You receive a letter from NSW Fair Trading (OFT) in your inbox referring to a ‘complaint’ being lodged against you/your agency and requiring information to be provided within a few days. It’s daunting to receive one of these letters, especially if it’s your first. You’ll be wondering who complained, what did you do wrong, and are you now on OFT’s radar. We work with many agents to help them prepare their reply. Here are some practical tips to assist in your response.
Do you need extra time to respond? Be mindful of asking for extra time. In accordance with your obligations under the Property and Stock Agents Act 2002 (NSW), the documents requested should be readily accessible to provide to OFT. If you want extra time because you’re overseas, are you the licensee in charge? If so, did you notify OFT and appoint an interim LIC in their absence? Chances are you may not have! By trying to gain more time, you may inadvertently expose yourself to a lack of supervision concern.
OFT will always ask for the following:
1. Your agency agreement and any revisions to the agency agreement or the estimated selling price (ESP).
2. Copy of your records used to substantiate your ESP.
- This will include comparable sales and a detailed description of how you arrived at the ESP. It’s not enough to just provide a few basic comparable sales. The comparable sales must be comparable with the property you are selling, even if the property is hard to price. If there aren’t sufficiently comparable sales, you must be able to substantiate how you used those properties as a basis to form your opinion.
- We have seen an example where an agent was selling a 3brm apartment in the inner west of Sydney, but used 2brm apartments to substantiate the ESP. However, the property being sold was very dark, in a poor location, with small rooms and was rundown. The 2brm comparable sales were similar in size, but more modern and with a better layout and location. In that instance, we were able to successfully demonstrate that the value of those properties was not dissimilar to the 3brm apartment. Generally, you should be careful to ensure that your comparable sales are no more than 6 months old, specific to the type and style of property you are selling, and there are at least 5 examples.
- If you increase your ESP too early in the campaign because of ‘buyer feedback’, you leave yourself open to potential underquoting allegations. OFT recently took action against an agent who had revised their ESP after the first inspection and reduced it in line with the value feedback expressed by 20+ buyers. The property then sold well over the guide, despite the buyer feedback stating otherwise. OFT took the view that the agent should not have relied on buyer feedback so early in the campaign to revise down their ESP, as they were the professionals with years of experience as opposed to buyers without relevant experience.
3. If you changed your ESP, you need to provide evidence that you provided notice of the change to the vendor in writing.
- It’s a common misconception that vendors need to agree to a revision of your ESP. This is incorrect as it is YOUR ESP, not the vendor’s. You just need to be able to show that you provided your vendor with notification of the revised ESP.
4. Copies of your marketing and advertising material.
5. Marketing history record from your CRM.
- This is sought so that OFT can see what price you placed in the back end and if it is different/lower than your ESP. We have seen many agents get caught out here, so you must ensure it matches.
6. Copies of emails about the sale price between you and buyers.
- Most agencies now use auto-responses on enquiries – providing a copy of these will suffice. If you’ve had additional communications with buyers in writing where you have mentioned price, you must also provide those documents.
- Keep in mind that if you try and withhold information from OFT because you think it may implicate you, the buyer you had that correspondence with may be complainant who may have already provided the correspondence to OFT.
- It is always recommended to acknowledge any error and outline how you intend to remedy it and ensure it doesn’t occur again.
7. Any written vendor expectations or requirements for the selling price.
- We have had situations where there are none, and that is sufficient. You will just need to explain that the vendor had no expectations or requirements and was happy to accept whatever price you were able to achieve.
8. A copy of the offers received and proof that you provided them to the vendor (in writing) and their response.
- This is where most agents slip up. They will often receive an offer via email or text and then call the owner to discuss, but they don’t always forward the offer to the vendor in writing.
- Is a signed contract with a section 66W certificate waiving the usual cooling off period an offer? Does an offer in writing but with extended settlement terms and subject to further contract reviews constitute an offer? In all instances, we recommend that you document any discussions regarding price and notify the vendor – including your comments about whether it is an offer or not.
- Determining if an offer is in fact an offer may affect the campaign. By law, if a vendor rejects an offer that is above the price guide, you must amend the guide to be no less than the offer rejected. But if a buyer submits an ‘offer’ that is suitable in terms of price, but not suitable in other aspects, it may not be an offer and no amendment to your guide is necessary.
9. A copy of all vendor reports.
- There may be instances where you don’t have any, as the property sells early in the campaign. This is fine, you just need to disclose the reason/s why you don’t have any.
- Some agents have weekly vendor face-to-face meetings instead of written reports. Again, this is fine – you just need to explain this, but we recommend you maintain file notes for your meetings that you can rely on or provide them if necessary.
10. A copy of the reserve letter (if applicable).
11. A copy of the auction bidding sheet and bidders register (if applicable).
12. A copy of the sales contract (if sold, you should provide both signed copies).
13. Any other documents or information that will assist with your response.
We recommend you:
- Prepare a cover letter, where you address any inconsistencies you find in your files. You may also refer to your experience, reputation and the procedures you have in place to ensure you uphold all areas of compliance.
- The cover letter should include headings for each document requested. You can use these headings to help create the narrative for OFT so they understand how the campaign proceeded. You should not just provide documents without proper context.
- Clearly identify which documents fall into which categories. Given the amount of material is likely to be large, you may want to send your response in a dropbox or share drive and provide access to the OFT investigator.
- Invite OFT to contact you directly to discuss any questions or concerns with the documents give you a further chance to address any questions prior to OFT making a determination.
If you have any questions or require assistance in any responses to OFT, please feel free to contact the Real Estate team at Swaab.
Julie Briscoe jab@swaab.com.au
Sarah Heuvel smh@swaab.com.au
