The nation's real estate industry watchdog says tougher action against misbehaving agents is necessary to remind them of their obligations to act in the best interests of commission-paying sellers and that there are consequences for wrongdoing.
Speaking this morning on Radio New Zealand's Nine to Noon show, Real Estate Agents Authority chief Kevin Lampen-Smith said the agency was becoming more proactive in trying to root out cases of house flipping where agents were in "cahoots" with on-selling investors or taking bribes.
An agent's primary responsibility was to act in the vendor's best interests and attain the best possible market price for the property they were selling.
He said the question to ask was whether the sale price the agent achieved was the best possible.
"It's quite difficult to work out and takes quite a bit of investigation to determine whether the agent knew the purchaser."
The Herald revealed today that the watchdog is cracking down on the practice of house flipping by investing in new technology that allows it to track when properties have been quickly on-sold for huge profits.
The new measures will allow the REAA to proactively chase agents involved in transactions without relying on complaints from homeowners or tip-offs from the media.
It comes after a
investigation revealed a series of cases in which houses were quickly re-sold - sometimes just hours apart - for big mark-ups, sometimes hundreds of thousands of dollars more than what the homeowner originally sold for.
One agent is before the courts facing criminal charges as a direct result of a Herald story and faces up to seven years' in jail should he be convicted.
Lampen-Smith told Nine to Noon recent cases highlighted by the Herald underlined the practice but it was not illegal for an investor to on-sell a property, which might be for genuine reasons or a change in personal circumstances.
A case highlighted by the Herald this week in which a family of seven's Papakura home was flipped on the day of settlement for an additional $81,000 appeared to involve a private on-sale by the investor.
Other cases where houses were flipped for large profits may simply reflect that the initial vendor was "desperate to sell" so they had accepted a low offer.
"If someone chooses to on-sell it is really their choice. We're interested if [the agent] has not met their obligations to that first vendor - if they are in cahoots with the purchaser and assist the purchaser to on-sell it for more money."
Investigators were looking for "ethical issues" such as agents taking bribes.
The objective was to raise professional standards and demonstrate consequences for wrongdoing.
Lampen-Smith acknowledged that a $3000 fine was not huge considering an agent could make a $30,000 commission on a standard Auckland sale.
However the Real Estate Agents Disciplinary Tribunal could order "rectification - in other words make good" - in terms of financial compensation or repayment of commission.
"The fines are quite small but there are other ways a real estate agent can be held to account."
The new technology being looked at by the agency would allow investigators to zero in on rapid on-sale transactions without waiting to receive a complaint from an aggrieved member of the public.
He defended the agency's track record, saying it was only 7 years old. The first few years had been about getting systems and processes in place, and "responding to complaints as they came through the door. Now we're getting a bit more proactive."