How a sacked real estate agent made $725k in four months
A REAL estate agent helping two pensioners sell their home has been sacked after buying the property for $530,000 and selling it less than four months later for $1.255 million - a profit of $725,000.
South Auckland Barfoot & Thompson agent Aaron Hughes is now under investigation by the industry watchdog and could face a legal claim.
Property records show he bought 51 Lynton Rd, a ramshackle Mt Wellington house, in a private sale early last year for a bargain at $100,000 below CV. It was on-sold through Barfoot & Thompson in June for the extraordinary mark-up, with no apparent renovation work done.
Barfoot terminated Mr Hughes' contract this week and launched an internal inquiry after a five-month investigation by the Weekend Herald.
Barfoot director Peter Thompson said the agent's actions were disturbing and the company was sorry for what had happened.
It was committed to maintaining the highest levels of integrity and honesty within the real estate profession.
"On being informed by the NZ Herald of a possible breach by one of our real estate agents of our standards, we immediately investigated.
"We have advised [the Real Estate Agents Authority] REAA of the situation and will work with them in any investigation that follows."
The company would also work with the former house owners and was not ruling out financial compensation, but pointed out Barfoot had not gained from the deal.
The former owners, brothers Jack and Walter Tata, both in their 70s, were stunned to learn of Mr Hughes' windfall when contacted by the Weekend Herald.
They said they had no idea the property, bequeathed to them in their parents' will, was worth so much.
"Really? Four months later? Oh gosh," Walter Tata said. "That's amazing.
"I didn't realise he was that sort of guy. I thought he was quite straight up."
The Waikato-based retirees have now prepared a formal complaint to the REAA and their Hamilton lawyer, Peter Jefferies, is investigating a potential civil claim against the agent.
The dated, three-bedroom, 1950s house has cracked paint, worn carpet and a basic kitchen and bathroom. But it sits on a flat, 1075sq m section near Sylvia Park Mall and is subdividable with development potential under the proposed Unitary Plan.
The property was sold privately on February 23 last year for $530,000 to Az-Iz Rentals.
Companies Office records list the sole director as Aaron John Hughes, a former representative league player who until Wednesday was also a licensed real estate agent at Barfoot's Papatoetoe branch.
Az-Iz Rentals flipped the property on June 9 for $1.255 million - a profit of nearly $7000 a day.
The buyer was Kangtai Ltd, a property rental company whose directors are listed as Dasheng Xu and Qinghong Wang.
At the time, they had considered the sale price "fair enough", though suspected it was worth "a little bit extra" due to its location and development potential.
"But I didn't realise it would go for that."
Jack Tata said he was disappointed to learn how much his old home had subsequently fetched.
"I wouldn't have minded a share of that.
"You feel a bit bloody done. But then again, what the hell can I do?"
Mr Hughes had "set everything up", including the South Auckland law firm which processed the transaction, Jack Tata said.
Mr Jefferies, their lawyer, said the brothers had originally planned to subdivide the property and sell half as their retirement "nest egg".
The resale price was "remarkable" and he was working with his clients on their next move.
Had he been involved in the sale and known an agent was purchasing the property, Mr Jefferies said he would have demanded a registered valuation to ensure a fair sale price and asked for written disclosure of Mr Hughes' conflict of interest, as required under the Real Estate Agents Act.
It is unclear if either happened in this case.
Companies Office records show Az-Iz Rentals was wound up last week.
Mr Hughes declined to comment.
Mr Thompson stressed the sale of the Tatas' home to Mr Hughes was a private transaction which had nothing to do with his firm and no commission appeared to have changed hands.
The second transaction did involve the company but complied with all relevant requirements.
"The action of the agent involved disturbs us," Mr Thompson said.
"Although the original vendors were not clients of the company, we will offer to work with them and their advisers to examine all options for potential redress, including legal support."
- NZ Herald