Two realtors waited until the sale of a house was finalised before disclosing a building report that showed areas of the property had moisture readings nearly eight-times the normal range and fixing them could cost $100,000. 

A moisture reading of 7 to 13 per cent is considered normal for a house. However, where moisture readings exceed 20 per cent, the risk of timber decay is high. The property in question had five areas where moisture readings were between 40 and 80 per cent. 

Now, the two realtors and their agency have been found guilty of unsatisfactory conduct and fined a combined $11,000 by the Real Estate Authority. 

Jing Chen, who goes by Amy Chen, and Dequn Zeng, who goes by Gloria Zeng, both worked for Barfoot & Thompson when they sold a property in Auckland to a couple in 2020. 

Sometime before the sale, the agents commissioned a building report which identified areas of moisture that required further investigation. However, they didn’t tell the buyers until the offer went unconditional in November of the same year. 

The purchasers discovered the existence of the report only when their bank requested one for finance purposes and Chen told her one had already been commissioned prior to sale and sent it to them. 

The buyer then made a complaint to the Real Estate Authority on the basis that Chen and Zeng had known about the weather-tightness issues and opted not to disclose them. They said if they’d seen the report they would likely not have purchased the property. 

They commissioned a further report which found “significant water ingress mostly to the downstairs bedrooms and the upstairs dining area” that was initially estimated to cost $50,000 to fix - but that figure has since nearly doubled after receiving further quotes from a builder. 

Late last year the authority found the two agents guilty of unsatisfactory conduct and in a decision released on Friday, ordered that Chen be fined $1000, Zeng $3000 as the senior agent and Barfoot & Thompson in Greenlane $7000 for its lack of supervision. 

In submissions at a hearing held last year Chen said the building report noted the property was in “above average” condition but conceded she “didn’t spend much time studying the technical terms” of the 41-page report, and “didn’t pay much attention to the other parts of the report”. 

The listing was the first she’d been fully involved in and she told the authority that she’d asked the senior agent - Zeng - if they should print out the report to give out at open homes. Her evidence was that Zeng told her they only had to give it to people who asked for it specifically. 

The authority noted that Chen lacked construction and technical knowledge to interpret the defects outlined in the report but that the moisture table included in it didn’t count as a “technical term” and Chen should have known its results were important. 

By contrast, Zeng was a “well-trained” realtor who had worked for the agency for roughly seven months and told the authority she had not read the builder’s report until after the agreement had gone unconditional. 

The authority found that both agents had failed in their obligations to disclose material information that would have likely affected the sale and that either not reading the report or only reading the general summary wasn’t good enough. 

“The committee is of the view that a simple reading of the report indicated half of the rooms tested have above normally anticipated readings, show dampness and that further investigation was needed to determine the source of the reading,” the authority’s decision states. 

“This is a red flag of a potential problem with the property that, had they read the report, a reasonably competent licensee would take further appropriate action upon.” 

The authority also found that Barfoot & Thompson’s supervision of the highly-inexperienced Chen and of Zeng was insufficient and also classed as unsatisfactory conduct. It has escalated this aspect to the Real Estate Agents Disciplinary Tribunal which handles complaints of a more serious nature. 

In its penalty decision released on Friday, the authority found that Chen lacked supervision given she’d only been qualified for six months and it was her first full listing. 

However, they said the situation was “very different” for Zeng who had substantially more experience and should have known it was her duty to read a builder’s report. 

Neither Chen nor Zeng wanted to comment for this article and Barfoot & Thompon’s managing director, Peter Thompson, said he was unable to make any comment because the authority’s decision was still subject to appeal. 

Jeremy Wilkinson is an Open Justice reporter based in Manawatū covering courts and justice issues with an interest in tribunals. He has been a journalist for nearly a decade and has worked for NZME since 2022.