Real estate insiders reveal the industry's deceptive tactics | Four Corners

foreign [Music] thing that I'm good at and that's called selling properties and listing properties and if you don't close the deal someone else will you guys give me some more confidence serious face and we can please Australia has one of the most hyped residential real estate markets in the world worth nine trillion dollars there's so much money there's so much money to be made for those of us fortunate enough to buy or sell a home agents are The Gatekeepers to the market this is an area where consumer protection is absolutely essential it's people's life savings that are going into this oh now the Insiders who know the system best are speaking out some are risking their careers to lift the veil on the tricks of the trade how would you characterize the real estate industry disingenuous extremely insincere it lies on top of Lies real estate agents are frustrated at the conduct of a select few who give the industry a poor name and a bad reputation we're about to show you the secrets of Australia's real estate industry we'll examine the tactics used on buyers and sellers to get them across the line real estate in Australia is Rife with potential conflicts of interest and hidden commissions and there's little confidence that Regulators are doing enough to reign in Rogue agents [Music] thank you [Music] the Gold Coast is a very untapped Market especially in the luxury space we're going to innovate we're going to bring in our Z touch and a z Sparkle to get the whole Gold Coast market shuring and shaking [Music] Melbourne real estate agent zedna sheet isn't a rule breaker but he is a risk taker he's expanding his high volume Melbourne agency to what he believes will be a lucrative Market here in Queensland maybe everyone just look at me and then when I say laugh smiles talk to each other three two one friendly people we spot all the time I'm all about personal branding and I'm all about expansion after expansion and the only way we can expand this to be in front of more people and create as much content as we can so people can get captivated by what we're doing because in real estate image is everything you have to make your passion your paycheck I live and breed real estate real estate's in My DNA sold by Zed real estate all right we're good you got enough fun [Music] in today's Marketplace every single phone call matters every single meeting matters and every single appraisal matters and if you don't close the deal someone else will [Music] how's that for an angle better Zed offers a window into the promotion-driven world of the luxury high-end agent confidence all of us looking the same all right guys serious first all right [Music] oh I love those shots you're a legend hey Zed how you going welcome to Z real estate Gold Coast mate good to see you mate yeah this is the team we've got is Edna sheets the kind of agent you expect to see on a reality TV show and I'm a loud person real loud it is loud Zed's always honing what he calls his killer sales pitch the wood shop salesman should be able to read every single personality out there like your body language right now is telling me that you're very straightforward you're very honest you're an honest person but you're also a little bit indecisive person so you need to push for it sometimes when it comes to real estate you're like oh I don't know if I should buy now she'll buy later right okay this is what we need to do I'm not actually in the market for property but there is a potential buyer on the phone obviously with the interest rate rise has just gone up we've uh you know when everything gets slowed down I'm happy to take an offer of 2.4 million in writing if you like you can't do that that's okay would you go 2.3 million Zed is pushing hard for an offer well why don't we do this let's put 2.2 million in writing with 30-day settlement could you do that and nudges the buyer closer to the line pleasure talking to you thank you so much bye-bye everybody's an opportunity in real estate isn't it regardless of who they are what they are and I never knock back offers reason being is because we're only state agents and we just can't knock back offers so the minute you put money in front of people we can't be decision makers it's all about the numbers game isn't it everything's for sale for the right price you like that I love that [Music] Zed's Unapologetic about his Relentless focus on sales that's how he makes money this is a nice view wow this has to be the money shot right here the back of the house is a lot more modern than the front of the house would you guys agree absolutely but he fires up when it comes to one industry practice that many consumers complain about under quoting that's when agents lowball price guides to lure in more buyers there are so many agencies out there that under quote and I'm totally against it I am 100 against under quoting the amount of buyers that show up to auctions in today's environment whereas agents have underquoted they're at Market a house between 2.4 2.6 where they've reserve price at three million dollars the buyers get pissed off this is why real estate agents they have a bad name because of those under quotas because of those agencies and it comes from the top the top the top of those leaders out there the old way of selling real estate is gone they need to change their ways how would you characterize the Public's perception of real estate agents well sadly we know that consumer perceptions about real estate professionals are not particularly good we know this from annual surveys that are conducted and it's certainly something