1. Consumer Complaints in Real Estate Industry
Mrs. Premila Kumar
Chief Executive Officer
Consumer Council of Fiji

2. Introduction Housing is one of the basic needs of consumers
just like food and clothing.
Every individual has a dream of owning a home
BUT way to home ownership­ is filled with challenges

3. CHALLENGES
For many, buying or selling a home is not a common experience. Probably just once or twice in a lifetime.
Consumers tend to rely on Real Estate Agents to give them advice.
It is hard for anyone who is not involved in the real estate industry to understand what goes on 'behind the scenes‘.
Consumers are victimized if they are not careful.
This costs them thousands of dollars and much heartache. Also, many consumers never realise how much they have lost.

4. COMPLAINT STATISTICS FROM 2008 – June 2016
YEAR
TOTAL
2008 6
2009 7
2010 5
2011 3
2012 4
2013
2014 2
2015 8
2016 41
Real Estate Complaints
Complaints against land developers not included

5. Nature of complaints – Property Sales
Non disclosure of property prices when property is advertised and property advertised as VEP
Pressure Selling:  is a common tactic used by some agents. They create hype by saying that a foreign Chinese buyers have offered a higher price and if the buyer don’t make a decision quickly the property will be sold to them.
Unlicensed real estate agents advertising properties and that poses a lot more risks to vulnerable consumers.
Untrained Salesperson can apply for a licence to sell real estate without having a financial background and necessary expertise.

6. Case Study: Under valuation
Real Estate Agent got the valuation of the property done through his contact.
He entered into an agreement with an illiterate seller. She had no idea how commission is worked out. A set price was agreed to and anything above that will go to the Agent.
They agreed for $80,000 as the sale price. He sold the property for $105,000. More than the valuation report.
Commission was $25,000

7. Case Study: Not disclosing the exact amount for commission
Roger engaged the real estate agent for the sale of his property. The two parties entered-into a Contract to sell the property. As per the agreement, Roger understood that real estate agents commission was 4% (VIP) of the net sale price
The property was sold for $242,000. Roger was informed by the Agent that the commission will be $9,680 BUT the Agent charged him $11,132.
Issue: The Agent charged $ VAT on the Sum $9680
(Rajesh Kumar v Bayleys)

8. Same Real Estate Company used Unclear Terms in the Contract
Does this make sense???????
“The commission will be 4% of the net sale price before vat, plus vat with a minimum fee of $5000 plus vat”.

9. Non- Disclosure
Consumers have the right to get a breakdown of costs charged for the services provided and in particular payments made to the lawyers’ Trust Account.
Some Agents and lawyers don’t provide written disclosures to consumers before finalizing the sale.
consumers are willing to pay but they are also keen to know what they are paying for.

10. Nature of complaints - : tenancy
Consumers given the run around by the Agents: Promises made but not followed
Non Refund of rental bond money
Agent took bond from one party and gave the flat to someone else
Letting Tenants in without an Agreement

11. Case Study: Taking bond but giving flat to someone
John paid $550 as rental bond to a Real Estate Agent to secure a flat.
Real Estate Agent failed to issue
1. Receipt for the rental bond; and
Tenancy contract document for signing.
When the time came for John to move-into the flat, he was advised that it was now occupied by someone else.
Also, Real Estate Agent did not want to engage in any communication with John thereafter.
Issue: misrepresentation by real-estate agent.
Outcome: with Council’s intervention, Agent refunded the rental bond amount. However, the refund was made in two installments.
Case Jacklee Moses v Property Pro Real Estate)

12. Conclusion
Difficult to protect consumers when companies operate in free market environment where
laws are deficient,
standards are not in place,
professionals remain untrained.
demand from consumers is high and SUPPLY is limited; and
market is small.

13. PROPERTY ADVERTISED AS VEP
Consumers need to make their decision by knowing the true cost . VAT exclusive prices give consumers a false indication of the likely cost of goods and services.
Just two scenarios: Either consumer has to pay VAT (VIP Price) or VAT is not applicable. In both cases consumers must be told the true cost…DISCLOSURE
Section 82(1) of the Value Added Tax Decree 1991 that prices of all goods and services supplied in Fiji must be displayed as inclusive of all taxes i.e. VAT inclusive. VAT is exempted on the sale of residential property and residential rent.
However any real estate agent whose annual commission is $100,000 or more will be required to register with FRCA for VAT purpose
Where a real estate agent registers for VAT, the real estate agent should charge and collect 9 per cent VAT on the commission earned. Therefore the Commission should be quoted as VIP.

14. Complaints against Property Developers
YEAR
NO OF COMPLAINTS
2009 1
2011 2
2012 6
2013