Name: Lowell Chetty

Student Number: 3510850

Question 1A
This property is suitable to have an auction. Tenders would consider the house to be of great
interest due to the home being a family home that is in a school zone. This would result in a high
competition and thus a fear of losing the opportunity to own this type of home would generate a
premium price. The situation of the vendor would allow pity form the bidders in order for them, to
get a fair deal thus it will be taken into consideration when bidding. This is known as a duty of
care. The vendor’s terms and agreements will also enable the home to become unconditional.

Question 1B

This property would be great for an auction as it would encourage buyers to act immediately. In
some instances the auctions may have a few amounts of bidders as expected so due to the buyers
being in no hurry to sell it’s recommended that they consider a tender. The closing date of the
tender for a property would enhance a decision to be made by a potential buyer. The set price of
the tender would be perfect as the home has no particular characteristic.

Question 1C

The property is in need of repairs or demolition thus it’s recommended to have it listed in an
auction. The price is hard to determine otherwise. The auction would allow for the property to go
at a pre-conceived price due to the future developments being plan for the surrounding popular
area

Question 1D

The vendor has not specified if the sale is urgent, thus the aim is to get the best price possible for
this property. A tender would be of recommendation solely as the property is in a pristine location
attracting high profiled executives. The tender would allow for negotiations to be made and offers
to be placed thus the vendor can decide which type of offer they would like to accept. A tender
also reduces the marketing time therefore the person going overseas will be able to obtain a result
on the closing date with regards to the tender.

Question 1E

The vendor has asked for privacy in terms of the advertising and selling of the property. This
would be regarded as a tender due to the confidential approach. The property is within walking
distance to local social orientations and the bowling club this property would attract a lot of buyers
who maybe interested in enjoying their retirement. It caters for an elderly purchaser due to its
location being on a quiet street.

23155A Copyright © The Open Polytechnic of New Zealand 1

Question 1F

The circumstances of this property fit the auction criteria. The property status makes the valuation
of the property difficulty in the sense that it still has a lot of work to be done, never the less it has
great potential. Its location is in the midst of a redevelopement of the area the property having an
unclear building consent and subdivisions escalates to the difficulty of sale. Advise the bidders of
this condition however. I suggest that the reserve price is made in order for the vendors and
prospective bidder to be satisfied with.

2 Copyright © The Open Polytechnic of New Zealand 23155A

Name: Lowell Chetty
Student Number: 3510850

Question 2 A

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Breaches committed Obligations
What did Wally (or his What should Wally (or Act or
colleagues) do wrong? his colleagues) have Code
done? breached

• Failed to sign Sign authority of sale Code clause

authority for sale agreement 3.1
due to vendor
being a friend
• Statement of “ He should have
Million dollar mentioned that the Code clause
views for half the property has some 4.2
price” views.

• Advertisement
states that the He should have stated Code clause
property is a open that it’s for tender or 4.1
tender “for sale by tender.”

• Opening of the Code clause

tender box before He should have waited 5.3 and 6.1
the closing date. for the closing date and
time of the tender and
also he should have had
a real estate licensee
present when opening it.

• Naomi had a Code clause

received fax tender She should have sealed 5.1
and left it on Jill’s the tender and placed it
table to see. in the secure tender box

Code clause
• Lack of informing
He should have phoned 6.2 and
the purchaser if the
the vendor and asked if document
tender had been
that value was accepted c7
accepted.
and if so he should have
contacted the purchaser
stating the acceptance.

Question 2 B

4 Copyright © The Open Polytechnic of New Zealand 23155A

Name: Lowell Chetty
Student Number: 3510850

1. Wally informed Allison that she had been unsuccessful in the offer. He takes the initiative
to show her further properties that may interest her. he maintains a relationship with
Allison as to help her to the best of his ability

2. The deposit he collects assures a vendor that the purchaser is able to go ahead with the
agreement. This fee is held if the tender is accepted and the purchaser backs out. The
money in the interim will go to the trust account.

23155A Copyright © The Open Polytechnic of New Zealand 5

Question 3 A

Implications in terms of obligations or actions for:

Item Vendor Purchaser Salesperson Licensee
A tender is not Will not see any Offer will Needs to ensure Needs to ensure
to be opened tenders until remain all tenders are all tenders are
before the stated after closing confidential. If placed in a kept in a locked
closing time time they wish to locked box
box and it is not
change their immediately on
price, they need receipt and box opened until close
to submit is not opened of tenders
another tender until close of
tenders
A deposit N/A They will place The sales N/A
(usually 10%) a 10% deposit person would
as stipulated to the agency’s need to place
must be account. the deposit in an
submitted with agency trust
the tender account.

