property a risky business for NZ’s consumers?

 

Last year we commissioned research by Colmar Brunton to look into the risks buyers and sellers of residential property face i​n New Zealand. This research was based on over 550 interviews conducted with consumers who had bought, sold or seriously considered buying or selling residential property in New Zealand in the last two years. Participants were weighted to reflect market activity (i.e. a greater proportion of respondents came from the Auckland region).  

Key findings from the research are summarised below:
  1. ​​​Opinion is divided over the perception of the risks of undertaking residential property transactions:
    A third (32%) of cons​umers see residential property transactions as low risk.  However, a fifth (22%) view these transactions as high risk.  Buyers are more likely to think the risks involved in property transactions are high (28%) and sellers are less likely to do so (12%).

  2. Perceptions of risk are mainly driven by financial concerns rather than concerns over how the property market operates:
    When it comes to risk, consumers are more likely to be focused on their personal financial risk in undertaking a property transaction rather than the risks posed by how the market operates.  Market fluctuations (21%), the high price of residential property (20%) and the cost of servicing a mortgage (20%) are uppermost in consumers’ min​d when thinking about risk in property transactions.  There is a small perceived risk that real estate agents can’t be completely trusted (6%), or that consumers are not fully informed about a property (4%).  

  3. Consumers do not feel rushed when undertaking property transactions:
    Overall consumers fe​el that they have enough time to do their homework before committing to property transactions.  Eight-in-ten buyers/potential buyers feel they had enough time to seek independent legal advice about the transaction (81%) and seven-in-ten feel they had enough time to find out further information about the property – i.e. LIM report or carry out a pre-purchase building inspection.  Clarity around real estate agents fees is also high, with eight-in-ten (80%) sellers/potential sellers saying they understand the agent’s proposed fee structure.

  4. However views of some aspects of agent behaviour are less positive:
    Two thirds (62%) of consumers feel the agent answered their questions fully and honestly, and a similar proportion of buyers/sellers say the agent explained how to insert a clause int​o the transaction agreement (63%).  However, less than half (46%) of buyers/potential buyers feel the agent told them everything they needed to know about the property.  One third of buyers/potential buyers (36%) and sellers/potential sellers (33%) say that the agent pushed them into offering or accepting an offer they were not comfortable with.

  5. Real estate agents are trusted:
    Four out of five consumers (83%) used or inten​ded to use a real estate agent.  Sellers are most likely to choose an agent based on a recommendation (40%) or past experience (38%) with the agent.  Most consumers (82%) feel they can trust their real estate agent.  Sellers (88%) are more likely than buyers (75%) to feel this way.

    D
    espite the high level of trust enjoyed by real estate agents one-in-five (20%) of those who used an agent were unhappy with them at some point. The cause of concern is evenly split between being unhappy with the customer service provided by the agent (29%), perceptions of negligence (31%) or feeling that the agent was being dishonest (25%).  Consumers are unlikely to raise a formal complaint about an agent however – just 8% of those who were unhappy did so.  All those who raised a complaint were buyers.

  6. Failing to disclose a conflict of interest or providing ​misleading information that resulted in financial loss are the main triggers to making a formal complaint
    Consumers are most likely to raise a formal complaint about an agent if they didn’t declare a conflict of interest (73%) or provided misleading information which resulted in a large or small financial loss (73% and 68% respectively).  Complaints are most likely to be raised with an agent’s company (overall 80% of those who would make a complaint would use this channel) but three quarters (73%) of consumers would turn to the Real Estate Agents Authority.  These figures vary considerably by the nature of the complaint, but for two of the top three triggers for complaints, the agent’s company or the Authority are equally likely to be approached.  In cases where the agent misleads the consumer and a large financial loss resulted, the Authority is the most likely port of call (67% of those who would complain in this situation would look to the Authority, while 48% would take the matter up with the agent’s company).

  7. Consumers feel well informed about undertaking property transactions:
    Most consumers (81%) say they feel informed about the process of buying/selling property.  Almost all sellers feel this way (93%), compared to 82% of buyers and 69% of those considering a property transaction.  The main sources of information used to find out more about the process of buying/selling property are real estate agents themselves (63%) and speaking to friends and family (53%).  Use of information sources varies considerably by type of involvement in the market – buyers are more likely to seek information from banks/mortgage brokers (59% compared with 40% across all groups), while sellers are more likely to turn to real estate agents (72% co​mpared with 63% overall).  Those considering a property transaction are more likely to speak to friends and family (63% compared with 53% overall) or to look for information online (57% compared with 47%).

  8. Trade Me dominates the online information sources used:
    Among the 47% of consumers who look for further information about the process of buying/selling online Trade Me is the most commonly used website (66% use this site for information).  Around half of consumers use the realestate.co.nz website or estate agent websites (52% and 49% respectively).  The Authority’s website is used by roughly one-in-eight (12%) of those who look for information online (this equates to 5% of consumers overall). 

  9. Websites are the most preferred source of information about the residential property:
    Seven-in-ten (71%) consumers prefer to receive information about buying/selling property via websites.  Talking to someone (57%) or reading something on paper (42%) are also popular channels for receiving information. As yet apps are not strongly preferred, with just 14% of consumers preferring to receive information this way. 

Not only are these findings interesting but they are incredibly useful for us as we continue to improve the​ advice and guidance we give consumers so they can feel confident and informed when buying and selling property.