REAL estate agents provide valuable service and therefore it is important that they are governed by the state laws. The relationship between real estate agents and other parties involved in a real estate transaction is not always a simple one. Therefore the real estate agents need to be subjected to range of legal and ethical requirements that need to be designed to protect the property seller, the prospective purchaser as well as the transaction itself. The law should specify the duties, responsibilities that are acceptable and maintains a good relationship with clients, customers and the general public.
The real estate agents are in the place of trust and they must exercise a reasonable degree of care while engaging in selling or buying a property for the client. The client expects that the real estate agents skill and expertise in real estate matters to be superior to that of average person. The agent should know all facts relating to the property such as the physical characteristics of the property being transferred. If the real estate agent represents the seller, care and skill include helping the seller to arrive at an appropriate and realistic listing price. On the other hand if the agent is acting on behalf of the buyer he/she must ensure that a suitable property is identified with pleasant neighbourhood, property conditions, financing alternatives, offers and counter offers with buyer’s interest in mind.
Transparency
The real estate agent must be able to report the status of all funds received in the transaction. Law should require that the agent give accurate copies of all documents to all parties affected by the transaction and keep copies on file for a specified period of time. The real estate agent must deposit immediately, or within certain statutory time frame funds entrusted in a special trust account. Using this money for personal use or generating business fund should be strictly illegal.
Disclosure
It is important to keep the client informed of all the facts or information that could affect the transaction. The agent should be liable for damages for failing to disclose such information as:
• All offers;
• The identity of the prospective purchaser;
• The purchasers ability to complete the sale or offer a high price;
• Any interest the agent has in the buyer;
• The buyers intention to resale the property for a profit; and
• The agents best judgment for the fair market value of the market based on the valuation report.
The seller must disclose the property conditions. These disclosures should cover a wide range of issues such as structural, mechanical and other conditions that a prospective purchaser should know about to make an informed decision. The law should require a seller to complete a standard form. It should be the real estate agents responsibility to see that the seller complies with these disclosures. Real estate agent should advice seller to make truthful disclosures to avoid litigation arising from careless misrepresentations.
Termination of contract to sell/buy
Contract to sell may be terminated on the following grounds:
• Death or incapacity of either party;
• Destruction of the property;
• Expiration of the term of the contract;
• Breach by one of the parties; and
• Completion, performance, or fulfilment of the purpose for which the contract was created.
Pricing of the property
It is the responsibility of the seller to determine the listing price of the property. Since an average seller does not have the resources needed to make an informed decision about a reasonable listing price, a real estate agent can help the seller to determine the price listing for the property by using the services of a registered valuer.
While it is the property owner’s privilege to set whatever listing price he or she chooses, a real estate agent can reject any listing in which the price is substantially exaggerated or largely out of line with the indication of the appraisal. An appraisal by a registered valuer provides the best indication of what a buyer will likely to pay for the property.
Price fixing
Price fixing is the practise of setting prices for properties rather than letting competition in the open market establish the price. In real estate price fixing takes place when competing real estate agents agree to set sales commissions, fees or management fees. Real estate agents must independently determine commission rates or fees for their own firms. These decisions must be based on real estate business judgment and revenue requirements without input from other real estate agents.
Commission
The circumstances under which a commission will be paid must be specifically stated. Is the payment earned on the sale of the property or on any transfer of interest created by the real estate agent? Will it be a percentage or a flat fee? When will it be paid? Will it be paid directly by the seller or by the party handling the closing?
Qualification
Real estate agents are not professional appraisers, but they need working knowledge of appraisal principles to evaluate properties listed and bought. A real estate agent must be equipped with understanding of the property management, agency and valuation. The basic understanding of the real estate and related issues can be gained by an individual after completing a Real Estate Certificate Course at the University of the South Pacific. Real Estate Certificate can be earned by completing six courses including four “core” courses and two electives. Having completed the course will broaden the knowledge and skills in the key real estate areas of an individual. This course is designed to help particularly the real estate agents to sharpen their skills and gain comprehensive knowledge required to meet the continuing and new challenges in the real estate profession today. The board believe this is the minimum qualification that a person should have before applying to become a real estate agent.
As for the current real estate agents who are engaged in real estate buying and selling, they must be thoroughly knowledgeable of the real estate agents law, rules and regulations that would be introduced, once the Bill is passed. A real estate agent examination should be organised by the board regarding real estate law and regulation. The applicant must pass the examination before licence is granted to operate as a real estate agent.
