Under what circumstances can a real estate agent purchase a property they have been engaged to sell?
Correct Answer
B) Only with the vendor's prescribed-form consent and an independent valuation
Section 134 of the Real Estate Agents Act 2008 bars a licensee from acquiring a client's property without the client's consent, and that consent is effective only if given in the prescribed form with a valuation by an independent registered valuer, paid for by the licensee (s 135). Without both, the client can cancel the contract and no commission is payable.
Why This Is the Correct Answer
Section 134 bars a licensee from acquiring a client's property without the client's consent. The consent is effective only if given in the prescribed form and the client receives a valuation by an independent registered valuer at the licensee's expense (s 135). Without both, the client can cancel and no commission is payable.
Why the Other Options Are Wrong
Option A: Never, because a licensee buying a client's property is always prohibited
The Act permits it with safeguards (ss 134 and 135) rather than banning it outright.
Option C: Only if the agent pays at least the full advertised asking price for the property
Paying the asking price does not satisfy the Act; the prescribed consent and independent valuation are still required.
Option D: Only after the agency agreement has expired and the listing is withdrawn
Waiting out the agency is not the statutory route; the conditions in sections 134 and 135 apply while the agent acts.
Deep Analysis of This Agency Practice Question
A licensee buying the client's property has an obvious incentive to pay less. The Act does not ban the purchase but requires two safeguards beyond ordinary disclosure: consent in the prescribed form, and an independent valuation paid for by the licensee, given before consent or, if the client agrees, within 14 days after. If the later valuation exceeds the provisional one in the consent form, the client can avoid the contract.
Background Knowledge for Agency Practice
Sections 134 to 137 of the Real Estate Agents Act 2008 deal with licensee conflicts. Section 134 covers acquisitions by the licensee or a related person, section 135 the valuation, section 136 written disclosure of other financial benefits, and section 137 who counts as a related person. The rules apply despite anything to the contrary in the agency agreement.
Memory Technique
A licensee buying a client's property needs the prescribed consent Form plus an independent Valuation at the licensee's cost.
Whenever a licensee or a relative wants to buy the client's property, check for both the form and the valuation.
Exam Tip for Agency Practice
Licensee buying a client's property: prescribed-form consent plus an independent registered valuation (ss 134 and 135); disclosure alone is not enough.
Real World Application in Agency Practice
An agent wants to buy a house she has been marketing for three months. She gives the vendor the prescribed consent form and a valuation from an independent registered valuer that she has paid for, and recommends the vendor take legal advice before deciding.
Common Mistakes to Avoid on Agency Practice Questions
- •Thinking agent purchases are banned outright
- •Believing that paying the asking price removes the need for consent
- •Forgetting the independent valuation required by section 135
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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