Underquoting, a Guessed Rental Appraisal and a Stale Pool Photo
Elena is branch manager at a Christchurch agency. She receives a complaint from a buyer, Mr Patel, about a Trade Me listing for a unit. The ad said “vendor must sell - offers over $379,000 considered”, but the vendor had told the salesperson, Josh, that the reserve was $450,000 and not to present offers below $410,000. The ad also said “rental appraisal $520–$560 per week”; Josh had no written appraisal and had guessed the figure. The unit had a leaky history and a body corporate remediation levy of $60,000; the vendor had told Josh about both, but the ad did not mention them. Josh used a photo of the complex’s pool taken before the pool was closed. Mr Patel offered $385,000, which was rejected; he later found out the vendor’s bottom line and complained to the branch and to the REA. Elena must respond.
1. Assess the advertising and disclosure issues under the Code and Fair Trading Act.
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The listing looks misleading in several respects. First, the price guidance: advertising “offers over $379,000” when the vendor has set a $450,000 reserve and will not look below $410,000 is likely to mislead buyers about the vendor’s expectations; that is the kind of underquoting the Code’s advertising standards and the Fair Trading Act’s prohibition on misleading conduct are aimed at. Second, the rental appraisal: a licensee must have a reasonable basis for a stated appraisal; guessing “$520–$560” without a written appraisal is misleading. Third, the omission of the leaky history and $60,000 levy is material; silence can be misleading where the licensee knows the information would affect a buyer’s decision. Fourth, the pool photo is stale and misrepresents the current property. “Vendor must sell” may also overstate urgency.
The Code requires advertising to be accurate, not misleading, and to disclose material information; the Fair Trading Act separately prohibits misleading or deceptive conduct.
2. How should Elena handle the complaint and what disciplinary outcomes are possible?
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Elena should treat this as a serious complaint. She should: preserve the Trade Me ad, the agency file, Josh’s correspondence and the vendor’s instructions; interview Josh and the vendor; withdraw or correct the ad immediately; check whether other listings by Josh have similar issues; respond to Mr Patel in writing and explain the process; notify the agent licence holder; and cooperate with the REA. She should also review the branch’s advertising approval and supervision systems, because the complaint suggests Josh’s advertising was not checked.
Under the REA complaints process, the complaint may be assessed by a Complaints Assessment Committee. Possible outcomes include a finding of unsatisfactory conduct against Josh and/or Elena, fines, censure, training or conditions, and referral to the Disciplinary Tribunal for more serious conduct. Compensation orders may be available in some outcomes. The agency may also face consequences. Elena should not simply blame Josh; her supervision of advertising is part of the branch manager role.