that I think as a peak body for Real Estate professionals disappoints us and equally I would say it disappoints those who are in the profession my name is Mark Jones I'm an independent real estate agent in the Eastern suburbs of Sydney I worked in finance in London during the GFC and saw how badly the industry needed to change that's what I think needs to happen in Australian real estate it needs cleaning up [Music] Mark Jones knows he runs a risk in speaking out about his own industry yeah it could be shunned by the industry for sure yeah it could mean the end of my business might have to get back to finance [Music] hey Mark how are you hey what are you doing yeah good beautiful morning what do you think is the biggest problem in real estate in Australia it's everywhere and it's obvious it's really blatant anyone who's in the industry or anyone who's trying to buy a property can see it in on most listings how do you know it's everywhere well I'm in the market I'm watching what goes on I'm talking to Tobias agents talking to buyers you know I know what price properties should or or will sell for certainly within with 10 within 10 maybe 15 at worse so I'm often seeing properties come on and just thinking what a joke there's no way that that's going to sell anywhere near that guide he's been closely following price guide set by agents in his local area and comparing them with sales prices he's found a significant difference so from the first guy to sold price I just kept track of properties that were comparable to the properties I was selling or appraising at the time and so this is just a handful and they were under quoted by 31 28 percent 28 percent 38 percent and the winner from the year before 43 so with undercoding we have recognized that this is quite a significant issue which is causing quite significant consumer harm so in 2021 we set up a specialist under quoting a team of inspectors who went out and really did a blitz across the state to look at how this practice was playing out what that under quoting team saw was around quite prevalent quite quite prevalent under quoting the data we've got from Fair trading shows that the largest fine they've ever awarded for under quoting is two thousand two hundred dollars a joke isn't it is that any kind of deterrent no no the The Usual Suspects are earning you know millions of dollars a year it's um that's an absolute joke I mean surely some agents are just baking this into the cost of doing business so that is an issue um and that is something that we are working with them on if they are baking it into the cost of doing business they need to look more broadly about what is it doing to their reputation both as an agent but also as the sector what are consumers thinking and what sort of level of consumer confidence is if people are just doing the wrong thing and baking it into business if people are forming that view if there are people telling you that and then I have to I'd have to accept that that's their opinion um as to as to that particular issue again you know it's a big state and uh but look I you know let me say this I I'm I'm aware it does take place um but having said that I don't think it is anywhere near uh as as big a problem as what the community would believe it to be [Music] thank you [Music] we're in South Australia's Clare Valley to meet homebuyer John O'Brien [Music] hey John hey cool is it yeah great to meet you [Music] so we're pretty much just surrounded by Vineyards everywhere here aren't we yeah it's an idyllic place but you know there's always a bit of trouble in Paradise John O'Brien's Story shows how consumers can be misled by an agent this is the some marketing from around the time when we purchased the property Stone Cottage modern extension eight acres in bold wide French doors that open out onto a balcony then we come back down here towards the bottom the grounds are superbly simplistic spacious lawn box Hedges and eight Acres set amongst huge guns and Vineyard and it just isn't true it's not true we're missing three acres the agent Who Sold John the property was also the owner he also um sent us an email about the size of it justifying the price on the basis of the size of the land as well so that was it we were misrepresented the size of the land John says he conducted the usual checks for the purchase two years after he bought the property John started planning Renovations and realized it was 5.2 acres in size not eight he's devoted years of his life trying to untangle the mess we decided to pursue through the regulator a complaint and we lodged that and they came out and investigated and ultimately they did find that the agent had misrepresented the size of the property under scrutiny from the regulator the agent undertook not to make false or misleading representations he agreed to what's known as an enforceable undertaking which says that because he owned the land and was selling it he should have known that the land was not eight Acres territory keeps an online register so that consumers can check a real estate agent's license South Australian Law requires disciplinary findings to be recorded on the register we looked up the license of John's agent and there was nothing there so this is a copy of the agent's license and it doesn't actually reference anything about the findings against him in relation to your property there's nothing on here at all unbelievable just unbelievable so he misled you and there's not even a reference to that on his license yes doesn't surprise me though [Music] services south Australia said that undertakings are available on its website but not on an individual's license