Real Estate Agents need to be aware of a misleading advertising prosecution brought by the Commerce Commission relating to an advertised price range for a property.

The property concerned was advertised at an enquiry range of between $70,000.00 and $98,000.00, despite the vendor having been adamant throughout that anything less than the Government Valuation of $97,000.00 would not be accepted. The Judge decided that this amounted to a misleading advertisement, and convicted the agent of an offence under the Fair Trading Act.

That case does not mean that advertising a property within a price band is illegal. This is still perfectly legitimate, so long as the price range actually represents the range that the vendor would consider.

An obvious difficulty from the land agent’s point of view, is the fact that normally no one really knows a vendor’s bottom line. The point of the case however, is that where an agent has been told a bottom price, it is misleading for any advertising to indicate that a lower figure might be considered.

This ruling does not of course prevent lower offers from being presented. All it means is that an agent must be careful about getting the vendor’s consent to the price range that is to be advertised.

The Commerce Commission press release states that agents “need to understand a vendor’s price expectations and obtain the vendor’s consent as to how that expectation is reflected, when advertising property for sale.”