Buying the Listing at a Price the Evidence Doesn't Support
Priya appraises a two-bedroom townhouse for a vendor. She reviews three comparable sales: $705,000 five months ago, $718,000 three months ago and $735,000 six weeks ago. Her written appraisal is $720,000 with a $700,000–$740,000 range. The vendor wants $820,000 because a neighbour has listed at $850,000, although that property has been on the market for four months without an offer. Priya's branch manager says: 'Just buy the listing at $820,000 - we need stock.' Priya prepares a sole agency agreement at $820,000 and advertising that says 'priced to sell, vendor motivated'. Eight weeks pass with no offers. The vendor says Priya misled him about the likely price. Priya's cousin then asks to view the townhouse, and the branch manager tells Priya to 'keep the family connection quiet'.
1. Did Priya breach the Code by listing at $820,000, and how should the appraisal and listing price have been handled?
Read the worked answer
The key distinction is between the appraisal and the vendor's asking price. A licensee may list a property at a price the vendor instructs, even if it is above the appraised range, provided the licensee does not mislead the vendor or buyers about market value. What Priya must not do is provide a written appraisal of $820,000 without comparable evidence, or use an inflated price to obtain the listing.
Priya's written appraisal was $720,000, which was supported by the sales she had. Listing at $820,000 was the vendor's decision, but she needed to record in writing that she had advised the vendor of the evidence and that $820,000 was the vendor's asking price, not her appraisal. The advertising 'priced to sell, vendor motivated' at $820,000 was potentially misleading because it implied the price was competitive when the evidence did not support it. The branch manager's 'buy the listing' instruction is not a defence. Priya should have kept the appraisal accurate, documented the vendor's instructions, and ensured the marketing did not misrepresent value.
2. What should Priya do about her cousin's interest and the branch manager's instruction to keep it quiet?
Read the worked answer
Priya must disclose the family connection to the vendor in writing before any viewing or offer. The branch manager's instruction to keep it quiet is improper and should not be followed. A cousin is a related party, and the vendor is entitled to know that the salesperson has a personal connection to a potential buyer so the vendor can assess whether the process is fair.
Priya should tell the vendor that her cousin would like to view the property, record the disclosure, and treat the cousin exactly like any other buyer. She must not give the cousin confidential information or prefer the cousin's offer. If the cousin makes an offer, it should be presented in the normal way with the conflict disclosed. If the branch manager continues to pressure her, she should escalate the matter to the agency's licensed agent or the Authority.
3. What should have been done differently with the agency agreement, the appraisal and the marketing?
Read the worked answer
The appraisal should have remained a written, evidence-based document showing the comparable sales and the range. The agency agreement should have recorded the vendor's asking price and any advice Priya gave about the gap between that price and the appraised range. The vendor should have confirmed the pricing instruction in writing.
The marketing should have been accurate. A statement such as 'priced to sell' should not be used unless it is genuinely supported by the market evidence. Priya should have set a feedback schedule, reported the lack of offers to the vendor promptly, and discussed a price adjustment based on evidence rather than waiting eight weeks. This protects the vendor from unrealistic expectations and protects Priya from a complaint that she over-promised to win the listing.