this practice is now being reviewed the regulator said it took appropriate action in relation to John's complaint and that the agent's license was canceled this year for an administrative reason they should be held to a higher standard they are a property professional that's their career if you read their their blogs and their Real Estate website and all that they boast about how skilled they are and how much they know and all that and yet they know all the tricks people just feel so completely Bamboozled by what they're seeing in the property industry that they really just want someone who's in their corner and backing in their interests and that's where buyer's agents come in and people really just want someone who's willing to give them Frank and fearless advice two hours north of Sydney Newcastle is a thriving property market and competition is fierce among buyers [Music] I'm Chad Dunn a buyer's agent from Newcastle New South Wales I've been in the real estate industry for over 22 years I'll ask you this question does your buyer's agent have your best interest at mine it's it's really important so there's no conflict of interest [Music] this one hasn't even hit the market yet so it hasn't been listed with an agent and it hasn't gone on to the open market so these clients that I'm sending this through to they're getting a showing before the General market does yeah the buyer's agent helps I guess assist you through the whole process Hold Your Hand a bit make sure that what you're buying isn't a dud buyer's agents rely on their relationships with selling agents we spend a lot of time making sure that we're talking and communicating with lots of different agents in different areas to be for one of the first to find out about the new listings coming up but it is crucial that we don't be seen as having too much of a bias to one particular office or one chain because at the end of the day we're being paid by the buyer to have a bias to them to find them the right property not necessarily with who we're um you know got a better relationship with his agents ready and it will look alright so I'm standing at the front of a property we purchased for a client we're just about to do the pre-settlement inspection [Music] one of Chad's competitors in the Newcastle Market is Jack Henderson [Music] Henderson advocacy so they're one of probably 20 different competitors we've got in in my area in the hunter I think they also operate on the Central Coast in Sydney I was a young guy in the construction industry got expelled from school and I leveraged all that to build my story to so to get onto people's podcasts and to you know get articles and all that and then I just I just went hard because in in I believe in life it's not about what you know up to you know there's plenty happening out there will I can feel it when everyone's Contracting mate we're expanding on my biceps all right the 26 year old is a prolific content creator churning out colorful videos on YouTube Instagram and Tick Tock how many square meters is it it's nice man it's private too [Music] big wait this week for the Henderson team mate three Deals last week Capital Latin in this way Greg Sheridan and his partner bought their Newcastle home through Henderson advocacy we wanted to uh leave Sydney we wanted to head a little bit north and we found ourselves in Newcastle we found that that real estate agents were suggesting that we call Henderson so um when you've got the the vendors agents suggesting Henderson's uh we perhaps naively um you know went I went straight to them right from the start Greg and his partner Glenn saw a red flag in the contract that Henderson's provided it says that we're not allowed to say or do anything that might bring the the buyer's agent into into disrepute or to in any way discourage people from uh from giving them business so this is basically a gag Clause absolutely your buyer's age you decide yes wow so you couldn't really say anything negative about Amazon at all no so we couldn't leave uh anything less than a glowing five-star Google review wow or contact the regulator if we'd had any problems with uh with this transaction I responded to Jack straight away saying no we're disengaging we're not going to proceed and when he asked why I said that that uh don't get close he was very quick to uh to drop the gay course he wanted the business very keen for the business and was prepared to drop the cake course I don't think these Clauses should appear in buyers agents agreements but a non-disparagement clause is likely to be unenforceable anyway um the a Triple C has taken action against businesses with non-disparagement Clauses and deem them to breach unfair contract terms laws it's an advocacy helped Greg buy his home through one of newcastle's biggest selling agencies PRD presence which also trades as PRD Newcastle [Music] this Castle is co-founded and directed by Mark kentwell it's no wonder that people from all around Australia and locals alike are trying to get their piece of coastal real estate action that's close to the city in Newcastle Mark kentwell and Jack Henderson appear in real estate videos together so let's go check it out [Music] that's what he's like he's so good the flamingo but the selling agent and the buyer's agent also have a business relationship of this and advocacy and and sitting with uh the other co-founder Marquette well yeah Mark herewell MK Kenny K and uh I organized the scaling and uh the vision side of the business look I think um we were surprised I know talking to different sales agents they were surprised as well because I think on face value they weren't informed that