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Compliance Managers advice regarding CMA pricing – attached

Hi all – you are all experienced salespeople and it is not my job to interfere arbitrarily in your business. However, it is my job to keep you and the agency safe (as well as me as supervising Licensee) so, as is required, I will point out oversights or omissions I see that are not congruent with the various laws we operate under.

All of your appraisals are presently deficient and I attach a REINZ Appraisal paper to highlight the way in which you need to improve them to comply – it is a small additional sentence or two that is all that is needed but it is critically important and the REA has successfully prosecuted against agents for doing the same omission as is presently happening…

Please read the article attached and note all Yellow highlights are mine…

Your appraisals are very good in 95% of all aspects but the glaring omission

is the failure in your Commentary paragraph to link the most comparable 1 or 2 properties from the recents sales list to the subject property as a summary of your analysis.

So all that has to happen is to add something like:

“as per the comments below each property in this report, your home most closely relates to 19 John St, which sold for $830,000 and as is the same size land but your house is larger by 45 sqm and renovated so is in much better condition. Accordingly we assess $860,000-880,000 as the appraisal range for your lovely home”.

This summary sentence MUST be added to all your present commentaries which currently just notes the appraisal range without reference to any other property.

This MUST be correct in all CMA’s I receive from now on or I will need to decline to approve the listing.

Secondly, you are overstating the top end of the search engine range in the agency agreement

–  (NOT the Trade Me one which is in line with vendors expectations) but where it is say $860,000 to $880,000 as per the example above, the search engine range for other properties is often $800,000 to $1,000,000 as example!

There is nil benefit in overstating the top end of the search engine range for your vendor and more specifically, as you note it in writing on the agency, any REA investigator would grab that in a heartbeat, as you misrepresenting the property to the market through advertising that was inconsistent with the vendors expectations.

As you can see from the article attached, this is a breach of the Act. The 10% range noted a couple of times is either side of the vendor’s expectations so ranges should be tight (5% on either side) to avoid you being in breach of the Act.

If any of you need any specific clarification on this article, do call me direct and I will go through the details more thoroughly.

Note also any non-comparable sales must be removed from your appraisal as well.

Regards,  Keith

I thought I would clarify a few more items following on from last week’s email about CMA’s from the REA article.

Most of you are now incorporating a property that most closely relates to the subject property in the CMA but it is important you also say why – eg.

“Your home is most comparable to 12 Smith Street, in terms of rateable value, location and floor area. However, while similar in house size, the Smith St property only has 721 sqm of land whereas yours is much larger at 1189sqm. As it sold for $632,500 last month, yours will obviously sell for more due to the land size difference. I believe the saleable value of your property is in the range of $790,000 to $820,000.”

You all need to have a connecting rationale or link like the passage in bold to demonstrate your use of professional skill and expertise in setting the appraised value. The above passage without the bold sentences would NOT be REA complaint.

Titles – If I suggest certain instruments on the title are necessary to be ordered to clarify to any buyer what they mean, please add them to Eagle with a note to me so I can review them to check on any peculiarities that you need to disclose.

Likewise if a company is on the title (a trustee company is still just a normal company, not a Trust), please add the Company Extract from the Companies Office website to Eagle so I can show the link between the Directors and shareholders over 25% to the AML needed to be done. Ditto any Trust Deed should be loaded in the same way to Eagle as I need to review this as any named beneficiaries in a Trust need to do AML CDD too.

Lastly, AML Exceptions – these are when we get a failed report – we have had 1 x PEP fail and about 4 Proof of Address fails. I over-rode the PEP fail on my authority as AMLCO, and have requested and received a hard copy of a utility bill for Proof of Address verification. These have been emailed to me of late, but please load these into Eagle now too.

If everything goes into Eagle, it will provide completeness and nothing will get lost or missed out inadvertently.

I have also formed an AML Exceptions folder to store data that I use to override Failed Reports for AML Audit reasons.

And a P.S. Do remember Marketing costs (along with commissions) are compulsory disclosures in your agency agreements – do fill this page in and get vendors to sign it at the bottom where provided otherwise this is a technical REA breach by omission.

