A vendor tells the listing salesperson firmly that she will not accept less than $820,000 (an invented figure). The salesperson wants to advertise 'buyers enquiry over $780,000' to draw more interest. What does REA's guidance say?
Correct Answer
A) That advertising is likely misleading, as the vendor would not consider that price.
Rule 10.4 requires an advertised price to clearly reflect the pricing expectations agreed with the client, and rule 9.4 bars misleading customers about the client's price expectations. REA's guidance says the lower end of any advertised figure must be an amount the vendor would seriously consider, and cites a case where a price advertised below the vendor's minimum was misleading.
Why This Is the Correct Answer
An advertised figure below what the vendor would ever accept misleads buyers under rules 9.4 and 10.4.
Why the Other Options Are Wrong
Option B: It is acceptable, because an advertised price may be up to 10% below the vendor's figure.
REA's guidance cites a case where a licensee wrongly believed a 10% margin was allowed.
Option C: It is acceptable, as long as the vendor signs off the advert.
Vendor approval does not stop an advertised price misleading buyers about the vendor's expectations.
Option D: It is acceptable, because 'enquiry over' wording never amounts to a statement about price.
REA treats an enquiry-over figure as a price representation that must match the vendor's expectations.
Background Knowledge for Agency Practice
Source: https://www.rea.govt.nz/real-estate-professionals/industry-guidance-and-information/listing-a-property/marketing-and-advertising/
Exam Tip for Agency Practice
The bottom of an advertised price must be a figure the vendor would seriously consider.
Common Mistakes to Avoid on Agency Practice Questions
- •Believing there is a permitted margin below the vendor's real price for advertising.
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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