A licensee is appraising an unusual converted church, and there are no directly comparable or semi-comparable recent sales in the area. What does rule 10.3 of the Client Care Rules require?
Correct Answer
D) The licensee must explain in writing that no comparable data exists.
Rule 10.3 says that where no directly comparable or semi-comparable sales data exists, the licensee must explain this in writing to the client. REA adds that licensees should be careful about claiming there is no comparable data and should refer to any semi-comparable sales.
Why This Is the Correct Answer
Rule 10.3 requires a written explanation where no comparable or semi-comparable data exists.
Why the Other Options Are Wrong
Option A: The licensee must refuse the listing until a registered valuer has valued the church.
Rule 10.3 does not require a valuation; it requires a written explanation that no comparable data exists.
Option B: The licensee may leave the appraisal figure out and simply market it by tender or auction.
An appraisal is still required; rule 10.3 adds a written explanation about the missing data.
Option C: The licensee may simply use the rateable value instead.
Rule 10.3 requires a written explanation; REA also warns against relying on rateable value as market value.
Background Knowledge for Agency Practice
Source: https://www.rea.govt.nz/real-estate-professionals/obligations/the-code-of-conduct/real-estate-agents-act-professional-conduct-and-client-care-rules-2012/
Exam Tip for Agency Practice
No comparables: say so, in writing, to the client.
Common Mistakes to Avoid on Agency Practice Questions
- •Skipping the appraisal altogether because comparable sales are hard to find.
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