We’ve arrived at the Top 4 ‘Dirtiest and Most Deceptive Tricks of Real Estate Agents’

After a countdown from Number 20, these are the most illegal tactics that agents employ and should you think that you’ve experienced any of these, I would recommend contacting ‘The Office of Fair Trading’ immediately.

Here they are…

Parties that have been proven guilty of undertaking some these tactics have been banned for life from working in the real estate industry in the country and on at least one occasion, have faced imprisonment!

This has resulted in a complete overhauling of the Queensland Real Estate contract system back in 2000 and consequently changed the way buyers and sellers are protected – or at least that’s the idea!

Unfortunately, I still see these dangerous practices occur regularly and whilst ‘Fair Trading’ has implemented systems to stop these practices, the most underhanded of agents finds ways around them!

So, let’s get to it….

  1. ‘The False Contract’ – I have just encountered this one personally. Here’s the scenario ….A seller contacted me and mentioned that they were particularly unhappy with their current agent that was still in charge of their property although now outside of second 90 day listing period. They asked me to appraise their home which I did and I was completely honest with them when I told them that I believed that I could achieve them the price they were looking for. To me, the first agent made a few critical mistakes with the marketing and strategy (it was a first home buyer style property and was initially auctioned). Not surprisingly, no-one turned up to the auction except the agent, the agency Principal, the auctioneer and the next-door neighbour. Once this agency became aware that the sellers were talking to me, they miraculously produced a contract on the last day that they had the property for sale. After thanking me for my time and effort, I didn’t hear from them until 3 weeks later when they informed me that the contract had fallen over. Further investigations from this seller (by checking out Social Media) has uncovered the fact that the agent seems to be very good friends with the buyer. Now maybe I’m a bit cynical and perhaps this was an unfortunate event for both the buyers and sellers although I’d be willing to wager a reasonable bet that this contract was never signed by a real buyer in the first place – it was purely a tactic to stall the sellers and find another buyer after the first contract fell over. What made me more suspicious was that I know of one buyer who inspected the property 4 days after the contract was apparently signed and this buyer was never informed that it had an existing contract on it. An unfortunate event or something more sinister? You be the judge! You may be interested to know that the property is still on the market with this same agent and is not yet sold.
  1. ‘Trust Account Slush Fund’ – A couple in Melbourne that owned 5 offices of a well-known franchise group have just made the news for all the wrong reasons by allegedly committing this offence that will more than likely result in imprisonment. As you’re probably aware, most real estate agencies will have a Trust Account established to hold client’s money for many different reasons – deposits paid to secure a property for sale, rental amounts paid by a tenant that are waiting to be transferred through to a landlord, advertising and marketing monies, etc. There have been a number of recent cases where an agency Principal has been found to be short of cash and made the stupid decision to dip into their own Trust Account to ‘borrow’ other people’s money to keep the business running…or another way of describing it – stealing money from unsuspecting clients for their own uses. Needless to say, this is one of the most illegal tactics used and if found guilty, an agent will likely be barred from operating a Trust Account in any capacity again. This latest high-profile case has the accused defending charges of misappropriating millions of dollars. And in sub-plot that defies decency, the wife (who has denied any wrong-doing and blamed it all on her husband), has recently opened an independent business and resumed operation as an agent. Unbelievable!
  1. ‘Under Appraise, Sell to Friends and Re-Sell It Soon After Whilst Splitting The Profit’ – Need I say more about this one? A very well-known agent who operates in Hope Island on the Gold Coast has been convicted of this offence several times and whilst she is no longer permitted to sell real estate in Queensland, her daughter runs an agency…and Mum has still been seen showing properties to buyers in this area. Another agent from Redcliffe was convicted of the same offence many years ago. I have personally seen this a number of times in my local area over the past 5 years. The last occasion was around 6 years ago whereby I was formulating a market analysis for a particular client when I noticed that a nearby home was sold for a figure way below asking price (around $540,000). Three months later, the home was back on the market for $120,000 more and after viewing the original marketing photos and the new photos taken, it was obvious that not a single thing had been done to improve the current market value of the home. Upon further research, I found that the purchaser and (very quickly acting) new seller was an employee of the agency – how ironic! When I sent an anonymous e-mail, informing the agent that I was right onto their game, the property was swiftly removed from the market later the same day. Very Dirty, Very Dishonest & Very Illegal!
  1. ‘The Two-Tiered Marketers’ – This is undoubtedly the number one most acknowledged ‘Dirty and Most Illegal Tactic’ reemployed over the past 20 years. The practice was rife in the ‘early to mid’ 1990’s whereby clients would be canvassed from interstate seminars, flown to Queensland and taken for a very controlled tour around the certain areas (The Gold Coast was the most common destination). These clients were introduced to Financial Advisors, Finance Brokers, Accountants, Solicitors, Real Estate Agents and Property Developers – all of whom were part of an elaborate scheme to convince the unsuspecting buyers to purchase an investment property for a hugely inflated price (often $100,000 – $150,000 higher than the current market value). The funders would process the finance applications by cross-collateralizing the equity in the buyer’s current home meaning that their new purchase did not require a bank valuation – even though they had been supplied a dodgy valuation from a valuer who was also in on the scheme. The result was that every person involved split the profit and the client had just been scammed out of amounts as high as $150,000. They were completely unaware of this until it came time to sell their property and after engaging a number of local agent’s appraisals, they became aware that the ‘then current market value’ of the property was now significantly less than what they paid for it, especially given the softening of the market at this time. Despite the implementation of the Form 27C in the Year 2000 (An agent’s disclosure of the benefit they receive when selling a home that needed to be signed by every agent and purchaser when an offer is signed), this practice is still widespread. Note – Fair Trading has now abolished the use of the Form 27C yet an agent still has a duty of disclosure of any financial interest in a property transaction. The Agency/Property Developer was getting around this legislation by disclosing the commission but failing to disclose the additional ‘Marketing Fees’ charged in addition to the commission. The practice has continued through the past decade but the consistent growth of the property market has hidden the extent of the amount of money that sellers have been fleeced at the time – and with the advent of extensive information on the internet, Southern buyers are not as easily stung by this operation, especially since property prices has levelled in comparison. But as I mentioned, this practice is still reasonably widespread.

 

 

Until next week, Happy Listing & Happy Selling!

 

 

 

Blog Post
Related Posts
We’ve arrived at the Top 4 ‘Dirtiest and Most Deceptive Tricks of Real Estate Agents’