Bigger fines for real estate agents who break the rules

The new head of the Real Estate Institute has called on agents to stop being "foolish and greedy" and start achieving high standards of professionalism and behaviour.

Murray Cleland, just elected as president of the Real Estate Institute, said there should be higher penalties for agents who broke the rules and the standard $750 fine was not good enough.

Last month the Herald reported on the case of real estate agent Graeme Sawyer, whose former firm Bayleys Napier was found guilty of knocking down the price of two units to almost half their asking price in an attempt to buy the properties himself. The agency pleaded guilty to three charges and was fined $750 on each count - the maximum penalty under the rules as they stand.

Yesterday Mr Cleland backed media coverage of rogue agents, saying some conduct had been "simply indefensible". While it was easy to blame the media, people who did so missed the point.

But his speech drew a sceptical reaction from Associate Justice Minister Clayton Cosgrove, who meets senior institute officials next month to discuss its complaints procedures.

"I am mystified that the institute has extensive powers but they don't use them," Mr Cosgrove said.

"The Real Estate Agents Licensing Board has the ability to deregister, de-license or suspend people and destroy their lives, so just increasing fines is no utopia." The institute is due to present a range of proposals to Mr Cosgrove which he said should restore consumer confidence.

He was particularly keen to discuss why the institute ruled out taking further action in the Sawyer case - such as taking it to the licensing board - and is awaiting the institute's submission on the penalty increases.

Mr Cleland's call for change follows speeches by many other presidents who often make tough addresses when they are appointed.

He took over from Howard Morley, the outgoing institute president who has also called for harsher penalties.

Mr Cleland said increased penalties would make agents think twice about breaking the rules.

Agents' reputations had suffered this year because of a few foolish or greedy people and he challenged the industry to take more responsibility.

"We need to raise the professional bar both as to conduct and as to the penalties and sanctions applied to those who fail," he said. "In recent months we have seen cases where members have been found guilty of conduct which is simply indefensible." New Zealand has 17,400 agents, mostly self-employed and earning commissions on sales, he said.

But Glendowie resident David Samuel said the institute was administering an unjust system which disempowered people who had bad experiences with agents. Many people suffered loss because of agents' misconduct, yet they had no ability to recover any money, he said.

"It's lovely for Mr Cleland to talk, but let's see some action. The institute do not help the public and the system needs to be reformed so the institute can award damages to people who suffer losses," he said.

Mr Samuel said had a $14,500 legal bill to recover a $35,000 deposit on an Auckland house which he had sought to buy last March.