there was um what what could be perceived as a conflict of interest and I think as long as clients and are informed that there is that conflict of interest to a degree I think then problem solved Mark kentwell is a co-founder of Henderson advocacy he isn't a director or shareholder and told Four Corners he receives no dividend or profit distributions from the company the two men have publicly spoken about how they work together at Henderson advocacy and uh and even though I still do real estate sales and advisory myself I don't buy properties for Henderson advocacy I'm purely involved in scaling the business side so what would you say if I told you that one of PRD newcastle's directors is also one of the founders of Henderson advocacy uh that would come as a shock that just seems totally inappropriate did you know that were you ever told no no definitely not so the whole point of engaging a buyer's agent is to be our representative to be able to talk all of the real estate Guff and know and work through uh all of the strategies that the vendors agent would be using against us so we definitely want somebody who's independent of the vendors agent to be working for us we're paying them a very uh very large amount of money we certainly want them to be on our side yeah Jack Henderson declined an interview request with four corners and did not respond to written questions he told us he wasn't interested in being a part of the story and referred us to his positive customer reviews foreign Newcastle and Henderson advocacy Behind These tinted windows is a call center and in this call center a handful of agents are making hundreds of phone calls a day drumming up new business with a very sophisticated strategy the so-called growth Center is supervised by Mark kentwell it's a separate corporate entity to PRD Newcastle what might sound like a spontaneous call from an agent is sometimes a calculated scripted pitch I was actually just checking in you inquired about a property with us a while ago I was just wondering did you manage to secure something or are you still looking we've obtained a copy of a training manual to help new staff pitch for sales to people on PRD newcastle's database a detailed script directs trainees to gather intelligence and then choose the appropriate sales spill I just had a thought one suggestion I can make based on this chat have you ever heard of a buyer's agent before we use the guys at Henderson advocacy and they have a really good relationship with a lot of Agents they've helped a lot of buyers so far throughout the conversation the script coaches staff to recommend Henderson advocacy we work closely with Henderson advocacy well what I can do is pass on your information to one of the team at Henderson and get them to touch base and I'll tell them to really look after you one section we showed the growth Center script to Henderson's competitor Chad Dunn yeah I mean look speech us that's really surprising it's very staged and obviously routine and I think that's the bit that is a little bit disturbing so it's the way this is done is probably not sitting that well with me there's nothing wrong with referrals in our industry I do get recommendations from other agents but this is very staged and I think that's where it's really blurring the lines I just hope there are clients that sign up with Hendersons are aware that this is where they're coming from there's no mention that PRD newcastle's director is a co-founder of Henderson advocacy if there's no disclosure how is a purchaser supposed to know about the relationship how how are those players those businesses going to act in the best interest of the purchaser in in those circumstances Mark kentwell declined an interview request with four corners he said in a statement his business interests and relationships are disclosed to stakeholders in writing and verbally where required and that he continues to work with lawyers to ensure compliance with consumer laws [Music] PRD presence which trades his PRD Newcastle also said it complies with its disclosure obligations [Music] foreign I've been a real estate agent since 1984. along the way I've seen laws being bent breached and broken this is not serving the community well consumers are suffering and good real estate agents are being dragged down [Music] Steve vonderbock runs a Suburban real estate agency in Adelaide's Northwest right here on the beach here and of course it's a fabulous location by speaking out Steve risks making enemies in the industry he wants to tell us the Trix agents use on sellers like conditioning my name's Steve bonzenbos thanks for watching so just walk us through that what's conditioning there's a lot of competition amongst agents to win the listing a lot of people think that real estate is about selling property it's actually about winning the listing and the Temptation is that agents who will tell an owner what they want to hear are more likely to get the listing and then it's the source of poor advice once the agent has won the listing with an inflated selling price the conditioning strategy is to talk the seller down to where the market actually is that agent has a competitive Advantage when they go to list their property their modus operandi is a praise high without accountability and quote low to make though you sound pretty angry about it I am angry about it because good agents are lost to this industry by this sort of practice because they get done it all the time and there's no real empowerment of the authorities to to um to go out and find this stuff off out and deal with it because it's nuanced and it's whispered there is this practice