Complaint No C06763 [2016] NZREAA 20 (24 February 2016)

Last Updated: 5 November 2016

Before the Complaints Assessment Committee

Complaint No: C06763

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

Licensee One (XXXXXXXX) Licensee Two (XXXXXXXX)

Decision to take no further action

24 February 2016

Members of Complaints Assessment Committee: CAC408

Chairperson: Marjorie Noble Deputy Chairperson: Deborah Clapshaw Panel Member: Geoff Warren

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1. On 13 July 2015 the Real Estate Agents Authority (the Authority) received a complaint against

Licensee One and Licensee Two from the Complainant.

1.2. Both Licensees One and Two are licensed Salespersons under the Real Estate Agents Act 2008 (the Act). Both Licensees are employed by the Agency.

1.3. The complaint relates to a property (the Property).

1.4. Licensee One was the listing agent and Licensee Two was the selling agent for the sale of the

Property. The Property was first listed for sale by auction in January 2014 with an appraisal of

$450,000, but was withdrawn from the auction as there were no registered bidders. The Property was relisted in June 2014, and eventually sold for $400,000 in December 2014. The Complainant believes that the Licensees were not acting in his best interests in the marketing of the Property and that he would have achieved a higher price if the Property had been advertised in accordance with his instructions.

1.5. In particular, the Complainant advised that:

a) In January 2014 he listed his section for sale with Licensee One, who he knew due to his son’s relationship with Licensee One’s daughter. Licensee One told him she would sell the Property for more than $500,000, which also influenced his decision to list with her.

b) He needed to sell the Property to discharge a mortgage on another property he owned and had received an appraisal of $450,000- $500,000 from Licensee One.

c) Licensee One persuaded him to sell by auction and the Property was marketed without a price indication. When he queried how the price was set, Licensee One said she was giving prospective purchasers indications of $300,000 and when asked how she would get the price up to $500,000, said she would “talk them up”.

d) The Property was withdrawn from auction as there were no registered bidders and then

marketed for sale by negotiation with Licensee Two engaged to assist.

e) On the expiry of the agency agreement the Property was listed with another agency, but no interest eventuated from this agency and a further agency agreement was signed with Licensees One and Two.

f) During negotiations for the second agency agreement, he told Licensee One in confidence that his financial situation had changed but he still needed to sell the Property for at least $450,000 to clear his mortgage and cover commission and legal costs. He was explicit in instructing the Licensees to advertise the Property at $480,000 and he would accept $438,000 as a bottom line.

g) Approximately a week later he was told by the Licensees they had advertised the Property at $375,000 and received an offer for $375,000. When Licensee Two presented this offer he told him he would accept $410,000 if there were no further offers but still expected $450,000.

h) On Boxing Day, Licensee Two said the offer had been increased to $400,000, was rude

and aggressive, and threatened to walk away if the Complainant refused it.

i) The Complainant believed he had no hope of achieving a better sale price due to the

misleading advertising so sold the Property for $400,000. The Licensees were not acting in his best interests and a better sale price would have been achieved if they had followed his instructions. Other agencies he approached told him they could not advertise the Property at a higher price or it would affect their credibility.

1.6. The Complainant requested a remedy, being:

a) $8,000.00 from the Licensees and the Agency. b) Censure of the Licensees.

1.7. The Licensees responded to the complaint against them.

1.8. In particular, Licensee One commented that:

a) She believes she did not fail to act in the best interest of the vendor and did everything to ensure the best possible price for the Property, which she considers was achieved. She believes she dealt fairly with the vendor, keeping him informed throughout the marketing process, giving him market feedback, and keeping him up to date with the process and discussing any concerns he had.

b) The Complainant indicated he was not interested in receiving more vendor reports or

emails and requested verbal feedback.

c) The Property was withdrawn from the auction because there had been no interest, as she was encouraging buyers over $400,000 as instructed by the Complainant, but there was no interest in the market at this price range.

d) She disputes the Complainant’s allegation that she would talk prospective buyers up

from $300,000 to $500,000, and states she indicated that she would start negotiations if an offer was over $300,000 by presenting the offer and then trying to negotiate a price above it acceptable to the Complainant, not to $500,000. She told the Complainant “where the feedback was and that we were encouraging buyers $350,000 plus after 4 weeks of marketing to try to achieve a price” the Complainant would be happy with.

e) The Property was advertised at $375,000 because the market feedback indicated a price between $300,000-$350,000, and in response to her question whether he would accept

$375,000 if it could be achieved, the Complainant said he would accept that price. However when an offer for $375,000 was presented and with other offers the Complainant wanted more.

f) In response to specific questions from the investigator, relating to the Complainant’s

concern that his son may have been inappropriately involved in the process and the Complainant’s allegation of pressure, Licensee One stated that she acted professionally and did not discuss the situation with the Complainant’s son at all and that no pressure was exerted. Over the 10 months the Property was marketed, 10 offers were presented, which demonstrates the Licensees were working towards achieving the best possible price, but each time a price was presented the Complainant would counter it seeking more.

