You might have seen the ads on TV that promote a website that offers sellers the opportunity to get assistance to select the best agent to sell their property. Mixed with that is the inference that if you go with them you will get up to $100,000 over your reserve. The site is Open Agent. There a number of similar sites offering the same inducements. We talked to an agent about them. Mark Dwyer joins us.
Kevin: I want to read you a post that I read on Facebook regarding what I believe could be very misleading advertising. That’s actually the way it’s purported in this article, too. I’m going to introduce the writer to you in just a moment.
Mark Dwyer writes: “I’ve seen the same advertisement appear at least 20 or 30 times with the same subtext: Hear how Wendy sold for $100,000 above her reserve price with the agent recommended to her by, in this case, it was a company called Open Agent. You might have also seen the television ads that say exactly the same thing.
“Curiously, the image always changes from one property to another, so they can’t all possibly have belonged to Wendy. But it appears that they – that is, Open Agent – would like you to think so.
“The Wendy text clearly suggests that Open Agent recommended the agent. Yet, in the following text, it now reads ‘Compare local agent sales and reviews, and see who is best. Sell faster and at the best price free and independent service.’”
There are a number of those words in this post by Mark that have been treated with an asterisk. I’ll give you an example of a few of them: best, sell, faster, best price, free, independent and service. He makes the point that these are onerous, and in his opinion, a real estate agent making these suggestions would be held accountable for this type of advertising.
Mark Dwyer joins me. Good day, Mark.
Mark: Hi, Kevin. How are you?
Kevin: Good, mate. This is not something where we’re picking just on one website because there are a number of websites like Open Agent, aren’t there?
Mark: It’s almost like an awakening commercially for a number of ventures where they’ve realized that agents, for years, have paid each other in kind and reciprocated with referrals and paid each other 20% of the fee gained. They’ve taken advantage of this, really. I can’t think of any other way to say it.
They’re kind of taking advantage of agents by recognizing that there is an in for business and they’re doing it under the pretense of referring people or trying to portray to the public that they’re referring them, knowing them on the same sort of basis that agents know each other, for commercial gain.
Kevin: I think Troy makes a very good point. He responded to your post and said one of the things that they don’t say is that they’ll only then refer you to one or two agents who are prepared to pay them their referral fee. They’re aiming for 20%, which is industry standard.
It’s a case of not necessarily referring them the best agent for the job – that is, for the seller – but only the best agent for the middle man – that is in this case, Open Agent. While they purport to give you a list of all of the top agents in an area, they’ll only ever refer you to someone who commercially has said they’ll pay them a referral fee.
Mark: This is where the onerous part comes in because the inference that they created is that they’re referring people as a free service to a commercial service, and what they fail to disclose is that if the agents refuse to agree to their terms and conditions – in other words, sign up for them – then they’ll be precluded from being referred.
Ostensibly, what that then means is if I’m getting a referral from an agent and the best agent in that area has decided not to participate in this particular service offered, then they’re not referred. Again, I say how can they say that you’re getting the best agent in the area if that agent decides not to participate?
Kevin: The other thing that I really take exception to is the style of advertising saying that because Wendy, in this case, took the advice and took on one of their agents, they actually got $100,000 over their reserve, which, really, is one of the things that in a lot of states around Australia, agents are being castigated for because they’re being accused of low-balling.
Mark: Precisely. The thing that prompted this post on social media in the first place is that for all intents and purposes, these particular companies are operating outside of the very guidelines that estate agents would be required, whether it be by internal regulatory bodies like the institutes or, indeed, the regulators themselves in each state.
We would just hit all sorts of trouble if we were making these claims. Yet, for want of a better way of saying it, these organizations are not licensed real estate agents, but they’re behaving or operating as such and there is no regulation whatsoever as to what they do and say whereas the real estate agent would be absolutely, as you say, castigated.
Kevin: What reaction have you had from the various institutes around Australia about this issue?
Mark: Aside from social media, I did call upon them to make comment. Thus far, they haven’t. They should. In the protection or the interests of the members themselves, they should be saying something because certainly, if this was actually happening between two members inside the institute, I would suggest here that they would be intervening almost immediately.
For some bizarre reason, because these third-party referrers are operating not as real estate agents but just as standalone commercial ventures, they’re getting away with it.
I think it’s also important that we recognize exactly what they are. All they’re really doing is bringing inquiry in, they’re collating data, and they’re just grabbing that data and seeing who is making sales in the area.
Their first priority is making sure that that agent has signed on with them and agreed to pay the 20% referral. In the second instance, they’re looking for the best, but they’re not actually referring the agent; they’re referring several agents, three, four, five, or as many as it takes. For want of a better way of saying it, they’re hedging their bets.
Kevin: Yes, leaving it up to the individual to make the decision, but they’ll only ever recommend anyone who has agreed to pay them the 20% in this case.
There are so many issues. We’re out of time on this, unfortunately. Many, many issues. I want to canvas it. Have you had an experience with one of these organizations? Give us a call and let us know. We’d love to have your feedback on it, too. You can do it through our website if you like. Kevin@RealEstateTalk.com.au – that’s the e-mail address – or just go to RealEstateTalk.com.au and give us some feedback. We’d love to get your comments.
We are going to actually canvas a number of these questions directly with one or two of these. I’ve mentioned Open Agent. There is another one that’s called Sell My Castle. Are there any others that you’re aware of, Mark?
Mark: Rate My Agent is purporting to just, as its title suggests, rate agents, but they’re eventually going to move into the same space. There are any number of companies now that are eyeing off an opportunity to cut into 20% of agents’ fees.
Kevin: As a consumer, it certainly looks very attractive, but I think you really have to ask some questions about what sort of agent they are referring to you and how they are deciding that it’s the best agent to suit you.
Mark: This is what is not understood. It is actually costing the consumer because the money that is being paid to these third-party referrers must come from somewhere, and it’s originating from the consumer. You, as a consumer participating in this, are actually putting more pressure on the agent to charge you more money. That needs to be understood.
Kevin: Be aware. Question it, by all means. If you want to contact Mark or read a little bit more about this, just go to his Facebook page, Mark Dwyer Real Estate Sales Trainer.
Mark, thanks for your time.
Mark: Thank you very much, Kevin.