The recent boom in the first-hand residential property market has helped contribute to an increase in the number of transactions in secondary residential properties. Media reports have shown prospective purchasers queuing up to inspect properties.
When searching for properties, prospective purchasers may browse different property advertisements from various property platforms. I would like to remind consumers that they should do more research and comparison on the information contained in these property advertisements, such as the list price.
Let me share a case about an agency advertising a property at a price different from the vendor’s instructions.
During a regular spot check, Estate Agents Authority (EAA) staff came across a printed advertisement for a second-hand residential property issued by an estate agency in a newspaper. The EAA staff requested the company to provide the prescribed estate agency agreement (Form 3) for that property. After reviewing the document, it was found that the property price stated in the advertisement was different from that instructed by the vendor as stated in the agreement.
The list property price in the advertisement was HK$21,300,000 (US$2,738,424), which was different from the HK$23,800,000 stated in the agreement. Although there was an additional clause stating “vendor agreed a range of 20 per cent above or below the property price as the list price for issuing advertisements” next to it, there was neither a signature nor the written consent of the vendor next to this clause.
The EAA Disciplinary Committee was of the view that the agency issued an advertisement in which the property price stated was different from that instructed by the vendor. Thus, the agency was in breach of section 9(3) of the property agents Practice (General Duties and Hong Kong Residential Properties) Regulation: “A licensed property agent shall not cause or permit to be advertised a residential property in respect of which he is acting as such agent at a price or rental or on terms different from that instructed by the client concerned.”
Having considered the nature and gravity of the case and the disciplinary record of the agency, the committee decided to reprimand it and to impose a fine of HK$28,000.
It is common in property sales that the vendor may instruct an agent to advertise their property within an acceptable range. It does not matter if the list price is an exact amount, or within a price range, property agents should bear in mind that the price in the issued advertisements must be in accordance with the vendor’s clear instructions.
Under the practice circular (No. 03-05 (CR)) issued by the EAA, if a property agent has advertised an uninstructed price, no matter whether it is stated as “try price”, “recommended price”, “transaction price” or any amount derived from calculation under any pretence, the licensee will still be in breach.Under the practice circular (No. 03-05 (CR)) issued by the EAA, if a property agent has advertised an uninstructed price, no matter whether it is stated as “try price”, “recommended price”, “transaction price” or any amount derived from calculation under any pretence, the licensee will still be in breach.
That said, I would like to advise consumers to do more research on transaction data by viewing government statistics reports, media reports and different property advertisements to understand more about the property market.
Also, vendors should thoroughly consider the selling price of their property or the acceptable property price range before giving price instructions and signing an estate agency agreement. They should be aware that property agents may advertise their property at the lowest price in the instructed price range, which may appear to them as “underpriced”. Hence, for one’s own interest, when giving the price range of the list price to property agents, the instructed price range should not be too wide.