Complaint No C10662 [2016] NZREAA 57 (16 March 2016)

Last Updated: 23 December 2016

Before the Complaints Assessment Committee

Complaint No: C10662

In the matter of

Part 4 of the Real Estate Agents Act 2008

Licensee One: Licensee One (XXXXXXXX)

Licensee Two: Licensee Two (XXXXXXXX)

Decision to take no further action

16 March 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 29 September 2015 the Real Estate Agents Authority (the Authority) received a complaint against Licensee One and Licensee Two from the Complainant.

1.2. The Licensees are licensed Agent and salesperson respectively under the Real Estate Agents

Act 2008 (the Act).

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

1.4. The details of the complaint are that the Complainant and his partner were prospective bidders at the auction of the Property held on site on 27 September 2015. Licensee Two was the listing agent and Licensee One the auctioneer. The Complainant stated that bidding commenced at $800,000 with Licensee One asking for increments of $50,000; the Complainant was bidding against one other on-site bidder and a phone bidder who appeared to be communicating through another licensee on-site. When the bidding reached $940,000

Licensee One called the auction twice and then said he needed to consult the vendor. When Licensee One came back he announced the phone bidder had agreed to jump to $1,100,000 but the Property had still not met its reserve. At that stage the Complainant and his partner left the auction because they believed the price hike was “ludicrous”. The Complainant’s partner later texted Licensee Two and was informed that the Property had been passed in at

$1,100,000 and when asked confirmed that it was a vendor bid.

1.5. In particular, the Complainant advised that:

(a) he had asked Licensee Two at open homes prior to the auction how high the selling

price might be and was told it would probably be in the “high 800’s”.

(b) on the day of auction the Complainant asked Licensee Two if there would be any vendor bidding. The Complainant stated Licensee One responded in a rude manner “of course there would be......every agency does this”. The Complainant replied that not every agency allowed vendor bidding.

(c) the Complainant stated Licensee One did not tell bidders a vendor bid was being made

or that the phone bidder was the vendor.

(d) the Complainant believed Licensee Two may have misled the vendor with an unrealistic price expectation.

1.6. The Complainant requested a remedy, being:

a) Serious consequences for both Licensee One and Licensee Two.

1.7. The Licensees responded to the complaint against them.

1.8. In particular the Licensees commented that:

a) Licensee Two had appraised the Property on 28 July in the range $695,000 to $818,000 and it was listed and placed on the market on 12 August 2015.

b) Licensee One had relisted the Property on 1 September 2015 on an auction

programme, detailing himself as auctioneer and Licensee Two as salesperson/ joint listing licensee with an auction date set down as 27 September 2015.

c) Licensee Two was the salesperson attending open homes at the Property and reported in writing to the vendor that feedback from attendees to the open homes now placed the Property in the $800,000 to low $1,000,000 range. A pre-auction letter to the vendors, and signed by both Licensee One and Two, detailed consistent price feedback within that price range and urged the vendor to be realistic in setting a reserve price suggesting anything over $1,100,000 may prejudice the chance of selling under the hammer at auction.

d) On 6 September 2015, Licensee Two emailed the Complainant comparative sales statistics ranging from $900,000 to $1,420,000. Licensee Two adamantly denied she had mentioned to the Complainant that the Property would probably sell in the late

$800’s. She said all her in-house auction training was centered around never mentioning price, but providing to those who asked for a price guide comparative sales statistics, as she had done for the Complainants.

e) On 21 September 2015, the Complainant emailed Licensee Two asking various questions, including a request for a rental appraisal, potential other bidders, feedback on building inspections, would there be vendor bidding, auction registration form, and a copy of a draft sale and purchase agreement.

f) The Complainant subsequently registered to attend the auction.

g) Licensee One stated he commenced the auction with his normal preamble including a statement that he represented the vendor and would, if necessary, present a vendor bid which he would disclose to the attendees.

h) Ms. X presented a statement that she was an administrator at the Agency, and did not

hold a license to market real estate. Her sole reason for attending the auction was to stand beside Licensee One and hold his phone. Licensee One introduced Ms. X at the start of the auction and advised those present she would be assisting him by holding his phone so he could communicate with a phone bidder.

i) Licensee A attended the auction by phone and stated that he was the licensee who was with the phone bidder and also in phone contact with Licensee One.

j) He explained that his phone bidder was Iraqi who spoke little English and as Ms. X is

Lebanese they communicated in Arabic, with Ms. X translating to Licensee One.

k) During the auction, Ms. X convinced his phone bidder to make a bid of $1,100,000 after speaking with Licensee One.

l) Licensee One stated that upon receipt of the phone bid, and with the auction having

stalled at a previous bid of $940,000, he interrupted the auction, went into the

Property, and spoke with the vendor who was sitting inside.

m) Licensee One stated he conveyed the bid of $1,100,000 to the vendor who rejected it, stating his reserve was $1,300,000 but might consider $1,200,000.

n) Upon being informed of this by Licensee One through Ms. X, the phone bidder immediately withdrew his bid.

o) Licensee One stated he then went back to the podium and announced this, and explained that the bid of $1,100,000 was now a vendor bid.

p) There were no further bids and the Property was passed in at $1,100,000.

