Estate agent found guilty of luring customers

For the first time ever a Swedish court has found an estate agent guilty of luring potential customers with prices well below the eventual selling price.

In six out of 41 cases investigated by the Board of Supervision of Estate Agents the final sale price was found to exceed that of the starting price by 40 percent or more.

The largest discrepancy between starting price and sale price was 53 percent, according to legal news service PointLex.

In 12 instances there was a differential of 30 percent or more, while in 14 cases it was over 20 percent.

A decision was taken some years ago by the Association of Swedish Real Estate Agents to tackle the phenomenon of unrealistic starting prices.

The Board of Supervision of Estate Agents, which is a government agency, indicated at the time that the price of a house or apartment must not differentiate too greatly from its estimated market worth.

As all of the sales prices under investigation in the current case exceeded the starting prices, the estate agent received a warning from the Board of Supervision.

The case was then taken to the county court, which ruled that an estate agent has “a duty to provide correct information about a property, as well as a duty to ensure that potential buyers are not misled in any way”.

While conceding that it is not always possible to predict the final price, the court was of the opinion that it is not acceptable to repeatedly start the bidding at unfeasibly low prices.

As such the court ruled that the estate agent’s price-setting “has been systematically incorrect”. He was therefore found to be in breach of good practice and of his obligation towards his customers, and the court considered that the decision to issue a warning had been appropriate.

In his defence the estate agent claimed that the properties in question were in need of renovation and that the owners were prepared to sell for the opening price.

The estate agent has been granted leave to appeal the verdict to the Administrative Court of Appeal.