Estate Agents & Home Loans - Conflict Of Interests?
by Peter Mericka B.A., LL.B Real Estate Lawyer and Qualified Practising Conveyancer Victoria Lawyers Real Estate
Ask any estate agent who they work for, and they will readily identify the vendor as their client. Ask the same estate agent about any duty owed to the purchaser, and the response "caveat emptor"
(buyer beware) is blurted out faster than the answer to an easy question on a TV quiz show.
But ask the estate agent whose interests are being served when a purchaser is referred to a mortgage broker of the estate agent's choosing, and the response is not as quick.
We noticed this advertisement from a mortgage broker, and wanted to know why the mortgage broker would be advertising to estate agents, rather than to consumers. We also wanted to know why the mortgage broker would be offering $1,000 per head to the estate agent, rather than offering this incentive to potential borrowers.
Most importantly, we wanted to know whether the mortgage broker had any concerns about the conflict of interests involved, considering that the estate agent is paid a commission by the vendor to bring about a sale. Would the mortgage broker protect the interests of the purchaser as against those of the estate agent (for whose assistance the broker is paying $1,000) and the vendor? How do the broker and the estate agent deal with the issue of illegal secret commissions?
We put these questions to Mark at Pro Home Loans.
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