Watchdog warns on property ads

A popular way of advertising real estate may breach the Fair Trading Act, says the Commerce Commission.

Property advertisements that indicate a price range, such as "offers over" a certain amount, are common.

But the commission says it is looking closely at this form of advertising to ensure buyers are not misled into thinking vendors are willing to accept a lower price.

Commerce Commission fair trading director Deborah Battell said the commission had taken two cases to court for advertising for "inquiries between" two amounts in the past two years, illustrating the danger of this type of advertising.

"There's nothing wrong with that as long as the bottom of the price range reasonably reflects the vendor's expectations." Asking for "offers over" was exactly the same as advertising a price range, she said, and vendors must be willing to consider offers close to the stated price.

"It's a complete and utter waste of everyone's time if the price that's advertised doesn't reflect the vendor's expectations."

She conceded it was difficult for buyers to know if a vendor was being honest in using this form of advertising.

"There's never any guarantee because the vendor might say, 'I'd like to hold out a little longer'."

Penalties for the offence were up to $200,000 for a company and up to $60,000 for an individual real estate agent.

Harcourts Nelson business owner Paul Hedwig said he believed some Nelson buyers were led to believe they could buy a property for a lower price than they could.

Mr Hedwig said he did not think it was a regular practice, and some real estate agents were probably genuinely unaware of the rules.

"It frustrates us because we're trying to do the best thing we can for our owners and some of them would like their properties promoted that way because it attracts more interest and they may get a better price that way, but if you're breaking the law I'm not prepared to do it."

Nelson Marlborough Real Estate Institute president Darryl Marshall said the institute had good practice guidelines reflecting the commission's stance on property advertising.

Mr Marshall said properties in Nelson were no longer advertised for between two prices, and although "offers over" were common he believed agents used this as a valid guide for buyers as to the vendor's expectations.

- NZPA