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A judge has warned real estate agents that they are all on notice over the use of "buyer inquiry over" advertising methods, which can disguise the true asking price for a house.
Tim Whitehead was yesterday fined $7500 by Judge Bridget Mackintosh in Hastings District Court for misleading buyers by advertising a property as "buyer inquiry over" $380,000 while knowing the vendor would not sell below $400,000.
The house was eventually sold for $405,000.
Whitehead had been found guilty of breaching the Fair Trading Act after the Commerce Commission alleged he made misleading representations in advertising a property in the Wellington suburb of Northland in 2004.
The judge also issued a warning to other agents.
"From here on in, all agents will be on notice as to the consequences of advertising in this way," Judge Mackintosh said.
Real Estate Institute president Murray Cleland welcomed the judge's comments.
"It has certainly signalled that you've got to be on the mark with your valuations and I actually agree with that, I think giving a wide range [to prospective buyers] is not professional enough," he said. "When you're in this business you've got to be able to get pretty close to the mark, or indicate to an intending purchaser what the value of the property is."
Mr Cleland said that where the sale ended up price-wise was part of the negotiation, but you had to give an accurate starting point.
"There's nothing more annoying for somebody to go and inspect a property and find out that what is quoted is not correct. I don't like it and I don't think we should have it."
Mr Cleland said use of the "buyer inquiry over" method only happened in some areas, particularly Wellington.
The institute was working on a code of conduct for advertising and had sought guidance from the Commerce Commission.
"There will be a code of conduct for our members regarding advertising - similar to our other codes that we have for tender and auction - and I think that will give agents a very good guideline as to how they've got to operate out in the field," Mr Cleland said.
The code would also address the issue of misleading photographs, he said.
It was hoped the code would be out early in the new year.
- NZPA
