Fair Trading Inspections

Brian Cannan: Today I'm with Greg Jemmeson from Jemmeson Fisher Solicitors and Accountants. Good afternoon Greg.

Greg Jemmeson: Good afternoon Brian.

Brian: Our subject is a very interesting one when Fair Trading come knocking at your door. A fair trading inspection. A couple of questions first of all if I may, a lot of agents want to know what rights fair trading have of entry and can they ask to them to come back and make an appointment.

Greg: Quite simple thing here is under the Property Stock and Business Agents Act, an agent has to have their records at their registered place of business okay their trust records for the last three years and that includes sales files, property management files, etc now under the legislation authorized officers from Fair Trading have the right to inspect records during reasonable business hours. Now that can be taken as Monday to Friday 9:00 till 5:00 there is no requirement for Fair Trading to make an appointment, they can just turn up at your office. And if you're the licensee in charge and your absent, Fair Trading have the right to have any other employee or agent who's in the office who has apparent control of the records provide those records for them.

Brian: So, you don't have a choice do you?

Greg: Essentially no, the minute you decide that you want to have an occupational license under the Property Stock and Business Agents Act means that you have to comply with having your records available. Now, if you choose to say "No, it's inconvenient to me today" well it's never convenient for Fair Trading to come knocking they can put you to great inconvenience. They can issue you with a written notice, requiring you to bring all records to their office so they can cause major disruption to your business. So essentially the only tip can give you is when they come, be civil treat them like they're your number one listing. Provide them with the records that they want. Don't argue with them, they're human as well just don't get them offside and try and comply as much as possible.

Brian: So they walk in your office and they say "I'm from the office of Fair Training". The first thing that they should do is show you identification.

Greg: They should yes.

Brian: You would ask them to, if they haven't.

Greg: You can. Mind you I'm not quite sure who'd want to come look at your trust records if they weren't fair trading!

Brian: And at the moment that they're they're doing random audits.

Greg: Yes.

Brian: And they seem to be wanting to enforce the underquoting guidelines.

Greg: Yes.

Brian: And so they're picking three or four properties out of your window or off your website and they're asking for those files straight away. What would they be looking for, once they get to those files?

Greg: What matters I'm seeing at the moment is that there's that firstly you have a compliant agency agreement. I notice they've been issuing penalty notices for people who have undated agency agreements and unsigned agency agreement they're looking to see that the agent's estimate is within the ten percentile band.

Brian: We had one agent ring us the other day about that they wrote $950,000 to $1,050,000 now they got fined because it should have been $950,000 to $1,045,000. It's that prescriptive, agreed?

Greg: Yes, and you don't have a defense. They'll want to say that there's some substantiation they want to see generally at least three comparables, okay, if you haven't got three comparables you need to have some written reason in your file as to why you've come up with this specific price.

Brian: And how.

Greg: And how, yes. Another interesting area that I found a number of agents have been fined for, an $1,100 on the spot fine is under the fraud prevention guidelines, which falls under the regulations and supervision, is not having a form setting out how they've identified who the vendor is, okay, so I'd hazard to guess that the vast majority of agents don't have any form of that nature. One of the interesting things about this vendor identification is the legislation does not say if you know this vendor you may have known them for 10 years they may be a personal friend, there's still a requirement to fill in the identification form and keep it on the file.

Brian: So as they're going through your files, if they would look at all offers that you've received and handed to the owner in writing and how you've done that and one of the things we're hearing back is that they're they're suggesting that you need to have the vendor's response on file.

Greg: That doesn't appear in the legislation. It would be nice for an agent to have a paper trail and receive an email back from the vendor saying I accept that offer or I reject that offer and why and it may be good business practice but it's not an actual legislative requirement.

Brian: Ok so then once you've given the offer to the owner and depending on the response that you have as we've done in previous videos they're looking that you have moved your quoting or moved your pricing if that offer has been rejected.

Greg: Yes.

Brian: They're looking for that?

Greg: Yes.

Brian: Ok and they're also looking for that if you move in your estimate as you're receiving these offers and as you go along a marketing campaign.

Greg: Certainly like we've talked about before where the agent's come up with an opinion of a $1 million to $1.1 million as a result the marketplace is saying $900,000 to $950,000 based on maybe some unapproved building work and they want to see that the agent has written to their vendor and said I have changed my opinion $900,000 to $950,000 based on the unapproved building work which we weren't aware of when we did the initial inspection of your property.

Brian: And they are looking for the agent to be changing their estimate as they go along?

Greg: As they go along.

Brian: It's important that they do that?

Greg: So a classic example would be in this particular case where we're recording the price so when we've got our open home inspections we've put on the top $1 million to $1.1 million is the price we're giving to people this is the date these are the people who came through. Two weeks later we've now got $900,000 to $950,000 on because that's what we're now quoting, but there's some evidence on the file that we've written to our vendor and explained why we've reduced that price to $900,000 to $950,000.

Brian: It really is all about having your paperwork right isn't it?

Greg: Very much so.

Brian: You don't have your paperwork right, expect to be fined. If you get an on spot fine and you disagree with it?

Greg: There are a number of things you can do. You can write submissions to Fair Trading and plead your case. I don't know how many agents who have done this yet and whether they would be successful. I've obviously had a number of calls from people where they've explained what's happened and unfortunately if they've got the 10 percentile are made it 20% in the agent's estimate there's no defense. Unfortunately for them they can go to NCAT to have the matter heard as an administrative appeal, however unfortunately for the agent the cost of running an application like that may well outweigh the benefit of having the fine overturned and it's a no-cost so they're not going to get their costs for appearance on that day. Suffice to say I would suggest to that if they jump up and down and that they may we'll reschedule themselves for a second or third visit which may be a little bit more thorough.

Brian: So if they if they pay the fine is it on their record?

Greg: No and this is the whole idea when the penalty notes came out, was to be a quicker form of compliance, now what happens here you pay the fine it is not recorded against your license. Obviously Fair Trading have a record in your file but there is no public record and it's not deemed to be an offence.

Brian: If you challenge it and you lose?

Greg: It still doesn't overturn that because they haven't actually taken you to court as an offense.

Brian: Well Greg, so it's all about the paperwork, get it right and don't worry about Fair Trading. That's what you're saying?

Greg: Correct

Brian: Thank you very much.