Pricing Propaganda From REIV

Published 29 September 07 08:55 AM | Peter Mericka

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

In his weekly propaganda piece in The Age newspaper (The Age "Domain" 29 September, 2007 p.3) CEO of the Real Estate Institute of Victoria, Enzo Raimondo makes something of a Freudian slip when he says, "Agents should ask for a single price for properties sold privately." Like so many of his type, Enzo Raimondo seems to believe that the pricing is a matter for the estate agent. But what about the vendor and the purchaser? If we remove the estate agent from the pricing equation we also remove the problems.

In a typically arroagent approach to real estate sales, the REIV ignores what consumers want, and tells estate agents:

"The REIV recently issued guidelines for the advertising of property for private sale. the guidelines advised member agents that a single price should be displayed on advertisements for property sold in this way."

No mention of what the vendor may want, or how the "single price" is to be arrived at. No mention either of what is to happen if 5 people submit identical offers. How does the vendor, (or should I say, the estate agent) choose which one gets the property? An egg-and-spoon race? A bribe? It's not hard to see how quickly such a situation would be exploited by the estate agent, particularly where the estate agent controls the transaction by keeping the parties apart.

Despite the immediately obvious flaws in such a silly proposal, Enzo then goes on to say:

"A single price gives prospective purchasers certainty anjd provides transaprency."

Now this is not just wrong, it's profoundly ignorant! The concept of transparency is obviously lost on Enzo and the REIV.

Let's get straight to the point here. We're talking about corrupt real estate practices, such as under-quoting and over-quoting, dummy bidding, and general criminal deception. Enzo's solution is to simply introduce a new scam to replace the old.

If Enzo and the REIV were serious about corruption in the real estate industry they would not allow it to be perpetuated through yet another "sales method". Rather, they would actually examine the concepts of transparency and pricing, and conclude that there should be no role at all for the estate agent in determining value and price.

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Filed under: REIV, Estate agent, Deception, Commission, Agent, ethics, Enzo Raimondo

Comments

# Lynton Duffell said on September 30, 2007 7:54 AM:

While I do agree with transparancy in every transaction, each and every transaction is unique, as is the house, the location, the vendors, supply & demand, each & every purchaser, the protocol and expectation from within an estate agents office, not all agents are members of the REIV and the longevity of the business and all the people involved to retain all future business, surely most agents must be doing things correctly if business is continually repeated and returned to agents?

We are not like the car industry where they have a little red book of values comparing like with like and change over prices, we are dealing with an long term property investment portfolio a market determination of ultimate value and the input of agents and vendors matter of opinion of worth, yes the vendors do have a say and rightly so, as well so do the purchasers and the vendors again when signing the contract.

Very few transactions ever, if any, are the parties kept apart, except during the physical staging performance of 20 to 40 minutes of the auction ceremony that we so boringly all put up with!

Why should there be no role for estate agents to determine a market worth we do not value the property.

Perhaps people in glass houses shouldn't throw stones

# Peter Mericka said on September 30, 2007 10:54 AM:

Hi Lynton,

On the observation that "most agents must be doing things correctly if business is continually repeated and returned to agents.." the fact that estate agents enjoy a monopoly in real estate sales has more to do with the use of estate agents than the value of the service they offer.

You seem to miss the point on the valuing of real estate. It is a conflict of interests where the estate agent determines the value of a client's property, and also has an interest in the sale. For example, if an estate agent wants to make a quick buck all he has to do it to tell the owner of a property worth $400K that it is worth $350K, and sell it quickly and cheaply. This difference in commission between $350K and $400K is negligible to the estate agent.

The fair and honest way is to eliminate the conflict of interests. Have the client obtain their own valuation, and have the agent decide whether he or she is prepared to try and sell the property for what it is truly worth, not just for what the estate agent tells the client it's worth.

Do you allow the vendor to show people through their own property, or do you keep the vendor and purchaser apart during this process? Why don't estate agents allow the vendor to show visitors through?

People in glass houses? Don't know what you're alluding to here, please elaborate.

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Pricing Propaganda From REIV

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