Lowe - Complaint No C01591 [2013] NZREAA 279 (25 November 2013)

Last Updated: 16 September 2014

In the Matter of Part 4 of the Real Estate Agents Act 2008

And

In the Matter of Complaint No: C01591

In the Matter of Craig Lowe

Licence Number: 10005970

Decision of Complaints Assessment Committee

Dated this 25th day of November 2013

Complaints Assessment Committee: CAC20008

Chairperson: Ellen Ryan

Deputy Chairperson: Graham Rossiter

Panel Member: Joan Harnett-Kindley

Complaints Assessment Committee

Decision finding unsatisfactory conduct

1. The Complaint

1.1 The Complainants have complained to the Real Estate Agents Authority (the Authority) about the conduct of Craig Lowe (the Licensee). The Licensee is licensed under the Real Estate Agents Act

2008 (the Act). He holds a salesperson’s licence and is working for RE/MAX Leaders.

1.2 The Complainants allege the Licensee’s appraisal of their property was misleading and unrealistic, giving them false expectations on the sale price of the property. The Licensee gave them an initial value of around $360,000.00 to $370,000.00 if renovations were made to the property. After the renovations were completed the Licensee provided an appraisal of the property valuing it at

$320,250.00 to $350,750.00, however, this value was not reflected in the market. The property was

eventually sold by another agency for $303,000.00.

2. Material Facts

2.1 The Complainants purchased a property listed by the Licensee for $280,000.00 around May 2012.

The Complainants had asked the Licensee what the expected sale price would be if they completed renovations, including a new roof, new carpet and painting. The Licensee verbally advised that it would be $360,000.00 to $370,000.00. The Complainants then proceeded to carry out the renovations.

2.2 The Licensee had advised them to add a deck to the property but the Complainants did not go through with this due to the cost and the consent process was cumbersome.

2.3 After the renovations were completed the Licensee then gave them a written appraisal of the property valued at $320,250.00 to $350,750.00. The Complainants listed the property with the Licensee in September 2012 and after two months only one offer was received of $305,000.00. The Licensee advised them not to accept this offer. The Complainants then changed to another agency to sell the property. The new agent appraised the property at a value of $310,000.00. The property eventually sold for $303,000.00.

2.4 The Complainants allege the appraisal provided by the Licensee was misleading as the property would not have been able to achieve his appraised price of $320,250.00 to $350,750.00. The Complainants state the Licensee should reimburse them for the marketing costs they paid.

2.5 The Licensee in response says that he did tell the Complainants that if renovations were carried out on the property it would be valued at around $360,000.00 to $370,000.00, but there was no way to know for certain. After the renovations were completed he went to view the property and found there was no deck added to the property. In his view the deck would have improved the value of the property significantly. He put the formal appraisal together by looking at comparable sales in the area. His formal appraisal value of the property was $305,000.00. He then suggested if they ran a competitive tender process it was possible to achieve a premium above $305,000.00, which is reflected in his premium range of $320,250.00 to $350,750.00. The Licensee states a tender process would generate competition; however, it did not achieve a competitive result in this case. He confirms that there was only one offer for the property of $305,000.00. The Complainants would not accept his offer stating they would lose money if they accepted this price. The Licensee

states he appraised the property as rationally and objectively as he could, based on sales data and his experience.

3. Relevant Provisions

3.1 The relevant law is section 72 of the Real Estate Agents Act 2008 (the Act) as to the definition of unsatisfactory conduct.

3.2 Section 72 - Unsatisfactory conduct

For the purposes of this Act, a licensee is guilty of unsatisfactory conduct if the licensee carries out real estate agency work that—

(a) falls short of the standard that a reasonable member of the public is entitled to expect from a reasonably competent licensee; or

(b) contravenes a provision of this Act or of any regulations or rules made under this Act; or

(c) is incompetent or negligent; or

(d) would reasonably be regarded by agents of good standing as being unacceptable.

3.3 The Real Estate Agents Act (Professional Conduct and Client Care) Rules 2009 also apply and the following is relevant: Rule 9.5 ‘An appraisal of land or a business must – (a) be provided in writing to a client by a licensee; and (b) realistically reflect current market conditions; and (c) be supported by comparable information on sales of similar land in similar locations or businesses.’