Acceptance of The vendor If unsuccessful They would They would be in

tender would need to they will be need to the presence of the
accept a tender notified or if approach the agent when
and negotiate their tender is vendor with the
opening the
the price. They accepted offers, and then
do have the get back to the tenders.
choice to reject purchasers
all the tenders. regarding
whose had been
chosen. It’s all
done in
confidentiality.

6 Copyright © The Open Polytechnic of New Zealand 23155A

Name: Lowell Chetty
Student Number: 3510850

Deposits of N/A The purchaser The agent N/A

unsuccessful would receive would need to
tenders their deposit contact the
with 2 working buyers and
days. Or if the inform them of
process of the
rejected tenders unsuccessfulnes
are complete, s and also let
them know as to
when they can
receive the
deposit they had
placed.

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Question 3 B

Implications in terms of obligations or actions for:

Item Vendor Purchaser Salesperson Licensee
Vendor They cannot N/A He needs to advise the code of
reserves the bid to reach the buyers that the vendor practice
right to bid reserve price. is bidding and also 3.4, and
point out who the
3.11
vendor is. The agent
would need to get the
reserve price in
writing from the
vendor. He has to
declare all the vendors
bids.
No bid shall be N/a No bid can be N/a N/a
retracted retracted if the
hammer is fallen
already.

Foreign N/a The purchaser They would need to Code C1.9

Purchaser needs to have ensure that the
consent from the purchaser has the
Overseas correct documentation
investment act in and financing before
order to bid. allowing to bid.
Vendor may They will need N/A The auctioneer will Code of
specify reserve to figure out a have to see if that practice
price price that is the price is realistic. They c3.4
lowest would need the vendor
acceptable price to agree upon .They
they can have. must also advise the
Must sign an vendor that they may
agreement to the bid under certain
document. circumstances. They
should advise the
buyers that there is a
reserve price.

8 Copyright © The Open Polytechnic of New Zealand 23155A

Name: Lowell Chetty
Student Number: 3510850

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Question 4

a)List one breach for each of the following Acts

• The Real Estate Agents Act 1976 (in terms of notices and signs)
1. Under section 53.1 the auctioneer did not place his license in a prominent place at the
business premissis, as to be easily read from the outside. The document that they only have
outside is a document that states its licensed premise of Polyvale LTD, Residential and
specialist auctions. There is no “MREINZ “mentioned after the company name and there is
no persons name and license details mentioned.

• The Auctioneers Act 1928

1. The auctioneer’s license has expired 6 years ago. The auction was carried out on
the 1 July 2007 under s6, licenses must be renewed annually.

• The Fair Trading Act 1986

1. Deceptive conduct – (sec 9) the auctioneer did not introduce Wallace as the person
bidding on behalf of the vendor.
2. The auctioneer also used Wallace to bid higher in order to entice the other buyers.

10 Copyright © The Open Polytechnic of New Zealand 23155A

Name: Lowell Chetty
Student Number: 3510850

b)Then use the 'auctioneer’s obligations' checklist on the next page, as well as your own
knowledge of the auction process, to complete the table. Use the comments column to
indicate if the obligations were carried out or not, or partially or incorrectly carried out.

Please note this DVD has been developed to highlight some shortcomings while conducting an
auction.

1. Rodger had raised his voice and repeated the reserve price severally. He should have
confirmed discreetly as there had been bidders that had been made aware of the reserve
price.
2. Rodger had given the vendors the necessary agreements upon the last contact they had.
3. Rodger had mention that the terms and conditions are available however he was going to
skip it.
4. The terms and conditions had been present with the “Sale of real estate by auction
agreement”.

5. The auctioneer did not mention that the house had a reserve price.
6. The auctioneer did advise the bidders that vendor has reserved the right to bid.
7. The auctioneer clearly mentioned the $5000 increase of the bids he was taking.
8. Rodger did not identify Wallace as the person who will be bidding on behalf of the vendor.
9. Mislead bidders as he did not directly declare that Wallace was bidding on behalf of the
vendor.
10. At a certain price Wallace had to confirm with the auctioneer if the bid was given to him or
not (at 385,000)
11. He did not mention anything regarding the property being on the market until the reserve is
met.
12. Rodger had carried on increasing the bids from $420,000 failed to do so as he carried on
bidding after Wallace had made an out cry at 420,000.He goes to $425,000 and so forth
13. the auctioneer failed to follow under the hammer process –‘going once , going twice going
thrice … sold” rather than “going , going , gone” . His Hammer rule had varied upon the
bid and not according to law.
14. The auctioneer signed all documents following a successful auction.
15. Rodger had impatiently left once the agreement was signed. He advised the vendors that he
would send them an invoice when he gets back form his holiday in Australia.
16. Failed to comply with auction code of practice (cop 3.11).He targeted specific bidders and
it felt as if he had applied a certain pressure which is not a choice he can make its entirely
up to the bidder.

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