Mud-slinging?

[ActionMan]

More complaints about agents - An article in the Waikato Times.

http://www.stuff.co.nz/stuff/waikato...1a6578,00.html

[donna]

With zero qualifications required there is no wonder that there are lots of compliants about RE Agents in NZ. To my knowledge a 2 week course is the only requirement (umm and that may not be complusory) in NZ before you can call yourself a Real Estate Agent (part of a registered RE Group).

It's a shame we are not following in Australia's footsteps with tougher rules and regulation of the industry etc. it would sharpen up the skills and service our RE Agents provide.....probably weeding out a few too.

Cheers,

Donna

[xris]

With zero qualifications required there is no wonder that there are lots of compliants about RE Agents in NZ. To my knowledge a 2 week course is the only requirement (umm and that may not be complusory) in NZ before you can call yourself a Real Estate Agent (part of a registered RE Group).


Donna

Donna,

I think you will find that it has little to do with the length of the course you have to take. It is all to do with being honest or dishonest. A three year degree in selling real estate won't change that.

xris

[donna]

Tougher legislation is required.

In Victoria, Australia - RE Agents need to get the actual house sale price within $10K of their quote or they can be reported and fined.

This prevents RE Agents doing a 'Tommys' as I call it. Tommys in Kapiti had an interesting strategy to get listings as soon as they entered the local market. They over inflated the sale price expectation.

I was seeing Tommys signs all over the place (4 in our very small street - over night, and there's very little turn over in our street). I was intrigued as to their 'sales pitch'. I viewed lots of Tommys properties and soon realised how they got the listings. Some of the properties were on for $100K more than they would sell for.

The 4 houses in our street didn't sell. The owners weren't motivated to sell in the first place. However a nice phone call from an Agent suggesting big bucks was enough for Tommys to get the listings - just not enough to get the sale. Though the strategy would work on some unsuspecting vendors that would accept a lower price.

Interesting strategy as it got a lot of Tommys placards out and about which is good marketing, and I was hearing people saying "hey we love Tommys" they are increasing the property values here in Kapiti".

It's morally wrong though to get listing through providing incorrect information and hence the law in Victoria, Australia to prevent this activity.

Cheers,

Donna

[SuperDad]

In Victoria, Australia - RE Agents need to get the actual house sale price within $10K of their quote or they can be reported and fined.

While this is preferable to the "Tommys" of this world, I can see two problems with this approach, one for vendors and one for investors.

From a vendor's perspective, I think that a law like this would encourage agents to underquote, rather than overquote. We all know that there is bugger all difference in terms of an agent's commission between a sale at $375K and one at $400K. So, in order to stay on the right side of the law (and to get a quick sale), I can see agents underquoting on this system.

From an investor's perspective, there won't be many bargains around if all properties must (by law) sell within $10K of the quoted (listing?) price.

Have other states followed Victoria with this kind of law, Donna?

Paul.

[xris]

Hello Donna,

I would be interested to know a little more how this system is actually practised in Victoria.

Without knowing anything about it, my feeling is that in reality it would alter things very little from our system here. It may have some effect on cutting out the worst cases of listing buying, but in a free market the variables are so numerous that there must be very many exceptions and ways to avoid the provisions of this law.

For example....

Vendor calls agent.

Agent goes round and says market value is $380-$400 but the market is still moving up and if well marketed a better price may be obtained.

Vendor says I am only really interested to sell at $450. See what you can do.

Agent advertises at $450. Nothing.

Two months later vendor says, I have changed my mind and want sold at market. What can you do.

Agent brings offer of $390 which vendor takes.

A/ Vendor sues agent because advertised price of $450 is well above sale price of $390?

b/ Agent in the clear because vendor chose to ignore initial advice?

The variations on this are infinite.

Also if it is so good why haven't the other states adopted it?

It sounds a little to me like a legislative nonsence thought up by bureaucrats to asuage the screaming mass of ill informed vendors and buyers. (You know me, never one to use tactful words)

As I said, it may have some merit but I would need to know more.

xris

[donna]

There is a way around this......

....sell your propery by Auction! I heard the rule doesn't apply to auctions, though maybe the reserve price needs to be the within the $10K and if the property doesn't sell at Auction the reserve price becomes the listing price?

I'm not clear on this - just throwing out some ideas.

Cheers,

Donna

[donna]

Phew!

It took me a while to find this:

Amendment to the Estate Agents Act
1980
Prohibition on under-quoting and over-quoting
Before obtaining a person’s signature to an engagement or appointment to sell real
estate, the estate agent must ensure that the agent’s estimated selling price or price
range is contained in the engagement or appointment.
This price must be the amount the agent believes that a willing but not anxious
buyer would pay for the property. If it is a price range, the range must not exceed
10% of the lower end of the range.
The Vendor’s reserve price is not required to be the same amount as the estimated
selling price.
To Seller
The agent must not make a false or misleading representation to a seller or
prospective seller as to the estimated selling price. This provision is designed to
stamp out the practice, engaged in by some agents, whereby the agent gives the
vendor an inflated estimate of the property’s value in order to obtain the vendor’s
listing.
To Purchaser
The agent must not, while marketing the property, state an estimated selling price
which is less than the estimated price or price range recorded in the engagement.
This provision is designed to stamp out the practice whereby the agent gives the
prospective purchaser a low estimate of the selling price to encourage interest in the
property and attendance at the auction. This practice can, in some cases, result in
purchasers spending money on architect or builder’s inspections or on legal fees
when, in fact, the property is beyond their means.
Estate Agents and Sale of Land Acts (Amendment) Act 2003 7
Evidence
The Director of the Office of Fair Trading and Business Affairs in the Department of
Justice may, by notice in writing, require an agent to provide evidence of the
reasonableness of the estimated selling price recorded in the engagement.

