Auckland Property Investors Association president David Whitburn says he would like to see longer due diligence periods for buyers, after a High Court decision last week that overturned an agent’s charge of negligence.
The High Court in Auckland upheld agent Daphne Brown’s appeal against a tribunal decision that found her guilty of serious misconduct by creating the impression her company was acting in the complainants' best interests.
She cold-called Mary Wealleans and her husband in 2006 with a marketing pitch for an investment seminar.
The Hamilton couple, who are in their 50s, attended and bought an Auckland apartment purportedly worth $248,000.
They borrowed $253,500.
After the global financial crisis struck, the Wealleans discovered their apartment was worth only $143,000.
The judge said it was “undesireable” that established real estate agencies would use "exaggeration" or "puffery" to lead investors to believe the client was their sole focus of concentration.
Whitburn said it was another sad story of people buying without doing sufficient due diligence on the state of the property market.
“It is not up to agents to tell people the state of the market - many don't know themselves, and just hope it is good.”
He said the apartment would likely have increased in value over recent years. “I'd love to see longer due diligence periods being encouraged for buyers, but agents want deals to sell unconditionally with deposits paid, so they in turn get paid.”