1.9. Licensee Two responded to the complaint, disputing he had done anything wrong, and in particular commented:

a) He was asked by Licensee One to assist in the sale of the Property by identifying and introducing potential buyers and was not involved in appraising it or the initial auction program.

b) Over the two periods the Property was listed by Licensee One, he introduced a number of buyers and 10 offers were actually presented but rejected. Over the 10 month period there were 30 buyer inspections and during both listing periods the Complainant had an

opportunity to cancel but did not do so. The second listing form signed by the

Complainant has an appraisal value of $399,000.

c) The price was set by the Complainant with Licensee One, but the Complainant was frustrating to work with because his instructions were not clear and he changed his wish price over and over again. The final purchase price obtained and accepted by the Complainant was above his expectations for the area and the highest section price for the last three years.

2. What we decided

2.1. On 29 July 2015 Complaints Assessment Committee CAC 402 considered the complaint and decided to inquire into it under section 79(2)(e) of the Act. This Committee was disestablished in October 2015 and a new decision to inquire into the complaint was made by CAC 408 (the Committee) on 27 October 2015.

2.2. On 18 January 2016 the Committee held a hearing on the papers and considered all the information gathered during the inquiry.

2.3. The Committee has decided to take no further action on the complaint.

2.4. This decision was made under section 89(2)(c) of the Act. The decision was also made with reference to the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012,

6.1(comply with fiduciary obligations), 6.2 (good faith and deal fairly), 9.1 (best interests and in accordance with instructions), 9.2 (undue pressure), and 9.4 (not mislead as to price expectations).

3. Our reasons for the decision

The Committee concluded:

3.1. Licensees One and Two did act fairly and in the best interests of the Complainant and in accordance with his instructions for the following reasons:

a) The Complainant approved changes to the marketing process and pricing.

b) The Complainant was provided with market feedback and offers were presented to him and a sale achieved.

c) The Complainant’s expectations did not reflect the market or buyer feedback. d) There was no evidence of undue pressure.

Approval of marketing and pricing

3.2. The evidence demonstrates the Complainant first listed the Property with Licensee One for sale by auction in January 2014, with an appraisal of $450,000. The listing agreement was signed by the Complainant and records this appraisal. The evidence shows the advertising for the auction did not identify a sale price or price indication. The Complainant and Licensee One have different interpretations of a conversation about setting the price. Licensee One’s interpretation and intended meaning, that buyers over $300,000 would be encouraged so that negotiations could then take place to a level acceptable to the Complainant, is consistent

with both an auction process and buyer feedback interest, which was in the $300,000 to

$400,000 range. The Property was withdrawn from auction because there were no registered bidders, with the Complainant’s approval. There is no evidence to support the Complainant’s view that Licensee One misled buyers as to his price expectations.

3.3. The Property was then marketed for sale by negotiation without a price indication. Although an offer of $300,000 was presented, the Property did not sell and the Complainant listed with another agency. The Complainant relisted the Property with Licensee One in June 2015. This listing agreement, dated 18 June 2015, was signed by the Complainant and records PBN and the value as $300,000-$400,000. The advertising at this time reflected that the sale was by negotiation and again did not state a price indication.

3.4. The agency was extended twice on 29 September 2015 and 11 November 2015. In the 29

September document the listing is modified to include a sale price of $375,000. The Modified Listing Authorisations were signed by the Complainant. Shortly after approving this sale price, on 4 December, an offer of $375,000 was presented to the Complainant by Licensee Two. This offer was for the asking price and the highest offer in over 10 months of marketing.

3.5. The Complainant may not have been pleased by the market feedback and the need to adapt the marketing process and price to the market, but there is clear evidence to demonstrate he approved the changes and continued to list the Property with the Licensees from January

2015 until the Property sold in December; with the exception of a short period when he listed with another agency. This listing was for an asking price of $489,000, which was not achieved. The Committee notes that this other agency appraised the Property at $390,000- $440,000 and the agency recommended an asking price of $439,000.

Market feedback and offers presented

3.6. The Licensees provided extensive evidence of market feedback provided to the Complainant, which resulted in the changes to the pricing, and at least nine offers were presented to the Complainant during the listing periods. This evidence suggests to the Committee the Licensees were working hard to obtain a sale for the Complainant at the best possible price achievable.

