REIV Votes Against Corruption Remedy

Published 30 June 09 06:51 PM | Peter Mericka 

OPINION
by Peter Mericka B.A., LL.B
Real Estate Lawyer
Qualified Practising Conveyancer Victoria
Director Lawyers Real Estate Pty Ltd

 

I believe that the real estate industry in Victoria is the most corrupt in Australia. This is confirmed time and again, not only by the conduct of individual real estate agents, but also by the behaviour of the peak body representing real estate agents, the Real Estate Institute of Victoria (REIV). We have seen how the REIV condones criminal conduct by providing its members with REIV prepared contract conditions, encouraging estate agent involvement in the preparation of sale offers and ignoring the growing problem of bribery and "referral fees". As if to confirm its role in maintaining the right of real estate agents to cheat and deceive, the REIV has now voted against a measure by which, according to the former head of its own ethics committee, "...almost all dubious price manipulation practices would be eliminated".

According to Herald Sun journalist Craig Binnie:

"ESTATE agents have voted down a proposal to stamp out deliberate under-quoting on properties being auctioned.

A secret committee ballot within the Real Estate Institute of Victoria voted nine to three against a motion that would have forced vendors to publish the prices they were willing to sell at.

The motion proposed that the REIV ask the State Government to introduce legislation requiring vendors to publish their reserve price before auction.

Complaints from angry buyers have been brushed aside by agents, the REIV and Consumer Affairs Victoria.

The former head of the REIV's ethics committee, John Keating, said his motion was voted down despite growing discontent about the "misleading and deceptive practices of many estate agents in over-quoting to vendors and under-quoting to purchasers".

Mr Keating, the managing director of Keatings Real Estate, said if vendors and estate agents were required to publish their reserve price, almost all dubious price manipulation practices would be eliminated."

(Craig Binnie Herald Sun June 29, 2009)

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Filed under: REIV, real estate institute of victoria, underquoting, corruption, victoria

Comments

# Austin said on July 1, 2009 7:52 AM:

Hi Peter,

No offense, but what were you expecting from the REIV? Their entire industry hinges on this. If pre-sale prices are published, a lot more pre-auction offers would be made, and properties would be sold quicker and for LESS - definitely nothing to brag about! They have known for years that auctions drive up hype, boost everyone's expectations, and give the agent a highly pressurised sales environment for the vendor. And the vendor is paying the bill, not the buyer!

# Peter Mericka said on July 1, 2009 9:22 AM:

Hi Austin,

You're wrong in assuming that auctions get higher prices (read some of Jenman's books on this), and my own experience in providing pre-purchase legal advice and conveyancing for vendors and purchasers alike confirms that auctions rarely get the best price.  The advantage of the auction is that gets a sale on a specific date, before the agent's exclusive sale authority expires.

But most concerning is the way you almost accept the inevitability of crooked conduct from the REIV (and by implication its members) when you implicitly shrug your shoulders and ask, "What were you expecting...?"

Madoff got 150 years because he made off with other people's money through trickery and deception.  Too bad for him that he wasn't a paid-up member of the REIV - perhaps the community would have responded with, "Well really, what were you expecting?" and he would have been issued with an infringement notice (remember that the penalty for the Crimes Act offence of Obtaining Financial Advantage By Deception is reduced from 10 years imprisonment to an infringement notice when it's committed by an estate agent in the context of dummy bidding).

# Peter Mericka said on July 1, 2009 10:53 AM:

The following comment is taken from another posting on this blog (See "Goodman Group Conveyancing Bribe Payments":

"As an agent who works in the south east, I can confirm that Goodman Group do offer $150 kickbacks to the agents who refer business on to them. I am a strong advocate of employing solicitors who do the job properly and thoroughly, kickbacks or no kickbacks. As a result I am not a big fan of conveyancing groups and personally refer most of my business to the local solicitor (at arms length), although Goodman Group are a touch more professional than most other conveyancers. This isn't the only group that offers kick backs, in all of my years in real estate i can tell you that most conveyancing, interior design, general trade and gardening businesses offer kick backs to us agents."

How far does open real estate corruption have to go before the REIV and the Victorian government feel the need to start doing something about it?

# Austin said on July 1, 2009 1:03 PM:

Again - what did you expect? This has been going on for years and years and nothing has been done about it - the REIV has POWER, that's the only thing that speaks to Government. It helps explain why agents have their trustworthiness ranked somewhere around the level of pollies / car dealers. It also explains why Madoff was made an example of - in this case the swindled had power too.

# Peter Mericka said on July 1, 2009 1:16 PM:

Hi Austin,

You're right.  But you may not be aware that real estate agents love their terrible reputation.  Their bad reputation is good for business.  Remember, they're sales people, and they are good at what they sell - not houses, but their own services.  Being able to allude to all of the "bad" real estate agents, while smiling and speaking in friendly tones to a "punter" (that's what agents call consumers) allows the real estate agent to demonstrate that he or she is not like the "bad ones".  It's a great sales tool.

And look at the likes of Ian Reid of Ian Reid Vendor Advocacy, who purports to find the good agent by avoiding all of the bad ones (for a cut of the commission of course).

So, having a terribe reputation for honesty and decency is good for business for the real estate industry.  The sad part is that the reputation is universally well deserved.

# Gerry said on July 15, 2009 11:12 AM:

Hi Peter,

You may recall our earlier phone conversation regarding a book I was in the process of completing in which I described my own real estate experiences, gained on both sides of the fence - so to speak. This was firstly as a frustrated consumer of many years and later, via unusual circumstances for 4 years (unsuccessfully as it turned out) trying to change the internal structure, training and policies of the Woodards group to one more in keeping with the needs and aspirations of its clients, customers and the general public.

The industry here in Victoria is corrupt and has been allowed to continue as such following many years of inactivity and connivance on the part of the state government and a toothless Consumer Affairs Victoria.  I am not sure how things can be changed without some positive action on the part of the state government - supporting some of the more forward thinking and concerned agents - who do actually exist in spite of the obdurate attitude and delaying tactics of the REIV.  

The book will soon be soon be available, titled "SMOKE & MIRRORS, Egos and Illusions - the world of Real Estate" ISBN 9781-1-921578-67-0(pbk). It is being published by Bookpal and should provide another perspective on the antics of the REIV, estate agents and agencies - particularly those operating in Victoria.  I would be interested in your comments - if and when you get to read it.

regards

Gerry

# Peter Mericka said on July 15, 2009 11:50 AM:

Hi Gerry,

I can't wait to read it!

# john rowe said on July 21, 2009 4:14 PM:

If just one small thing could be changed and that is that all houses have the reserve price not only stated pre auction but with every advertisement and dislay photo, this would bolster the confidence of buyers who are worn down by being left in ignorance of the price and having to phone and phone and phone again which leaves buyers in a beaten condition and who give up and purchase even when they know the price is inflated.

If only someone would start a blog to invite comments on how the r/e industry could be defeated.

# Peter Mericka said on July 21, 2009 4:30 PM:

Hi John,

That is what I have done in developing the SLOD! Best Price Negotiation Strategy.

# Australian Real Estate Blog said on July 29, 2009 6:51 AM:

OPINION by Peter Mericka B.A., LL.B Real Estate Lawyer Qualified Practising Conveyancer Victoria Director