REINZ Develops Code Of Conduct For Auctions
11 July, 2003
Real Estate Institute Develops Code Of Conduct For Auctions
- REINZ seeks for more transparency for home buying public
The Real Estate Institute of New Zealand has released a draft Code of Conduct for the Sale of Real Estate by Auction, designed to ensure transparency and fairness in the Auction process.
The Institute’s National President, Mr. Graeme Woodley said today that developing the Code was vital in order to maintain the integrity of auctions as an effective and efficient means of selling real estate.
He said, “There are public misconceptions about the auction process, and these misconceptions threaten to undermine the validity of auctions as an extremely useful tool for selling your home. The Code seeks to enhance both the transparency of the process from a public perspective; and to ensure absolute consistency in conduct from our members.”
The draft Code addresses such contentious issues as vendor bidding.
“While vendor bidding is a legal and accepted practise, in the sense that is only employed up until the reserve price is met and the property is officially ‘on the market’, its critics have mislabelled it as ‘covert’ and ‘clandestine’.
“The new Code of Conduct addresses that. In it, the vendor must state that they reserve the right to bid, and the auctioneer must identify that person at the auction. In addition, if the opening or closing bid is by a vendor or their agent, that must also be stated,” said Mr Woodley.
“The principles underlining the code are to preserve the integrity of the auction process; ensure that the process complies with the law and the notion of fair trading; and to strike a balance between transparency and fairness to intending purchasers and the legitimate use of vendor bidding, recognised by common law as a means for the vendor to preserve the value of his or her property”.
The Institute believes that this will make vendor bidding a more visible and understood aspect of the auction process.
Key details of the proposed code are:
No members of the Institute shall engage in misleading or
2. Prior to the auction members shall disclose that the vendor reserves the right to bid
3. The auctioneer shall conduct the auction with integrity and in compliance with New Zealand law and the code
4. Prior to bidding the auctioneer will identify whether the vendor has set a reserve price and whether the vendor has reserved the right to bid at auction
5. Identification of the person who has been appointed by the vendor to bid
6. That no member or salesperson shall make or assist anyone else to bid on behalf of the vendor
7. Where there is no written reserve prior to the auction no bids will be made on behalf of the vendor
8. Auctioneer must respond to any question as to whether any bid has been made on behalf of the vendor
9. No bid on behalf of the vendor will be made by the auctioneer at or in excess of the reserve price
According to Mr. Woodley, the proposed Code is a natural result of the self-regulatory nature of the industry.
He said, “It’s the responsibility of the Institute to oversee the conduct of our members, and to enforce that where necessary. My belief is that this Code is proactive, providing guidance and setting parameters, so that our members have clear guidelines to work within.”
“The true value of the ‘Code of Conduct for the Sale of Real Estate by Auction’ lies in our ability, as an industry, to demonstrate to the New Zealand home buying public that real estate agents are committed to dealing fairly and honourably with them – whether they are buying or selling their home.”
The draft code has been approved by the Institutes National Council for circulation to members for their comment before final adoption by the Council.
Real estate information is also available via the Institute’s official property directory – RealENZ – on the Internet. RealENZ is a search facility providing comprehensive information on residential, lifestyle, rural, commercial, investment and rental properties. RealENZ’s Internet address is: www.realenz.co.nz
Issued on behalf of The Real Estate Institute of New Zealand by Sorensen Group.