KEY POINTS:
Over the years there has been plenty of talk from real estate leaders about the need for the industry to clean up its act and drive out the rogues who sully the good name of agents everywhere.
The talk is usually prompted by the latest story of skulduggery,
whether it be an advertisement that falsely implies a property has a sea view or the claim that a house is in a certain price range when in truth the owner has set a reserve tens of thousands of dollars higher.
In the face of such stories, it is hardly surprising that industry leaders should have plenty to say about the need to deal firmly with such unethical practices. Unfortunately their words have never been backed with resolute action. On the contrary, the public has been left with the impression that the industry is all too willing to turn a blind eye.
Until now, that is.
Within two weeks industry leaders will be reporting back to Associate Justice Minister Clayton Cosgrove on plans to establish a proper consumer watchdog to deal with complaints about real estate agents.
This latest promise of action followed a Weekend Herald inquiry which showed that a Napier agency received the maximum fine of just $750 from a Real Estate Institute subcommittee on each of three charges after falsely claiming that a client's property had been valued at $170,000 less than the asking price.
As a result of that report the industry came under real pressure to act, notably from Mr Cosgrove, who demanded that the institute consider establishing a position similar to the banking ombudsman.
It was not enough, he argued, simply to increase the maximum fine from the paltry $750 as it stands now to $30,000 as had been suggested.
The real problem is less the extent of the available punishment and more the lack of industry will to enforce standards, despite the strong rhetoric from the top. The only possible way forward is for a truly independent body to deal with complaints and fix penalties.
The model that Mr Cosgrove had in mind when he sent the institute away to think about it, was the banking ombudsman. This is a position funded by participating banks with the authority to enforce its decisions. The ombudsman's independence is preserved by a commission which stands between it and the banks.
It is not a bad model and received good marks in a comprehensive review published this year. Apart from its independence, the great virtue of such a system is its accessibility and efficiency in settling disputes without getting bogged down in protracted and costly legal proceedings.
Much, of course, will depend on the detail and the rules under which the watchdog operates and also on the type of person who fills the role. It must not be someone with close links to the industry. Rather it should be someone who understands the softly, softly methods of mediation, who is prepared to act independently, but is not afraid to rock the boat if that is what is required.
The institute, of course, has not yet unveiled its plans, but if they provide for an independent watchdog with teeth, then there is good reason to suppose that, at last, there will be an effective process in dealing with complaints about real estate agents. There is no question that this will be of real and lasting benefit to home buyers and sellers. But the industry should not forget that it will also benefit through a consequent increase in public confidence.