that we've been told of of conditioning where agents condition sellers to get a listing to start practice concern you if agents aren't being honest about their expectations for a price they can get a real estate professional shouldn't be inflating the price in order to secure the listing and then subsequently uh trying to condition the vendor to accept a lower price so what I would say is that a good real estate agent should be able to substantiate uh the amount that they think the property will achieve and that's usually done through pointing to comparable sales data we accept that in in some in some areas of um of agency practice that there are people who do the wrong thing um like every other trade calling and profession there are people unfortunately that bring the industry into disrepute we have ours we have to deal with ours we do but we are constantly trying to improve the standard of of the services that we provide to our clients Steve vonderbach wants to reveal something else about his industry the hidden kickbacks an agent who sends a client to another agent could get a commission well a good example would be referring business so you're standing in an open inspection you meet someone who's got a property in a remote location you can't work to who needs to sell they mention this to you you get their details you call another agent in their location let them know that that's about to happen they give the client a call go and see their property and in return that settlement the referring agent picks up 20 of the fee so that could amount to a couple thousand dollars for a 500 000 home do you think consumers actually know that this is happening I'm sure referrals are a bigger part of the market than than I had realized when I when I first started the business um yeah there's uh it's very standard for a 20 referral fee to be paid for um from anyone who might bring it bring the business to you to bring you a lead or or bring you a listing so there's a whole kind of hidden economy of of commissions beneath beneath the industry yeah absolutely yeah until all considered very normal which I don't have a problem with as long as it's disclosed right with more than half a million Residential Properties sold around the nation each year Regulators can't Police Every transaction we're here for the general compliance briefing for operation 3 2023 Southwestern Sydney but New South Wales Fair trading inspectors are doing their best to keep real estate agents honest we're joining them in the middle of a week-long blitz we're still seeing quite prominent issues with undercoding not being able to substantiate changes to the estimated selling price we will be looking at taking a consistent approach with under quoting fairly fairly educative in in respect of the requirements but strong compliance action to indicate our zero tolerance for that particular matter [Music] operations like this are part of the New South Wales Regulators efforts to oversee an industry with a reputation for flouting the rules as the regulator we can never be in every agency every day of the week so ultimately what we need agents to do is to actually step up and do the right thing and comply with the laws that they are required to comply with so we can only do so much as a regulator and ultimately it needs to be the agents who step up and make sure that there is consumer confidence in their industry after the Blitz the compliance team updates the commissioner and it's not good news we visited 41 agencies during the week and 37 were non-compliant 37 of the 41 were non-compliance about 90 non-compliance rate it's pretty disappointing so we had 88 separate breaches that were identified the most common breaches were agents not having policies and procedures in accordance with the supervision guidelines and not ensuring that estimated selling price on sales agreements were considered to be reasonable and remain reasonable so the under quoting offense that's correct 25 000 worth of penalty notices were issued we've done education and warnings and the team will be out in the next couple of months again to see that that compliance Has Lifted in those areas the New South Wales Fair trading commissioner would welcome greater powers to be tougher on agents a lot of it's enshrined in law in terms of what the maximum value of the fine can be um so that's it's really is a matter for the politicians to change the law in that respect um personally I think I'd be very happy to have to have higher fines and higher enforcements do we take the approach that we want to find the industry we're simply going to be looking to catch people doing the wrong thing or do we take it or do we take a better response and say that we want to work with the industry to bring the level of compliance up to where there is um to where the standard of what the regulator wants now I I frankly don't think there is a lot of benefit in having having these these programs where we go into the market and finer find a heap of of agents and then publish the results in the newspaper the following day we've learned the Real Estate Institute gave agents a heads up about the operation in Southwest Sydney this information actually came from Fair trading and it's not the first time the regulator has alerted the industry body about a number of raids in the past we take two approaches one is announced visits and one is unannounced visits so with the announced visits we would work with the industry associations and we would tell them this is what we're looking at it might be under quoting it might be rent bidding we would tell them because ultimately we want real estate agents to get