Real estate agent ‘shaved’ price $100k without telling owners, guilty of unsatisfactory conduct

A real estate agent “shaved” $100,000 off the asking price of an Auckland property without seeking vendors’ permission, resulting in him being found guilty of unsatisfactory conduct.

The Real Estate Agents Disciplinary Tribunal heard the case against Michael Sheldon of Elysium Realty, trading as Harveys Te Atatu Peninsula.

The sellers believed that based on his appraisal, he could get $1.45m yet at the same time, he was telling prospective buyers it could be had for only $1.1m – without that steeply dropped price being declared to the sellers or agreed on.

Sheldon was convicted after the complainant vendors brought a case, saying $1.45m was what they thought he could get, not $1.1m.

“Sheldon admits that he sent a text to prospective purchasers inviting expressions of interest in the property in excess of $1.1m,” the tribunal said.

Yet the vendors’ bottom line was $1.2m and they expected more.

He sought no instructions to lower the price by $100,000.

The tribunal delivered its decision last month saying Sheldon had “displayed a fundamental lack of understanding as to his obligations as a licensee acting as agent for the complainants”.

A decision on the penalty is pending.

Sheldon told the Herald after the decision was released that he was extremely unhappy about the situation with the complaint and the outcome, which he said his lawyer would appeal.

“I’m dumbfounded that six months afterwards they did that,” he said referring to the time he said it took the complainants to make a complaint.

“I’m mortified. You’re living a selfless life – to be accused of trying to screw someone. This has hurt me and my family….people would think I have done something wrong.”

The agent admits he sent the text “but says he made an honest and inadvertent mistake and is not guilty of misconduct”.

Following the decision, the tribunal asked for submissions from his lawyer Kim Burkhart of Kennedys Law and Claire Paterson of Meredith Connell, along with others, acting for the complaints assessment committee of the Real Estate Authority which led the case.

The case spelt out what happened.

Complainants Tara and Ryan Nel wanted to sell a Laingholm property which Sheldon appraised as being worth $1.3m to $1.45m “and said that it would likely sell for $1.3m”, the tribunal said.

But the agent denied he had given that oral appraisal, saying his opinion was that the value was $1.15m to $1.3m.

The agency agreement recorded the appraised value as being $1.35m and the commission was struck at that amount.

Advertising recorded the price range as $1.2m to $1.4m “with initial inquiries over the figure of $1.2m”, the tribunal noted.

“Sheldon did not advise the complainants or seek instructions from them before he sent the text message and he did not provide them with a copy of it,” the tribunal said.

Once the vendors found out about the $1.1m figure in his text to all previous buyers, they made it known to him they were concerned about that low figure, saying “you shaved another $100k of our property without discussing this with us”.

Sheldon accepted that he did not inform the complainants that he was sending the texts and he did not get their consent. His evidence was that he did not consider he had to do so and that he was acting in the complainants’ best interests to get an offer for the property, which could then be negotiated up to get an acceptable price.

He accepted that he was obliged to act on the complainants’ instructions and that the agency agreement did not give him a “blank slate to market their property however he liked”.

“However, he maintained that a certain degree of licence was needed, it was a marketing strategy and the complainants were fully aware that that was how he sold. He denied that the texts were inconsistent with the complainants’ instructions. He said that this was how he got offers, and how he worked,” the tribunal decision said.

His lawyer, Kim Burkhart, said the texts were sent to encourage interested parties to make written offers that could form the basis of negotiations on price, and they did elicit two offers.

The tribunal accepted that but said Sheldon had gone lower, making an “oral indication of an offer of $1,050,00 so below the ‘interest expected’ level of $1.1m and the second was a written offer made on 15 April 2019, at $1,060,000”.

Barry Grieve, national network manager for LJ Hooker and Harveys New Zealand, said he had talked to the business owner about “this situation and they are in talks with their solicitor about a possible appeal. This suggests they are not happy with the outcome.”

The Real Estate Institute declined to comment because of the possibility of an appeal. Once that process had run its course and the tribunal had made a ruling, it would reconsider.

The Real Estate Authority is considering whether to comment.

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