Source: www.deacons.com.au

This provision is designed to
stamp out the practice, engaged in by some agents, whereby the agent gives the
vendor an inflated estimate of the property’s value in order to obtain the vendor’s
listing.

This is what I was inferring to - and would hurt the NZ Real Estate Agents....the 'Tommys' of the industry.

Cheers,

Donna

[Glenn]

I do not see a lot of problems with the selling side of the industry. Their bogus bidders at auctions and stooges buying on behalf off little old ladies is a problem that the current system is supposed to deal with. The biggest problem is the poor disputes resolution service and the mud they sling at others.
If an independent disputes organisation run by say the department of courts was set up then everyone would need to sharpen up their act. The best way to get more business is to provide above average ethical service not legislate the opposition out of business.
They call this the Kiwi rope trick. Climb up the rope and pull it up after you.

[xris]

Strange as it may sound, I am hestitant to venture an opinion on this at the moment.

As a method of stopping the worst excesses of 'buying' listings I can see some merit in it. But, there are other problems which such a system would create, some mentioned earlier.

However, I believe it would not work here anyway unless the RE industry was subjected to a major overhaul. This is because by passing a law like this the salesperson and/or agent is immediately placed in the position of valuer. Although needing to know to a reasonable extent the market value of a property, the agent's job is not to be a valuer - nor to be a builder nor to be an interior designer, nor to be a shoulder to cry on, etc., but rather (in nearly all cases) to market the property.

xris

[donna]

Although needing to know to a reasonable extent the market value of a property, the agent's job is not to be a valuer - nor to be a builder nor to be an interior designer, nor to be a shoulder to cry on, etc., but rather (in nearly all cases) to market the property.

Interesting thought - the Agent is in fact a ' property marketing specialist' yet the skill of 'marketing' is not taught in the 2 week course they attend .

Cheers,

Donna

[xris]

The quality of this initial course is not particularly good, that is true. In many cases the quality of the tutoring is highly questionable which may be more relevant. A good teacher is a lot more important than the subject being taught.

In defence of the couse though, it is difficult to teach 'How to be a good salesperson'. To a large extent you either have it or you don't. You cannot really teach people how to change their personality or character or base attitudes.

Intelligence also has little to do with what makes a good salesperson. Some of the best salespeople are the stupidest, and vice versa.

Also which makes teaching the subject difficult, is that marketing techniques in anything but a very general sense, will vary enormously from area to area and market to market. There really is no alternative to getting out there and getting your hands dirty. This is often the case in many industries, but is particularly true in real estate.

My personal opinion is that the initial course does need tightening up, particularly in the way it is taught, and more emphasis needs to be applied in vertain areas, including the law, basic marketing techniques, human psychology and how a salesperson might choose to structure his or her business plan and personal life around the job. The job can be very stressful - just look at the drop out rate.

An alternative would be to place greater emphasis on the role of the licencee in guiding and educating new salespeople. This would have the advantage that the lessons learnt would be based a lot more on the reality of the job - real life experiences in a busy RE office. A lot of licencees actually do this anyway. Some franchises even run their own courses after the REI one has been finished (a vote of confidence if ever there was one!) But some licencees would grumble at the extra responsibility this would place on them.

xris

[captaincrab]

Real Estate people in the main SELL, not "Market". They started using the term 'marketing" to try to create a veneer of professionalism. As many of these tales illustrate, most fall short of the standard required to be professional. Xris has a point,they cant be valuers, building inspectors etc Maybe the industry has used hype to put them selves in a position whereby they are regarded as something, which patently they are not. The courses need to be harder and longer and licensees need to take more control ( a lot do I believe) I think most agents, on average, only sell 6 houses ayear

[donna]

Umm....Real Estate Agents are not actually selling property. The vendors are selling their property. The Real Estate Agents are 'marketing' their clients property to introduce buyers.

As we know Real Estate Agents are more motivated to get listings because its a numbers game and every time they get a listing when the property eventually sells they get a share of the fee.

Very few properties are listed by the same Real Estate Agent that finds and introduces the buyer. Normally there is a fee split between at least 2 Real Estate Agents.

Also, the ultimate decision to 'sell' lies with the owner of the property which is not the Real Estate Agents...so IMHO Real Estate Agents are definitely 'marketing' their clients property to introduce buyers to the vendors.


Cheers,

Donna

[captaincrab]

Reluctant to argue semantics with you Donna but my point is that the majority of agents talk about marketing but really have no idea. What they are doing is selling on behalf of the Vendor. We often have agents who put "marketing" proposals to us as to how they will sell our property but it is patently obvious they dont understand what 'marketing' truly is as all the campaigns seem to be pretty much the same. Money for advertising in the Herald/Property Press,sign at the gate and open homes for meeting and greeting. Not very innovative. You see selling as being the decision at the end by the vendor but I see it also as the process to get that to the vendor. I would wager 95% of Agents have no qualification in marketing. I would also add that most FMCG people just laugh at the idea that REA are "marketers".