Breaching the act is ‘common in a tight market’

Breaching the act is ‘common in a tight market’

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A high-profile industry figure has called for an end to undocumented selling activity, which many agents believe is rife in their local market.

According to a recent REB poll, 81.4 per cent of agents believe it is a regular occurrence for agents in their local market to show homes to buyers without agreements or contracts for sale in place.

Another 11.1 per cent said it happens occasionally in their local market, while 4.9 per cent said it rarely happens and 2.6 per cent had never heard of it happening.

John Cunningham, who is managing director of Cunninghams and Real Estate Institute NSW deputy president, said his Sydney agency is discovering instances of this behaviour every fortnight or so.

“It’s becoming pretty common in a tight marketplace; people are doing things they wouldn't normally do, and it’s a problem,” he told REB.

According to Mr Cunningham, this is creating an environment where the law is being flouted and people think it’s acceptable since they aren't getting caught.

“I think there’s also a generation of agents that might be falling into the ‘unconscious incompetence’ category where they haven’t been taught that you actually can’t do that,” he added.

Mr Cunningham noted that not having an agency agreement not only jeopardises potential commission, but puts vendors and agencies at risk since they’re unwittingly part of the issue.

“I think people are unaware of the consequences, which can be as much as a potential loss of licence if there’s potential fraudulent activity going on,” he said.

“This isn't so much breaking the law as it is breaching the act, but if people start breaching the act then they’ll keep going in so many other ways as well. If your agents are doing that, what else are they doing?”

Mr Cunningham said the industry should report this sort of behaviour to the regulator so it can be investigated.

A spokesperson for NSW Fair Trading told REB that real estate agents who don’t have an agency agreement are not entitled to commission or expenses incurred in offering the property for sale.

“Fair Trading will continue to work collaboratively with the real estate sector to better balance industry needs with consumer protection,” the NSW Fair Trading spokesperson added.

A spokesperson from Consumer Affairs Victoria told REB that agents can legally show a property with the owner’s consent even if there’s no agency agreement or contract for sale in place. 

A spokesperson from the Queensland Office of Fair Trading said this conduct is rare, with a total of six investigations between 2012 and 2015 resulting in four enforcement outcomes.

The other state and territory departments told REB they were unaware of this being a common occurrence, but would welcome and investigate any complaints brought forward.

[LinkedIn: What can be done to improve the image of the real estate industry?]

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