The Real Estate Agents Authority (REAA) revealed today that it began the review last year because of concerns that agents were increasingly involved in the flipping of houses for profit. Photo / File
The Real Estate Agents Authority (REAA) revealed today that it began the review last year because of concerns that agents were increasingly involved in the flipping of houses for profit. Photo / File
The watchdog for real estate agents says it has reviewed 300 cases in which Auckland properties were quickly onsold to check whether the agent involved had acted illegally.
The Real Estate Agents Authority (REAA) revealed today that it began the review last year because of concerns that agents were increasingly involved in the flipping of houses for profit.
However, in only a handful of the cases were agents found to have broken ethical or legal rules.
It comes after the Herald revealed a series of cases in which investors took advantage of Auckland's overheated housing market by flipping a home for a large profit, sometimes on the same day.
In the most recent case, a family of seven's Papakura house was sold twice in one day, the second time for an additional $81,000.
The REAA appeared before a select committee at Parliament today for the first time since being set up, and was challenged on whether it was doing enough to crack down on flipping.
Labour's housing spokesman Phil Twyford wants the rules and penalties for agents to be stricter to ensure they are giving accurate information to sellers.
REAA chairman John Auld told MPs today that his organisation was trying to be more proactive about investigating wrongdoing by licensed agents.
Labour MP Phil Twyford challenged the real estate watchdog about whether it was doing enough to deter flipping. Photo / George Novak
As part of this proactive approach, the authority reviewed 300 cases in Auckland last year in which an agent was involved either as a buyer or a seller in the rapid turnover of a house.
Auld said the authority carried out the review because it wanted to be sure that agents were looking after the interests of their vendors and "weren't in some sort of relationship with the purchaser".
Agents are required by law to disclose whether they have a relationship with a buyer because of the potential conflict of interest.
Auld said many of the 300 cases were legal, and only a small number of them broke the rules.
Twyford questioned whether the authority's penalties were enough to deter rogue agents.
The average fine was between $3000 to $5000 but an agent could make up to $30,000 in commission on a sale, he said.
The authority said it received 564 complaints in the 2015/16 year and about a third of them were upheld. Between 2 to 3 per cent of 15,000 licensed agents faced disciplinary action.
The REAA executives were also asked about whether they would follow the lead of some Australian states by cracking down on underquoting in New Zealand.
Auld said the authority had received about complaints about the practice. But he said agents were not the only ones involved in marketing properties. Banks, lawyers, insurance companies, building contractors and others were involved in "pushing information out to the public".
"What we are trying to do is educate the public to recognise their rights and their legal obligations in these transactions," he said.