4. Discussion

4.1 The appraisal provided by the Licensee included a market base price of $305,000.00 and a ‘likely premium range of $320,250 - $350,750’. The requirements of Rule 9.5 are clear in that the appraisal must reflect current market conditions and be supported by comparable information on sale of similar land in similar locations. We find that there is no evidence provided by the Licensee that this premium range of $320,250 - $350,750 is realistically reflected in the market conditions at the time as no information was provided of comparable sales of similar properties to support this price range. In our view the Licensee simply relied on the possibility of a competitive tender process eventuating (which did not occur) to achieve this premium price range which does not meet the requirements of Rule 9.5. We are satisfied there has been a clear breach of Rule 9.5 by the Licensee and accordingly find unsatisfactory conduct has been proven against him.

5. Decision

5.1 After conducting an inquiry into the complaint, pursuant to section 89(1) of the Real Estate Agents Act 2008 (the Act), the Committee held a hearing with regard to that complaint. In accordance with section 90(1) of the Act, the Committee conducted the hearing on the papers, and pursuant to section 90(2) the Committee’s determination was made on the basis of the written material before it.

5.2 The Committee has determined under section 89(2)(b) of the Act that is has been proved, on the balance of probabilities, that Craig Lowe has engaged in unsatisfactory conduct.

6. Orders

6.1 The Committee will conduct a separate hearing on the papers to decide what orders, if any, should be made under section 93 of the Act.

Section 93 provides:

93 Power of Committee to make orders

(1) If a Committee makes a determination under section 89(2)(b), the Committee may do 1 or more of the following:

(a) make an order censuring or reprimanding the licensee;

(b) order that all or some of the terms of an agreed settlement between the licensee and the complainant are to have effect, by consent, as all or part of a final determination of the complaint;

(c) order that the licensee apologise to the complainant;

(d) order that the licensee undergo training or education;

(e) order the licensee to reduce, cancel, or refund fees charged for work where that work is the subject of the complaint;

(f) order the licensee:

(i) to rectify, at his or her or its own expense, any error or omission; or

(ii) where it is not practicable to rectify the error or omission, to take steps to

provide, at his or her or its own expense, relief, in whole or in part, from the consequences of the error or omission;

(g) order the licensee to pay to the Authority a fine not exceeding $10,000 in the case of an individual or $20,000 in the case of a company;

(h) order the licensee, or the agent for whom the person complained about works, to

make his or her business available for inspection or take advice in relation to management from persons specified in the order;

(i) order the licensee to pay the complainant any costs or expenses incurred in respect of the inquiry, investigation, or hearing by the Committee.

(2) An order under this section may be made on and subject to any terms and conditions that the Committee thinks fit.

6.2 The Committee requires the Case Manager to obtain a record of any previous disciplinary decision in respect of the Licensee under either the Real Estate Agents Act 1976 or the Act, if any such decision exists, and provide it to the Committee.

6.3 The Licensee and the Complainants may file submissions on what orders, if any should be made.

The Complainants may file submissions within 10 working days from the date of the decision. These submissions, if any, will then be provided to the Licensee, with a timeframe for filing final submissions.

7. Publication

7.1 One of the Committee’s functions pursuant to section 78(h) of the Act is to publish its decisions.

7.2 The Committee has deferred making any decision on publication until its hearing to decide what orders, if any, should be made.

8. Right of Appeal

8.1 A person affected by a determination of a Complaints Assessment Committee may appeal by way of written notice to the Real Estate Agents Disciplinary Tribunal (the Tribunal) against a determination of the Committee and must do so within 20 working days from the date of the determination.

8.2 The Committee has yet to finally determine this complaint because the parties are being given an opportunity to make submissions on orders before the Committee determines what orders should be made, if any.

8.3 The Committee considers that the 20 working day appeal period does not commence until it has finally determined this complaint by deciding what orders should be made, if any.

8.4 Appeal is by way of written notice to the Tribunal. Further information on filing an appeal is available by referring to the Guide to Filing an Appeal at www.justice.govt.nz/tribunals.

Signed

Ellen Ryan

Chairperson

Complaints Assessment Committee

Real Estate Agents Authority

Date: 25 November 2013