No motivation for best result, as REINSW slams upfront fee disruptive agencies
The REINSW has slammed low upfront fee disruptive agencies.
"Consumers are at risk of not achieving the best price for their property if they use the services of companies that charge an upfront fee," according to the Real Estate Institute of New South Wales president Leanne Pilkington.
She said with the cooling Sydney market consumers are at risk of paying even when their property does not sell.
“There had been a lot of press surrounding companies that offer a flat fee upfront to sell a consumer’s home rather than the traditional commission model,” she said.
“There is no motivation or incentive for these agents to take a professional approach in achieving the best possible result as they have already been paid regardless of the outcome,” she said.
Ms Pilkington said in buoyant markets upfront fees are attractive to consumers seeking to save money but they are not significantly tested because of the high demand and low supply.
“As the peak body REINSW is therefore concerned for sellers in this changing market who are vulnerable to such low cost high risk strategies that have the potential to leave them in the lurch.
“We encourage consumers to explore a full range of options when it comes to selling their most valuable asset: don’t just go for the lowest cost option as the risks are too high if you get it wrong. Never take anything on face value, do your research and ensure that you are making the best decision.
“As the market cools the true value of an experienced real estate professional can really be seen,” Ms Pilkington said.
The press release did not name any agencies, but the most recent arrival has been Purplebricks.
Last year Hayden Groves, the president of the Real Estate Institute of WA, claimed these disruptive agencies offered "poor value to consumers."
Groves said Purplebricks' fixed fee of $4500 sounded "enticing to sellers.
"Then you are effectively on your own," he wrote.
Purplebricks, an online property platform that claims to have a unique low-cost model, was also attacked last year by a leading Australian property industry executive, the First National Real Estate chief executive Ray Ellis.
“Australians understand the extra value that a professional agent brings to the marketing, negotiation and sale of property, and therefore continue to choose agents to maximise their sale price," said Ellis.
Purplebricks opened its Sydney office late in 2016.
A Purplebricks agent was accused by Fairfax Media of "a lack of professionalism from start to finish" in an article on a Sutherland Shire listing where the vendor hoped to save more than $33,000 on the $1.85 million to $1.95 million property offering.
There was an upfront $12,000 outlay - a $5500 fixed-fee, $1370 in August auction fees plus money spent on additional advertising.
The debt was reportedly in the hands of Purplebricks debt partner RateSetter, after the vendor opted to defer payment until the end of her campaign.
"I don't see why I should have to pay all that money for no result and a lack of professionalism from start to finish," she alleged.
The property was sold in November by a traditional agency, but only after the price guide was dropped to $1.5 million to $1.6 million.
Purplebricks co-founder and CEO Michael Bruce defended the agent's conduct saying he "gave comprehensive and sound advice to our customer based on their extensive experience, knowledge of market conditions and after undertaking a comparative analysis.
"It is ultimately the customer's decision, despite the advice, what price they wish to market the property for," Michael Bruce noted.