Marketing and advertising
There are rules you must follow when you are marketing a property, business or lifestyle block.
Understanding a property
Before you begin marketing a property, it’s important to fully understand what you are selling and make sure the way you market the property matches the information you have about it.
Things you should do before starting any marketing or creating advertising:
- Obtain the record of title to see if there are any interests registered on it such as covenants, caveats, or easements that should be brought to the attention of buyers (and the vendor).
Read more about checking titles
sure the title information in the listing document (tenure, ownership, legal description and property description) matches the information on the title.
out the zoning and town planning regulations or council requirements so you can point out any restrictions that may apply to the property.
Speak to the vendor
any claims made by the vendor. If the vendor has made a claim about the property that you can’t verify, for example, that the property can be subdivided, we recommend you do not make the claim. If you decide to tell buyers about an unverified claim, we recommend you explain the claim is based on a statement made by the vendor and that it hasn’t been verified. You should advise buyers to seek legal or expert advice.
Disclose any issues to prospective buyers
out any issue you are aware of. You should provide the information you have and recommend the buyer makes their own checks and seeks professional advice.
a written record of the information you give buyers and whether you have advised them to get professional advice. It’s a good idea to follow up with an email.
the buyer understands what you have told them. You may wish to ask questions to ensure they understand the information you have provided.
Find more information about disclosure and your obligations
If you or your agency becomes aware of new information that is contrary to what is already being advertised and promoted, you are required to take immediate action. You must withdraw any incorrect materials, issue corrected material and notify any party that you or any of your colleagues have had any dealings with about the property and provide them with the correct information.
Making false claims
If a claim is made about a property, you must have a reasonable basis for it (i.e. supporting evidence). If you do not have a reasonable basis to make the representation, it is called an 'unsubstantiated representation'.In the context of agency work, it can apply to all representations including statements used in marketing and websites or verbal statements made by a licensee.
Fair Trading Act
Under sections 12A and 40 of the Fair Trading Act 1986, it is an offence to make unsubstantiated representations, including representations made about the sale of a property. Licensees can be held to account under the Fair Trading Act, the Real Estate Agents Act 2008 and the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012.
Penalties for breaches of the Fair Trading Act
Breaching the Fair Trading Act can lead to fines of up to $200,000 for licensees and $600,000 for agencies. The courts can also grant an injunction and can order corrective advertising.
Are there any exceptions?
You can make claims that are regarded as clearly an exaggeration and are so obvious that no-one is likely to reasonably believe them, known as ‘puffery’.
An example might be "This is the best property ever!" It’s risky to rely on ‘puffery’ except where it is obvious that it’s not meant to be taken as fact. You may want to consider whether all prospective buyers will understand the difference between ‘puffery’ and fact.
The law is designed to catch representations that a reasonable person would expect to be substantiated. For example, the term ‘home and income' shouldn’t be used to advertise a property where there is a restrictive covenant preventing this.
What if a representation is unsubstantiated but true?
A representation can be unsubstantiated regardless of whether it ends up being true or not. The law requires you to make sure you have reasonable grounds at the time of making any statement about a property or business you are marketing.
What this means for you
You need to be vigilant and take steps to ensure that statements you and your agency make (whether verbally to a prospective purchaser or in advertising) are accurate, genuine and substantiated.
Providing an accurate price range
It is a requirement that, when you are providing potential buyers or lessees with information about the price range of the property, it must be true and accurate. You must be clear about the acceptable price range your vendors or lessor is willing to accept.
- carefully check all the marketing and advertising information in printed and digital media to ensure any reference made to a price or range is true and accurate
- avoid giving inaccurate or untrue pricing information during verbal communications
- You can quote a negotiating price range but the lower end of the range must be an amount the vendor would seriously consider accepting.
Avoid unrealistic focus on the rateable value (RV) — the relevance of RV in terms of reflecting a true market value must be approached with caution, and it is recommended not to use the RV in any advertisements where it does not realistically reflect market value.
How to best protect yourself
Take care when setting price ranges. A price range needs to be consistent with the vendor’s price expectations.
If the lower end of the price range is not an amount the vendor would consider, and you know the vendor would only accept something higher, the advertising could be misleading. Have an honest discussion with your vendor about their price expectations so you can set and advertise an accurate expectation.
Guidance from a decision
A CAC decision has provided industry guidance about the importance of advertising a realistic Buyer Enquiry Over (BEO) price.
The case involved a licensee marketing a property at a ‘buyer enquiry over’ price which was lower than the price the vendors had indicated was the minimum sale price they would accept for their property.