their business in order to do the right thing I mean aren't you giving a tip off to the industry about compliance issues in advance if you're for warning them about a visit as I said we do both announced visits and unannounced visits so with our announced ones we are informing them we are saying it is our regulatory Focus this month to look at under quoting and we put you on notice that you need to be doing the right thing because we are sending inspectors out to monitor you and we will come after you if you're not when did this practice of getting updates from Fair trading on compliance operations in advance when did that begin uh be 12 months ago maybe yeah why did that start 12 months ago um well that's probably a better question for fair trading um it um I I don't know we we have uh did did you request we could have we could have uh we could have said that we would like to be working with Fair trading in these uh in these issues where I see with with penalties sorry just did you ask the regular I I possibly did yes I mean we're asking constantly if we can have a have a more productive and uh um relationship so that we can improve our sector I mean some might say that indicates that that's a far too friendly relationship getting tip-offs like that what would you say to that uh well I see the argument but but at the end of the day what we've said to people when we know that fed rating is going to be in the area we said to them these are the things that they will be looking for so um have your office in a position to provide the maximum assistance they can with Fair trading because at the end of the day people who from Fair trading that go in there they've got their job to do we can cooperate with uh with each other we can provide the documents that they are looking for oh [Music] Christine Shaw real estate agent from Canberra our industry is all about trust I believe the legislation should be improved so that consumers have greater protection [Music] I want to thank our owners in handing over the property they've had constructed for themselves to live in Christine Shaw is breaking ranks with her own industry if you'd like to kick us along it's not where we start but where we finish oh Jesus give me a long day agents like Christine are seeing a real slowdown at auctions as interest rate Rises take hold okay so we have a slight increase here folks to 2.2 million dollars just give us a moment we're going to see some final instructions from our sellers the final bid today isn't enough to reach the reserve pass the property into your thanks for your bids today we might be able to help you immediately after the auction thanks folks for coming along something I have a very good group of Agents around me there will be some and many of us who follow the spirit and the intent of the law and the legislation and our framework of how we operate there are others however if there's a loophole in the legislation they'll find it and they could drive a truck through it Christine Shaw wants to see better regulation and once the industry itself to help pay for compliance that's peps not going to be liked by many I understand but perhaps that is an Avenue and that can help improve consumer confidence that the industry themselves are contributing to those compliance and investigative units that are in their various jurisdictions it's hard enough as it is for many Australians to break into the property Market surely there's a better way to help consumers with what may be the most important financial decision of a lifetime so you've got in every state and territory different rules around licensing you've got different rules around penalties different rules around what needs to be disclosed wouldn't it make more sense for all of this to just be regulated nationally given how important property is to Australians yeah that's right look I think uh I think that's the utopian Vision potentially even though that sounds like a simple solution uh the reality of achieving that is is I think quite complicated so I'll hand it over to Zed [Applause] [Music] okay all right back with zed Nasheed at his Melbourne headquarters it's the weekly sales meeting in today's Marketplace you need relationships you need connections today is a celebration of his team's fortunes so far this month they've hit 42 million dollars worth of listings congratulations to every single one of you guys because if you notice in here every one of you guys have performed [Applause] thank you [Music] so another agent told us that when we asked him how would you characterize the real estate industry in Australia he said disingenuous extremely sincere from the very first appraisal meeting its lies on top of Lies what do you think about that everyone has um their own opinions and I respect that if that's their experience and the journey that they've had I feel bad at the end of the day nobody's perfect in life correct and that's why you've got to do do your due diligence your homework there shouldn't be any lies why would you have the need to lie good [Music] in this real estate industry if you want to survive you've got to go out there become a hunter and be willing to be able to take punches on daily basis [Music] it's the world's easiest industry to get into it's also the world's hardest industry to survive into and in real estate if you don't sell you don't get paid [Music] foreign [Music] [Applause] [Music]

Channel: ABC News In-depth

Views: 189,111

Keywords: abc news, australian news, abc news indepth, documentaries, long-form journalism, underquoting, conditioning

Id: K62MxrUHDj4

Length: 44min 9sec (2649 seconds)

Published: Mon Mar 27 2023