Jun

26

Listing Price

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THE DEFINITION OF LISTING PRICE AND THE IMPLICATIONS FOR AGENTS

Under the Property Agents and Motor Dealer Act 2000 (PAMDA) a Reserve or Listing Price is required to be inserted at Part 4.2 of PAMD Form 22A by an Agent for a Private Treaty Sale for all variations of the private treaty listing type.

We have identified that there remains some confusion amongst agents as to what can be inserted at Part 4.2 of PAMD Form 22A and the implications of what is inserted.

THE MEANING OF ‘LISTING PRICE’

PAMDA does not provide an express definition of ‘Listing Price’. PAMDA Section 574A (2) defines ‘Reserve Price’ as, “a price at which the seller agrees to sell the offered property” at auction. PAMDA Section 574D (1) defines offered Property as “residential property that is to be, or may be, offered for sale, whether or not by auction”.

The two definitions read in conjunction provide the following definition:

A Reserve Price is a price at which the seller agrees to sell residential property that is to be, or may be, offered for sale, whether or not by auction”.

Clearly the definition of Reserve Price applies to properties that are not offered for sale by auction. A court of law is therefore likely to interpret ‘Reserve Price’ and ‘Listing Price’ as having the same meaning under PAMDA.

This is further supported by the fact that the PAMD Form 22a, Item 4.2 heading is “Reserve or Listing Price”.

The Listing Price is therefore the price at which a seller agrees to sell residential property; it is not the typically higher price that the residential property is usually advertised at for example.

THE IMPACT OF THE DEFINING LISTING PRICE

The Listing Price is a price and must be recorded as a set figure at Item 4.2 of PAMD Form 22a.

The Listing Price should not be recorded as:

  1. The Price to Advertise the Property

If the advertising price is recorded as the Listing Price the Seller can reject any offer below the advertising price without breaching the Agency Agreement.

  1. The Highest Price the Seller will accept for the Property

If the highest price the Seller is willing to accept is recorded as the Listing Price the Seller can reject any offer below the highest price without breaching the Agency Agreement.

  1. A Range of Prices

If a range of prices is inserted it is probably that the lowest price would be interpreted as the Listing Price and the range would have no effect. It is possible however that the highest price be interpreted as the listing price (as this is the most beneficial scenario for the Seller), meaning that the Seller can reject any offer below the highest price without breaching the Agency Agreement.

  1. A Price followed by the wording “(Negotiable)”:

The word “Negotiable” would carry no meaning and the price noted would be the Listing Price, meaning the Seller can reject any offer below the Listing Price without breaching the Agency Agreement.

  1. A Price followed by the wording “(Not Negotiable)”:

The wording “Not Negotiable” would carry no meaning and the price noted would be the Listing Price meaning the Seller can reject any offer below the Listing Price without breaching the Agency Agreement.

  1. The Wording “By Negotiation” only:

This would mean that no Listing Price has been set. This means that the Seller can reject any offer brought to them by the Agent without default under an Agency Agreement.

Disclosure of the listing price & OBLIGATIONS OF THE AGENT

PAMDA Section 574D (Real estate agent not to indicate reserve price to potential buyer) (3) states that ‘if a property is not to be offered for sale by auction and the seller has instructed the real estate agent not to disclose the price at which the seller is willing to sell the offered property, the real estate agent must not disclose to the potential buyer the price at which the seller is willing to sell the offered property’.

Consequently, if a Seller directs an agent not to disclose the Listing Price, the Agent must not disclose the Listing Price and / or any price above or below the Listing Price unless the Seller grants the Agent express permission to do so.

The fact that the heading of 574D refers to reserve price and the section discusses properties not offered for sale by auction further indicates that Listing Price and Reserve Price have the same meaning under PAMDA.

In addition section 10 of the Property Agents and Motor Dealers (Real Estate Agency Practice Code of Conduct) Regulation 2001 states that ‘a real estate agent must act in a client’s best interests unless it is unlawful or unreasonable to do so’.

This would indicate that an agent has an obligation to attempt to attain a higher price than the Listing Price for a Seller.

OUR RECOMMENDATION 

We strongly recommend that:

  1. The lowest price acceptable to the Seller for the sale of the property is inserted at Item 4.2 of PAMDA Form 22a.
  2. If the Seller exercises their right to not have the Agent disclose the Listing Price, Agents must not mention any price at all in relation to the Seller’s property unless permission is granted to do so by the Seller.
  3. Agents attach a Schedule to the PAMDA Form 22a that allows Agents to advertise the property at a certain price as follows:

Advertising Price

The Seller grants the Agent permission to advertise the property for sale as follows:

Insert a figure, range of figures, or a figure followed by Negotiable or Not Negotiable

This clause is not indicative in any way of the Listing Price and / or Reserve Price of the Seller.

  1. Agents endeavour to secure a higher price than the Listing Price and / or Reserve Price for Sellers.

Any queries in relation to these issues should be referred to Byron Cannon, Director @  Ferguson Cannon on 07 5443 6600.

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Category: Business & Corporate Services, Contract Law, Fact Finders, General, Property Development

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