2. What we decided

2.1. On 30 October 2015 the Complaints Assessment Committee (the Committee) considered the complaint and decided to inquire into it under section 79(2)(e) of the Act.

2.2. On 1 March 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.

2.5. Rule 6.4 (A licensee must not mislead a customer or client, nor provide false information, nor withhold information that should by law or fairness be provided to a customer or client), and Rule 9.4 (A licensee must not mislead as to price expectations of the client).

3. Our reasons for the decision

The Committee concluded:

3.1. Licensee Two did not mislead prospective buyers about what the selling price might be.

3.2. Licensee One did not mislead prospective buyers nor fail to disclose at the auction there were vendor bids.

3.3. The Licensees did not mislead the vendor with false price expectations.

Licensee Two did not mislead prospective buyers about what the selling price might be

3.4. Licensee Two provided to the Committee a comprehensive and detailed comparative market analysis (CMA) addressed to the vendor and dated 28 July 2015. The Committee was satisfied with the content and source of information provided.

3.5. Licensee Two further provided two written vendor reports compiled from feedback obtained during the marketing period, which stated viewer opinion placed the Property in the

$800,000 to $1,000,000 price range. The vendor acknowledged receiving these.

3.6. Licensee Two further provided the Complainant with a recent “window” of sales within the locality of the Property in the range $900,000 to $1,420,000.

3.7. Licensee Two was very adamant she did not, and would not, comment to the Complainant that the Property would probably sell in the late $800,000’s, as all her training was not to discuss pricing, but provide comparables to intending bidders to allow them to make their own decision on value and affordability.

3.8. The Committee accepts this and has no issue with documents and statements provided by Licensee Two. The Committee also understands the volatility of the market at this time and has a degree of sympathy with licensees’ reluctance to predict values, as in this instance, where a CMA was provided some two months prior to auction date.

Licensee One did not mislead prospective buyers nor fail to disclose at auction there were vendor bids

3.9. The Complainant accepted in his submission he was not ignorant of the fact a vendor bid could be made; however his initial complaint was that the bid of $1,100,000 during the auction was communicated as coming from a phone bidder, not from the vendor, as is legally required by Rule 6.4.

3.10. The Complainant further stated that upon hearing this bid - some $160,000 above the previous bid, he and his partner left the auction claiming the increase was “ludicrous”.

3.11. Licensee One stated upon receipt of the $1,100,000 bid he stopped the auction and went inside the Property to converse with the vendor, who declined the bid.

3.12. It is the Committee’s view that the Complainant was not present to hear Licensee One state the vendor had declined the bid and he was instructed to inform the attendees that

$1,100,000 was now a vendor bid.

3.13. Based on this evidence the Committee can only conclude Licensee One did not mislead prospective buyers as to the source of the final bid of $1,100,000.

The Licensees did not mislead the vendor with false price expectations

3.14. At the heart of this, and compelling to the Committee’s decision, is a letter signed by the vendor, whose signature is verified from his signature on the listing documents. We quote verbatim:

I confirm I am the owner of the Property. I have been provided with a copy of the complaint.... I can confirm the following:

The home was to be sold by auction with a reserve price of $1,300,000. I was present during the auction and sat at the rear of the home.

I authorized the auctioneer to bid on behalf of the owner as long as it’s under the reserve price.

I authorized the Agency to allow a client who was unable to attend to bid via a telephone. When the auction stopped, the auctioneer came in to discuss the highest bid which was subsequently negotiated to $1,100,000, which was well below our reserve and advised that it was not at an acceptable level to sell.

When conveyed to the purchaser they withdrew their offer immediately.

We passed the Property in to a vendor bid at that level ($1,100,000) and was instructed that we could advise all the parties that $1,200,000 would be a level that you (sic) would consider. The feedback we received from buyers throughout the auction was $800,000 to over

$1,000,000 from the reports which was surprising based on what next door has sold for several years previously.

3.15. Based on this, it is the Committee’s conclusion that the vendor was not misled as to price expectations. The vendor was emphatic in his decision to accept no less than $1,200,000.

Conclusion

3.16. The Committee notes the Complainant’s statement that the price increase from $940,000 to

$1,100,000 was “ludicrous” and on first reading there appeared to be merit in this. However,

the Committee can only base its decision on the written evidence and statements presented to them.

3.17. During the investigation further evidence was requested but not provided. These are:

a) Registration forms for bidders other than the Complainant.

b) Auction bidding sheet.

c) Open home registers.

d) Auction reserve price form.

3.18. The Agency stated they were never given these as the Property had not sold and subsequent to the auction both Licensees resigned. Licensee One put his licence into voluntary suspension and Licensee Two moved to another agency. The Committee concluded there was little point in pursuing these documents as the first three documents had no relevance to the complaint and the fourth was negated by the vendor’s written statement and seeming determination to achieve a price at or close to his reserve.

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 (no later than Friday, 15 April 2016) (Section 111).

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

J usti ce -Tri bunal s ( ww w. justi ce. g ov t. nz/ tri bunal s ).

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

Geoff Warren

Date: 16 March 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

2012 are:

Rule 6.4 A licensee must not mislead a customer or client, nor provide false information, nor withhold information that should by law or fairness be provided to a customer or client.

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