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REIQ Journal : December January 2009
FEATURE 15 The law and best practice By Stacey Holt, Senior Best Practice and Policy Advisor, REIQ One of the first questions just about every prospective seller will ask of a real estate agent or salesperson is: “How much do you think my property is worth?” SALESPEOPLE AND AGENTS cannot simply provide a verbal estimate or appraisal when providing a sales price for a property. Under Section 574C of the PAMD Act, it is a legal requirement that an agent provides a written comparative market analysis (CMA) or written statement if they are asked by a seller or prospective seller for their opinion. This applies to residential property only. The legal definition of a CMA is defined in Section 574A (5) of the PAMD Act as: “…a document comparing the offered property with at least three properties sold within the previous six months that are of a similar standard or condition to the offered property and are within a 5 km radius of that property”. If at least three properties cannot be found that meet these criteria, the agent is required to provide the seller or prospective seller with a written statement that explains how the agent decided on the estimated selling price of the property. To ensure compliance and for sound risk management, sales agents should immediately support any verbal price discussion with either a CMA or written statement. In the rare cases when a seller does not ask for the agent’s opinion regarding price, the agent must ensure compliance with Section 21 (4) of the Property Agents and Motor Dealers Real Estate Agency Practice Code of Conduct, which states that: “…the real estate agent must tell the client if the agent considers the selling or purchase price of property expected by the client is substantially more or less than the market price of the property”. This might occur in a situation when an agent is called in to list a property and the seller advises that they do not want an appraisal completed as they know what the REIQ Journal December 2008/January 2009