Hi all – you are all experienced salespeople and it is not my job to interfere arbitrarily in your business. However, it is my job to keep you and the agency safe (as well as me as supervising Licensee) so, as is required, I will point out oversights or omissions I see that are not congruent with the various laws we operate under.

All of your appraisals are presently deficient and I attach a REINZ Appraisal paper to highlight the way in which you need to improve them to comply – it is a small additional sentence or two that is all that is needed but it is critically important and the REA has successfully prosecuted against agents for doing the same omission as is presently happening…

Please read the article attached and note all Yellow highlights are mine…

Your appraisals are very good in 95% of all aspects but the glaring omission

is the failure in your Commentary paragraph to link the most comparable 1 or 2 properties from the recents sales list to the subject property as a summary of your analysis.

So all that has to happen is to add something like:

“as per the comments below each property in this report, your home most closely relates to 19 John St, which sold for $830,000 and as is the same size land but your house is larger by 45 sqm and renovated so is in much better condition. Accordingly we assess $860,000-880,000 as the appraisal range for your lovely home”.

This summary sentence MUST be added to all your present commentaries which currently just notes the appraisal range without reference to any other property.

This MUST be correct in all CMA’s I receive from now on or I will need to decline to approve the listing.

Secondly, you are overstating the top end of the search engine range in the agency agreement

–  (NOT the Trade Me one which is in line with vendors expectations) but where it is say $860,000 to $880,000 as per the example above, the search engine range for other properties is often $800,000 to $1,000,000 as example!

There is nil benefit in overstating the top end of the search engine range for your vendor and more specifically, as you note it in writing on the agency, any REA investigator would grab that in a heartbeat, as you misrepresenting the property to the market through advertising that was inconsistent with the vendors expectations.

As you can see from the article attached, this is a breach of the Act. The 10% range noted a couple of times is either side of the vendor’s expectations so ranges should be tight (5% on either side) to avoid you being in breach of the Act.

If any of you need any specific clarification on this article, do call me direct and I will go through the details more thoroughly.

Note also any non-comparable sales must be removed from your appraisal as well.

Regards,  Keith

I thought I would clarify a few more items following on from last week’s email about CMA’s from the REA article.

Most of you are now incorporating a property that most closely relates to the subject property in the CMA but it is important you also say why – eg.

“Your home is most comparable to 12 Smith Street, in terms of rateable value, location and floor area. However, while similar in house size, the Smith St property only has 721 sqm of land whereas yours is much larger at 1189sqm. As it sold for $632,500 last month, yours will obviously sell for more due to the land size difference. I believe the saleable value of your property is in the range of $790,000 to $820,000.”

You all need to have a connecting rationale or link like the passage in bold to demonstrate your use of professional skill and expertise in setting the appraised value. The above passage without the bold sentences would NOT be REA complaint.

Titles – If I suggest certain instruments on the title are necessary to be ordered to clarify to any buyer what they mean, please add them to Eagle with a note to me so I can review them to check on any peculiarities that you need to disclose.

Likewise if a company is on the title (a trustee company is still just a normal company, not a Trust), please add the Company Extract from the Companies Office website to Eagle so I can show the link between the Directors and shareholders over 25% to the AML needed to be done. Ditto any Trust Deed should be loaded in the same way to Eagle as I need to review this as any named beneficiaries in a Trust need to do AML CDD too.

Lastly, AML Exceptions – these are when we get a failed report – we have had 1 x PEP fail and about 4 Proof of Address fails. I over-rode the PEP fail on my authority as AMLCO, and have requested and received a hard copy of a utility bill for Proof of Address verification. These have been emailed to me of late, but please load these into Eagle now too.

If everything goes into Eagle, it will provide completeness and nothing will get lost or missed out inadvertently.

I have also formed an AML Exceptions folder to store data that I use to override Failed Reports for AML Audit reasons.

And a P.S. Do remember Marketing costs (along with commissions) are compulsory disclosures in your agency agreements – do fill this page in and get vendors to sign it at the bottom where provided otherwise this is a technical REA breach by omission.