Property buyers may not realise checks they should do

Home-buyers are being warned to conduct sufficient research on any property they are thinking about buying.

The Real Estate Authority has completed research that shows that the proportion of real estate purchasers seeking legal advice and property documentation has dropped.

Respondents to its research were less likely than in the previous year to have obtained a Land Information Memorandum (LIM), title search, or property files before purchasing a property, and were significantly less likely to have consulted a lawyer or conveyancer.

Chief executive Belinda Moffat said potential purchasers should learn everything they could about a property before committing.

"Buying a home is often the most financially significant purchase a consumer will ever make. Obtaining key property information documents is fundamental due diligence that a responsible buyer should always undertake.

"With first-home buyers accounting for a substantial proportion of purchases during the period our research looked at, the results indicate how important it is for those who are new to real estate transactions to carefully research the property they hope to buy and take time to learn about the real estate transaction process."

A LIM gives a summary of information held by the local council, including things like the consents granted for work on a property and information about the flood risk and rates.

The property file at the council can contain relevant information that isn't on the LIM such as a site plan and the original plans of the house. The property title has a record of legal rights and restrictions that can impact what you can do with the property and any access you need to provide to others.

Sometimes, people have reported buying houses with less due diligence in periods when the market is hot and pressure is on.

But REA engagement manager Aaron Alexander said with buyers having the upper hand in the market at the moment, it might be that people did not realise what they should be doing.

"We don't think there's been as much pressure on time for people to move forward on their transactions. What the research suggests is that it may not be a question of people choosing not to obtain these documents, it may be a knowledge problem. The research also shows that only 48 percent of all real estate consumers reported that they had good knowledge of the end-to-end transaction process.

"These are people who, in the preceding 12 months, had gone through or attempted to go through a real estate transaction. That's concerning that they don't rate their knowledge very highly. It may simply be that people don't know that they ought to be obtaining these documents rather than choosing not to get them."

The authority recommended people engage a lawyer or conveyancer early in the process.

"REA's 2026 consumer research suggests fewer prospective home buyers are seeking legal advice before buying a home. This is concerning given the complexity and risk involved in real estate transactions. While legal fees will be a consideration, the downstream costs that may be incurred if an important issue with a property is not identified before making an offer can be very high," Moffat said.

Alexander said salespeople had statutory guides they were required to give buyers before they signed an agreement and had to allow them time to take legal advice.

"A responsible buyer should always be undertaking that due diligence and always be making sure that they know what they're buying ... you really can't know too much about any property.

"Real estate professionals generally act for the vendor, but play a critical role in guiding all parties through a real estate transaction. Under the Code of Conduct REA oversees licensees must ensure all representations about the property are accurate and verified, that known defects are disclosed and that consumers are given time to seek legal advice before signing agreements. Importantly, they must treat all parties fairly, and that includes allowing parties time to obtain professional advice and not placing parties under undue pressure. However, none of this diminishes the fundamental importance of buyer-side due diligence, process knowledge and expert advice."

Property law expert Joanna Pidgeon said she was surprised by the research.

"It is very common when vendors are selling a property to provide full property information including LIM report, copy of title and so on in a bundle or able to be downloaded from a link so the information is generally available to purchases for many transactions. Whether clients read it, understand it get legal advice on it before entering into an agreement is of course another question.

"When the market is hot, purchasers are more likely to enter into a contract without advice for fear of FOMO (fear of missing out), or have incurred costs in previous due diligences while missing out on properties and can become cost sensitive. In a flatter market such as now, there is usually more time for a purchaser to be considered and enter into an agreement after carrying out due diligence, or inserting a due diligence clause or particular conditions."

She said obtaining prior legal advice or having an agreement that was conditional on satisfactory due diligence was best.

"It is important also that purchasers understand that council will not take responsibility for incorrect LIM reports if the LIMs are not addressed to the purchaser in name. Having expert legal advice can prevent expensive problems down the line, and I would also strongly encourage purchasers to obtain a trusted property adviser to help guide and protect them through the process. Understanding the purpose for the use of the property and providing advice can also add value - there may be tax issues, whether the property may be rented out, title, building or other issues which experienced lawyers can help guide purchasers through the fishhooks."

Sign up for Money with Susan Edmunds, a weekly newsletter covering all the things that affect how we make, spend and invest money.