Complainant’s expectations

3.7. The evidence suggests the Complainant’s initial expectations for the Property did not reflect the market, and the pricing and process was modified over the marketing period to reflect buyer feedback with his acceptance. The Property was withdrawn from auction because there was no interest at the Complainant’s price expectation, it did not sell when marketed at a price of $489,000 through the other agency, and a number of offers were made in the early

$300,000 range when the Property was marketed price by negotiation with the value of

$300,000-$400,000, recorded on the 18 June listing form. An offer of $375,000, the then asking price, was made in December 2015 and through negotiation was increased to

$400,000. In light of the appraisal values completed by Licensee One, the evidence on buyer feedback, the appraisal by the other agency, and the fact that this was a result of a lengthy marketing process, the Committee considers that this was the best price achievable at the time, which is the view expressed by Licensee Two.

No evidence of undue pressure

3.8. There is no evidence to suggest the Complainant outlined his concerns to the Licensees during the ten month period of the listings. It is notable the Complainant relisted the Property with Licensee One despite his alleged concerns, after a failed campaign with another agency. Moreover, this listing was extended twice. The Committee notes the sale and purchase agreement with the purchaser of the Property contained a subject to vendor solicitor approval clause. The Complainant ’s allegation of undue pressure is not supported by the evidence made available to the Committee and appears to be inconsistent with it.

4. Your right to appeal

4.1. If you are affected by this decision of the Committee, you may appeal in writing to the Real Estate Agents Disciplinary Tribunal (the Tribunal) within 20 working days after the date of this decision (Section 111).

4.2. For further information on filing an appeal, read Guide to Filing an Appeal at Ministry of

Justice-Tribunals (www.justice.govt.nz/tribunals).

5. Publication

5.1. At the Committee’s discretion, the decision will be published without the names or identifying details of the Complainant (including the address of the Property), the Licensees, and any third parties.

5.2. The Authority will publish the Committee’s decision after the period for filing an appeal has ended, unless the Tribunal receives an application for an order preventing publication. The Authority will not publish the Committee’s decision until the Tribunal has made a decision on the application.

5.3. Publishing the Committee’s decision supports the purpose of the Act by ensuring that the disciplinary process remains transparent, independent and effective. The Committee also considers that publishing this decision helps to set industry standards and that is in the public interest.

Signed

Deborah Clapshaw

Date: 24 February 2016

Appendix 1: Relevant provisions

The Real Estate Agents Act 2008 provides:

Section 89 Power of Committee to determine complaint or allegation

(1) A Committee may make one or more of the determinations described in subsection (2) after both inquiring into a complaint or allegation and conducting a hearing with regard to that complaint or allegation.

(2) The determinations that the Committee may make are as follows:

(a) a determination that the complaint or allegation be considered by the

Disciplinary Tribunal:

(b) a determination that it has been proved, on the balance of probabilities, that the licensee has engaged in unsatisfactory conduct:

(c) a determination that the Committee take no further action with regard to the complaint or allegation or any issue involved in the complaint or allegation.

(3) Nothing in this section limits the power of the Committee to make, at any time, a

decision under section 80 with regard to a complaint.

Section 111 Appeal to Tribunal against determination by Committee

(1) A person affected by a determination of a Committee may appeal to the Tribunal against a determination of the Committee within 20 working days after the date of the notice given under section 81 or 94.

(2) The appeal is by way of written notice to the Tribunal of the appellant's intention to appeal, accompanied by—

(a) a copy of the notice given to the person under section 81 or 94; and

(b) any other information that the appellant wishes the Tribunal to consider in

relation to the appeal.

(3) The appeal is by way of rehearing.

(4) After considering the appeal, the Tribunal may confirm, reverse, or modify the determination of the Committee.

(5) If the Tribunal reverses or modifies a determination of the Committee, it may exercise any of the powers that the Committee could have exercised.

The relevant provisions from the Real Estate Agents Act (Professional Conduct and Client Care) Rules are:

Rule 6.1 A licensee must comply with fiduciary obligations to the licensee’s client.

Rule 6.2 A licensee must act in good faith and deal fairly with all parties engaged in a transaction.

Rule 9.1 A licensee must act in the best interests of a client and act in accordance with the

client’s instructions unless to do so would be contrary to law.

Rule 9.2 A licensee must not engage in any conduct that would put a prospective client, client, or customer under undue or unfair pressure.

Rule 9.4 A licensee must not mislead customers as to the price expectations of the client.