New law changes way homes sell

It is about to cost more to sell your home, as real estate agents prepare to hike their commissions.

Jill Quaid, chairwoman of First National, says commissions have to go up within the next year, blaming extra compliance costs generated by new laws governing real estate agents.

The average commission is about 3.95 per cent of a home's sale price, plus a base fee of about $550. Quaid says some offices have already raised this to $750.

At the same time, a property lawyer is tipping more sellers could opt to sell privately to get around new rules making real estate agents disclose defects in the home to potential buyers.

Before the law change, agents did not have to point out the property's faults, says Debra Dorrington.

But now agents are obliged by their own rules to disclose all known defects. And the new rules say if it is likely, based on the agent's experience and knowledge, that the property has a defect, the agent has to make further enquiries.

They must either get confirmation from the seller that there is no such problem or they must make sure the purchaser knows about the risk.

For example, an agent should be able to tell if a house is at risk of being a leaky building based on when it was built or what it is made of. So they must make sure the buyer knows about it too, irrespective of whether it leaks or not.

Dorrington says the changes raise questions about how agents are going to persuade sellers it is a good idea to let the buyer in on all potential problems associated with the property.

"And just how far will the obligation to tell all extend?"

More private sale listings on Trade Me and through other outlets could result from the changes, Dorrington says.