Estate agent fined for 'ramping' up value of own home

File photo / NZ Herald

A real estate agent has been fined $1000 for 'ramping' up the value of his own home to allow a purchaser to get a loan without a deposit.

The deal involved overstating the sale price on a loan application, and then `gifting' the deposit amount back to the buyer, in a scheme the industry disciplinary body said was akin to facilitating fraud.

Christopher (Kit) Brown, of Kaimai Real Estate Limited in Welcome Bay, Tauranga, was found to have engaged in unsatisfactory conduct by the Real Estate Agents Authority.

The charge related to the sale of Mr Brown's own house in 2011 for $320,000.

Mr Brown was approached by a buyer who had recently arrived in New Zealand. The buyer told Mr Brown he didn't have a deposit, but a common practice in his country was to raise the sale price and have the vendor 'gift' back the deposit.

A sale and purchase agreement was drawn up listing the sale price as $352,000, and including a clause that the "vendor agrees to leave $32,000 in as a gift''.

Based on the sale price of $352,000, a loan application was made for $320,000.

However, the bank credit manager researched the property and found it was listed for sale at a lower amount, and declined the loan on the basis it did not provide 100 per cent finance.

In his response, Mr Brown said the idea came from the buyer, the bank mortgage manager had agreed to it and helped draft the relevant clause and that the solicitor acting for both parties saw nothing wrong with it.

But the authority's complaints assessment committee said it viewed the practice of 'ramping' the value of the property as akin to facilitating fraud. It had the potential to mislead the public and artificially inflate prices.

The committee also noted there were others as well as Mr Brown involved in facilitating the deal.

He was censured and fined $1000.