Warning for private-sale property firms

Steps by a Government watchdog to rein in the real estate sector have also included warnings to two marketing businesses that provide private-sale services.

Nelson-based Green Door Real Estate and Invercargill-based No Commission Property Sales have come in for Commerce Commission attention regarding Dunedin and Wanaka property sales.

Commission spokeswoman Jacqueline Martin said a compliance advice letter had been sent to Green Door last year, warning about potential breaches of the Fair Trading Act. At issue was how the sale of a Dunedin house was being advertised.

"They listed it as having been sold by Green Door's advertising when it had been sold through a different real estate agency," she said. "We said it was misleading conduct and we suggested they be more careful in the future."

Peter Hammond, one of Green Door's founders, said the advertisements stating his firm had been involved in the sale were immediately removed once he got the commission's letter.

"I said to take it down, it wasn't worth the hassle and it's the only letter we've had on the Fair Trading Act," Hammond said.

Green Door was advertising the house that another agent subsequently sold, the same firm that laid a complaint with the commission, he said. The vendor was disappointed the agent charged $15,000 commission and authorised the advertisements saying Green Door had sold the property. The ads had appeared on Green Door's website and in Dunedin's Meridian Mall.

Hammond said licensed real estate agents were behaving in a predatory and unfair way, taking Green Door's listings by promising vendors they had buyers.

Green Door estimates vendors who use licensed real estate agents pay between $10,000 and $12,500 to sell a $200,000 house, thousands more than it charges.

John Smart, an Invercargill-based director of No Commission Property Sales, said a complaint had been made about a flier on a Wanaka house sale, resulting in the commission sending his firm a letter.

"It was a degree of interpretation. We're threatening traditional real estate firms and we're under constant attack," Smart said.

He added that his firm had not breached the Fair Trading Act.

"We have not been in breach and we only had to change the word 'professional' on the web site."

He estimated his firm had saved vendors $1.5 million in commissions, offering listings packages starting from $1295.

The commission's director of fair trading, Deborah Battell, said at least one other real estate firm was being investigated and she was particularly worried about the new type of unlicensed property agencies that had sprung up offering only marketing or advertising services but not full licensed agency benefits.

The Real Estate Institute wants members to use an advertising campaign that encourages people to think of agents as "house doctors" and promotes the benefit of using a real estate agency to sell a house.

The series of ads is on the institute's web site.

In a separate matter, the Commerce Commission is taking action against Wellington agent Tim Whitehead of RE/MAX Leaders for advertising a house at $380,000 when it could not be bought for less than $400,000. Whitehead has pleaded not guilty to breaching the Fair Trading Act and is to appear in the District Court at Wellington on March 22.