New South Wales
couple Dean and Janis claim to have lost a substantial amount
of money at their March 2001 auction because of the actions
of the agent 'L’ retained by them and the agency which
L inspected the vendors’ property and signed the listing
authority at $875,000. Other sales staff from the agency also
agreed that the house was worth that amount.
Their agent urged auction as the best method for the owners
to get "top exposure and top dollar". He also recommended
an advertising campaign costing the owners $5,000.
L advertised the house at "$750,000" despite the
vendors’ concern. L insisted this was the best way to
"pull the buyers in" and a higher price guide would
"scare potential purchasers away".
Four weeks into the marketing campaign for their home, L
showed them another house being marketed by the agency. Dean
and Janis decided they wanted to buy it but sought reassurance
from the agent that they would get at least $850,000 for their
The agent said that there were four "strong buyers"
and six contracts had been handed out during the auction campaign.
The vendors committed themselves to the purchase of the second
house for $1.1 million. Agent L acted for the vendor of the
second property in signing up Dean and Janis as purchasers.
On auction day Dean and Janis set their reserve at $840,000
and informed the auctioneer / agent.
The agent used a dummy bidder on behalf of the vendors. Bidding
stopped at $803,000.
The vendors reduced their reserve under considerable pressure
from the agent and auctioneer and the house went "on
the market" at $803,000. The house sold shortly afterwards
Dean and Janis were incorrectly advised by the agents that
they were obliged to sign the contract at that price. The
agent also dealt directly with the vendors’ solicitor
whom he had earlier recommended the vendors retain for the
conveyancing transaction. The agent did not tell the solicitor
that his clients did not want to sell their house at $805,000,
$35,000 under their initial reserve.
The agent then incorrectly advised the vendors to change the
existing contract conditions to enable the purchasers to pay
the deposit by cash five days after the auction was over.
The auction shortfall resulted in the vendors being unable
to complete the purchase of the second house. They forfeited
their $20,000 deposit to the vendor of the second property.
The vendor was liable to the same agency for commission on
The HHPF is presently engaged in obtaining detailed witness
statements and other proofs of evidence from the vendors and
other parties prior to considering whether or not to institute
legal proceedings against L, the agency which employed him
and any other relevant party.
The preliminary advice of counsel briefed by the solicitors
retained by the HHPF to represent Dean and Janis is that there
are "several grounds" available to proceed upon
against those parties. The agents were allegedly negligent
and breached their duty of care to their clients and committed
breaches of the relevant sections of the Trade Practices Act
Depending on the outcome of its investigations, the HHPF expects
to commence legal action shortly.