Tony Brazier

www.braziers.co.nz

Tony Brazier

The Press - Wednesday 18 November 2009

Times are a Changing

As of yesterday the new Real Estate Agents Act 2008 is the new legislation under which your chosen agent will operate. All members qualified to be involved in real estate practice are now called licencees, be it a salesperson’s licence, a branch manager’s licence or an agent’s licence. The word agent has been very loosely used over the years, even by the industry itself, but now the only agent is the one who runs and/or owns the agency.

From here on things will be different, not only for the licencees but also the clients (vendors/owners) and customers (purchasers). What was a simple, and sometimes too relaxed, process has been clearly defined as a set of procedures to be implemented. All parties will need to be patient as initially documents will need to read out laboriously until the natural salesperson ‘patter’ is learned.

Before we look at what changes we might expect, as clients and customers of real estate licencees, we should know the reasons behind them. The new act is about transparency and making sure the public are fully aware of what they are doing and the options available to them along the way. It is about accountability and being given the tools by which complaints can be made, and defended, with processes that are known and available to all. Most of all it is about process and the upgrading of processes that had fallen way behind the times from its last review over 30 years ago.

On a day to day basis the Act is likely to mainly show its changes through the following processes; appraisals, listings, offers, presentations of offers and documentating the sales. Firstly when you are discussing your property’s price either socially or in the business environment, you can no longer expect to get a short answer to the age old question made of salespeople, “What d’ya reckon it’s worth?” Under our new rules (9.5) no licensee can give you an appraisal unless it is in writing and offering a reflection on the current market conditions along with recent sales statistics to back up what they say. This will be frustrating as there are times when we are asked this question 20 to 30 times a day. The reason for this is to ensure clients do not act on shoddy information, however it may result in the long held ‘free appraisals’ becoming a thing of the past, especially in busy times. Mind you, charging for appraisals would sort out the genuine requests from the other when having to write each of them up. The above question will probably now be challenged with, “Are you genuinely thinking of selling?” at the very least.

Secondly when a client comes to list their property they will need to allocate more time than previously as the licensee salesperson must ensure through a signed copy that (i) the client was not under duress to sign (ii) was offered the opportunity to seek legal advice (iii) was given a copy of the REAA Approved Guide to read (iv) told of any rebates and discounts the licensee may get (v) informed that the licensee’s agency has (under s10 of the rules,) a Complaints Resolution policy (not precluding any further complaint to the REAA) and (vi) if applicable, that this is a good place to disclose the idiosyncrasies of the marketing style suggested e.g. Neg Over, Private Treaty etc. After all that, you can now get on with listing the property, which of course must be in writing under s9.15 of the new rules.

Thirdly, before a customer may want to put in an offer there is a similar extensive process involving written consent to show that the ‘under duress’ issues, the Approved Guide, the Complaints policy and legal advice offer were all covered. It is also a good time to disclose the fact that the customer (purchaser) may be in a multi-offer situation before they make their offer. With a copy of this left with the customer and armed with the offer, the licensee now goes to the client (vendor). But, (you guessed it), before the offer can be presented the client is given another Approved Guide, offer of legal advise, checked for ‘under duress’, and re-told of the Complaints procedure. It is also an opportune time to disclose under s134 of the Act whether there is a relationship between the purchaser and the licensee/agency. Only then is the offer presented. Hopefully someone has put the jug on by now.

As mentioned previously these processes will initially be laborious but will streamline as time evolves. When the Approved Guides become more common public knowledge they may end up as being acceptable to be accessible on the web. It would certainly save a forest or two if the numbers of boxes of guides recently issued is anything to go by.

In the coming months be patient with your salesperson licensee as they have more chance, under the new regime, of being in breach of the process than anything affecting their clients and customers.