A salesperson wants to save time by giving a prospective vendor an automated online price estimate, without visiting the house, and then signing the agency agreement. What does REA's guidance on rule 10.2 say?
Correct Answer
A) It is unlikely to be enough; a written appraisal backed by comparable sales is needed.
Rule 10.2 requires an appraisal to be in writing, to realistically reflect current market conditions, and to be supported by comparable sales. REA's guidance says an electronic market estimate is unlikely to meet this, the licensee should physically view the property, and not viewing it risks breaching rule 5.1.
Why This Is the Correct Answer
REA says automated estimates alone are unlikely to meet rule 10.2 and that the property should be viewed.
Why the Other Options Are Wrong
Option B: It is acceptable, as long as the estimate is from a reputable data provider and in writing.
REA says an electronic estimate alone is unlikely to satisfy rule 10.2 and the property should be viewed.
Option C: It is acceptable for residential but not commercial property.
Rule 10.2 applies to all land and businesses; REA's guidance covers residential, rural and commercial.
Option D: It is not allowed, because only a registered valuer may give a vendor a figure in writing.
Licensees can give appraisals; the rule is that they be written, realistic and supported by comparables.
Background Knowledge for Agency Practice
Source: https://www.rea.govt.nz/real-estate-professionals/industry-guidance-and-information/listing-a-property/appraisals/
Exam Tip for Agency Practice
An appraisal needs a written, realistic figure, comparable sales, and in practice a site visit.
Common Mistakes to Avoid on Agency Practice Questions
- •Treating a data-provider estimate as a compliant rule 10.2 appraisal.
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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