A vendor client tells the listing agent that the buyer who has just made an offer is her brother, and she wants to accept a price below the agent's appraisal. What should the agent do?
Correct Answer
D) Advise her on market value in writing, then act on her informed instructions
The agent must submit the offer (Rule 10.10) and act in the vendor's best interests while following her lawful instructions (Rule 9.1). Acting in her best interests means making sure she understands the market value she may be giving up; after that, choosing to sell to her brother at that price is her decision.
Why This Is the Correct Answer
The agent must submit the offer (Rule 10.10), act in the vendor's best interests and follow her lawful instructions (Rule 9.1). Best interests means making sure she understands the market value she may be giving up, ideally in writing, and then the decision to sell to her brother at that price is hers.
Why the Other Options Are Wrong
Option A: Refuse to present the offer, because it is below the agent's written appraisal
Rule 10.10 requires every written offer to be submitted; whether to accept a lower price is the vendor's decision.
Option B: Withdraw from the agency, since a family sale creates a conflict for the agent
The family relationship is between the vendor and the buyer, not the agent, so it creates no conflict for the agent that requires withdrawal.
Option C: Proceed only if a registered valuation confirms the price matches market value
The independent valuation requirement in section 135 applies when a licensee or their relative buys, not when the vendor's own relative does.
Deep Analysis of This Agency Practice Question
Family sales below market are common and lawful. The agent's role is not to police the vendor's generosity but to make sure the choice is informed: the appraisal and comparable sales are explained, the advice is recorded, and the vendor is reminded she can take legal advice (Rule 9.7). The special safeguards in sections 134 and 135 apply only when the licensee or a person related to the licensee is the buyer.
Background Knowledge for Agency Practice
Rule 9.1 requires a licensee to act in the client's best interests and in accordance with the client's instructions unless that would be unlawful. Rule 10.2 requires appraisals to be in writing and to reflect current market conditions, and Rule 10.10 requires every written offer to be submitted to the client. Sections 134 to 137 of the Real Estate Agents Act 2008 regulate purchases by licensees and their relatives, not by the vendor's relatives.
Memory Technique
Inform the client of what the market would pay, record the advice, then obey her lawful instructions.
Use it whenever a client wants to do something lawful that seems against their financial interest.
Exam Tip for Agency Practice
The client decides; the agent's duty is to make sure the decision is informed and to follow lawful instructions.
Real World Application in Agency Practice
A widow wants to sell her house to her son for less than the agent's appraisal. The agent presents the son's offer, explains in an email what comparable homes have sold for and suggests she talk to her lawyer, then processes the sale on her instructions.
Common Mistakes to Avoid on Agency Practice Questions
- •Refusing to present an offer because it is below appraisal
- •Thinking a sale between the vendor's relatives creates a conflict for the agent
- •Applying the section 135 valuation rule to buyers who are not related to the licensee
Related Topics & Key Terms
Key Terms:
More Agency Practice Questions
A real estate agent receives two offers on a property at the same time. What is their primary obligation?
Which of the following situations would create a conflict of interest requiring disclosure by a real estate licensee?
Sarah is a licensed salesperson working for ABC Real Estate. When showing a property to buyers, who does she primarily represent?
Under the Real Estate Agents Act 2008, what is the primary duty that a real estate agent owes to their client?
Which licence allows a person to carry out real estate agency work for an agent, but only under supervision?
- → Under section 126 of the Real Estate Agents Act 2008, what must happen after the client signs an agency agreement for the agent to be entitled to commission?
- → A licensed agent discovers that their salesperson has been providing advice about tax implications of a property investment without appropriate qualifications. What is the agent's responsibility?
- → An agency agreement contains a clause stating that the agent's commission is payable even if the property is sold by the vendor directly to a buyer introduced by the agent during the agency period, but the sale settles after the agency expires. Is this clause enforceable?
- → What must a real estate agent disclose to a potential purchaser when showing a property?
- → Under a sole agency agreement, when is the vendor still liable to pay commission to the agent?
- → Sarah holds a salesperson's licence and works for ABC Real Estate. When presenting an offer to a vendor, who is legally responsible for ensuring all disclosure obligations are met?
- → A real estate agent discovers that a property has a leaky roof after the agency agreement is signed but before any offers are received. What is the agent's obligation?
- → Which of the following allows an agent to end an agency agreement before its expiry date?
- → Under the Real Estate Agents Act 2008, what is the primary fiduciary duty that a real estate agent owes to their client?
- → What must a licensee do when they become aware of a material defect in a property they are marketing?
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Previous Question
An agency agreement contains a clause stating that the agent's commission is payable even if the property is sold by the vendor directly to a buyer introduced by the agent during the agency period, but the sale settles after the agency expires. Is this clause enforceable?
Next Question
An agent's sole agency expires in two days, and the vendor plans to list with a different agent next month. The original agent says a buyer it introduced is still negotiating. What determines the original agent's entitlement to commission?