A shortage of property listings is pushing desperate buyers to consider defective houses with works that are not consented.
Recent figures from the Real Estate Institute show the number of properties for sale has fallen to an all-time low.
This had contributed to the median house price rising nearly 26 percent in the past 12 months to $850,000.
Auckland law firm TM Bates Co said it had come across a number of examples in recent months where buyers had put big offers on properties that had unconsented additions.
"Because the market is so hot, and despite those would-be purchasers having those defects of [the property] drawn to their attention, they are still going along to auction or into those negotiations and being prepared to put their best foot forward in terms of an offer, without necessarily factoring in the kind of discounts that perhaps someone like myself would be recommending they do," solicitor Tim Bates said.
Houses without a code compliance certificate could hurt the property's future resale value or could create insurance challenges, he said.
There was also the risk that the council could order the buyer to bring the property up to standard, he said.
Bates said it was wise to avoid such properties, although he admitted this advice had been falling on deaf ears recently.
"The client or the would-be purchaser knows that there's going to be another [20 to 50] people interested in that house and turning up to that auction, and its going to be a pressured buying situation where they are going to have to put their best foot forward.
"Where the purchaser does proceed and ignores that kind of advice, and doesn't take that discount into effect, they need to factor in that they have got this problem."
He said after the purchase the buyers would need to explore whether there was any prospects of curing the problem or whether it can't be remedied.
If there was no fix, he said these buyers would need to come to terms with the fact that they may not be able to extract the full value for the property in the future.
Ray White Remuera salesperson Thomas Farmer said the issue was relatively constrained to buyers in the market who were able to stump up large deposits to finance properties with a defect.
"Those people who are in that position to buy that property are probably discounting the purchase price less than what they previously would.
"Say you had a buyer who is approved to buy a home that a has a defective title, or an unconsented bathroom, they may have previously factored in $20,000 to $30,000 to fix the bathroom and get it consented.
"However, because of the shortage in the supply and the high demand in this current market, people are taking less of a discount and are just going and buying the property".
They may be paying the retail price for a property even though it has defects, he said.