It’s hard enough to buy a property in an over-heated market without discovering you’re competing against the real-estate agent you thought was working for you. That’s what happened to a Wellington man last year.
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Margaret Lindsay, an experienced agent with Harcourts in the Wellington suburb of Eastbourne, didn’t immediately disclose to a potential buyer that she and her husband (another real-estate agent) had become interested in buying the property. The buyer only found this out 30 minutes before tenders closed, although the agent and her husband had viewed the property 3 days earlier.
The Real Estate Agents Disciplinary Tribunal found her actions amounted to “unsatisfactory conduct” rather than the more serious charge of “misconduct”, which involves wilful or reckless breaches of the rules of the Real Estate Agents Act. At the penalty hearing she was fined $4000, ordered to attend a course on business ethics, and to apologise to the complainant.
It seems surprising an experienced agent wouldn’t have realised she had a major conflict of interest on her hands – and needed to make every effort once she became interested in the property to inform her client of her changed situation.
This type of conflict of interest is not an isolated case. Over the past two years, at least 10 similar cases – where the agent or a close family member had an undisclosed interest in the transaction – have been dealt with under the Act. The Real Estate Agents Authority website lists 300 complaint decisions for “unsatisfactory conduct” by agents.
The Tribunal in its penalty decision commented the Real Estate Agents Act “was introduced specifically to better protect the interests of consumers in respect of real estate transactions”. While the new system and its stronger penalties is an improvement on the past, there seems some distance to go in protecting consumers.
We think the penalties in cases of “unsatisfactory conduct” which involve breach of trust between agents and their clients should be nearer to the maximum of $10,000 so that they act as a stronger deterrent.
About the author:
David Naulls is Consumer's deputy CEO and the editor of Consumer magazine.
David works closely with the research and testing team to ensure the quality of all articles published by Consumer NZ. He has previously been a research writer and contract books writer at Consumer. Before returning as Content Editor, he was a freelance writer and editor for 25 years. David has post-graduate qualifications in journalism and political philosophy.