Marketing needs examination: Judge
Changes are needed to real estate marketing schemes, the High Court has warned.
Monday, December 23rd 2013, 12:00AM
by The Landlord
The High Court at Auckland upheld the appeal of real estate agent Daphne Brown, against a tribunal decision that found her guilty of serious misconduct. It quashed her $450 fine.
Brown, who worked for an LJ Hooker franchise, called Mary Wealleans and her husband in 2006, offering an investment seminar.
The couple attended and bought an Auckland CBD apartment that was said to be worth almost $250,000.
When the GFC hit, the Hamilton couple, in their 50s, found it was worth just $143,000.
They had borrowed $253,500 against it.
Wealleans said the only reason they had purchased the property was that they were told they could make a $70,000 profit in three years. They thought Brown and her company was acting in their interests.
Justice John Priestley said the scheme was consistent with industry practice at the time but risked putting investors in a situation where they might purchase a property that it was not in their best interests to buy.
He asked for the Real Estate Agents Authority to address marketing standards, which allowed agencies to use “exaggeration” to lead people to think they were the agents’ sole focus.
REINZ chief executive Helen O’Sullivan said the new real estate agents legislation placed more obligation to ensure they provided buyers with all the necessary information.
She said the way the FMA regulated investments meant that some structures that agents were legally able to deal in five or ten years ago were now out of bounds.
“You’ve got to be careful about the difference between investment products and residential.”
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