The vendor of the property made it clear to the licensee that they would not sell for less than $300,000. However, the licensee listed it for a BEO of $295,000. Negotiations began with potential buyers (the complainants), and they submitted an offer of $300,000 which was over the BEO but was rejected by the vendors.
When the complainant complained to the licensee about the misleading price expectations. The licensee said he believed he was within the Commerce Commission’s guidelines. The licensee incorrectly thought he could advertise the price within 10% of the vendor’s price expectations.
Disclosures in marketing material
Advertising is a positive representation of the facts and intended to generate enquiries. While it is not expected everything about a property or business is disclosed in the advertising, you should ensure that the impression the marketing gives is a correct reflection of the property or business being marketed. The advertisement needs to create interest but not be misleading.
Getting approval for advertising
Before a prospective client signs an agency agreement, you must explain to the client, and set out in writing, how the property will be marketed (see rule 10.6(c)). Additionally, your client should pre-approve and sign off all advertising relating to their property or business to confirm they are happy with it. Your supervisor or manager should oversee all advertising before it is published.
The level of disclosure increases with the level of interest shown by a prospective buyer. Some vendors would prefer not to have confidential details given to someone making a general enquiry but would be happy for the information to be passed on to buyers who are making serious enquires.
Commercial advertising and marketing
You must be very clear about what specifically is being marketed.
For example, when photographs or descriptions mention a specific business that is a tenant of the property you are marketing, prospective purchasers may incorrectly interpret this to mean that the business is being offered for sale as well as the land and buildings.
Often REA receives queries from consumers who are concerned about the ownership of the photos taken of their property.
We advise consumers that, although they have paid for photographs to be taken, the images usually belong to the agency or even the photographer who took them. The listing agreement and marketing plan will need to clearly outline who has ownership of these photos.
Photographs with boundary lines
If you include an aerial photograph of the property with an overlaid boundary line in advertising or promotional material, you must check the positioning of the line, to confirm whether it is accurate. Best practice is always to state that the line is 'only indicative of the boundary'. This will help to avoid later complications if there is an encroachment over the true boundary by either the subject property or a neighbouring one.
Drone photography is popular in marketing campaigns because it showcases features such as coastal views or sweeping grounds. There are some restrictions you must follow when operating a drone.
It is important to remember that drones are classed as aircraft, and their use is regulated by the Civil Aviation Authority (CAA) under part 101 of the Civil Aviation Rules.
Part 101 of the Civil Aviation Rules state:
- you must fly the drone only in daylight
- the drone must not weigh more than 25 kilograms
- you cannot fly the drone higher than 120 metres above ground level
- you must have consent from anyone you are flying over
- you must have permission from the owner of any land you are flying over
- you must not fly the drone in controlled airspace without authorisation from air traffic control and not within 4 kilometres of an airport without agreement from the aerodrome operator — a certified unmanned aircraft operator certification (UAOC) operator will have variations under this section allowing for more operating flexibility.
If you want to fly a drone that weighs more than 25 kilograms or operate the drone under a variation of the part 101 rules, the drone operator must hold an unmanned aircraft operator certificate (UAOC) issued by the CAA under part 102 of the Civil Aviation Rules. The CAA recommends that you use a UAOC holder to operate a drone to ensure a safe and professional operation without creating a hazard. If you hire an operator, make sure you ask to see a copy of their certificate and attached operating specifications to outline exactly what they can do.
You should also consider the Privacy Act when taking photos from a drone. Make sure you have permission from everyone whose land you want to fly over and communicate clearly with them about when it will be taking place.
To learn more, visit the Civil Aviation Authority website(external link).
Removing marketing at the end of a listing
If a property doesn’t sell
If your listing ends and the property has not sold, you must make sure that all marketing stops. This means removing all media, including physical advertisements, printed media and any digital advertisements on websites or social media. Leaving advertising up after the end of the agency period is a breach of rule 9.6.
In a relevant decision the Tribunal commented:
'Simply put, when a listing comes to an end it is a professional responsibility of the licensee to tidy up and cancel or sever all his advertising in any form. In this case, the licensee has been too slow in cancelling advertising. It is no excuse that he may not have received a formally written instruction from a vendor to do so. If a property has been sold, it follows that advertising it for sale must cease and it is the licensee’s responsibility in most cases to effect that.'
If a property sells
If your listing has been successful and the property has sold, make sure you update your marketing to reflect the property has sold. Check your company policy on how long you are able to continue to advertise a property after it’s sold. Be mindful that if you leave your advertising up for a long time after the sale, this might impact on your buyer’s marketing campaign when they go to sell the property.
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