{"id":5934,"date":"2015-10-05T01:00:56","date_gmt":"2015-10-04T14:00:56","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=5934"},"modified":"2015-10-05T01:00:56","modified_gmt":"2015-10-04T14:00:56","slug":"agency-agreement","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/agency-agreement\/","title":{"rendered":"Agency Agreement – John Cunningham"},"content":{"rendered":"

 
\nA high-profile industry figure has called for an end to undocumented selling activity, which many agents believe is rife in their local market. John Cunningham<\/strong>, from\u00a0Cunninghams Real Estate, says not having an agency agreement not only jeopardises potential commission for the agent, but puts vendors and agencies at risk since they\u2019re unwittingly part of the issue. He is our guest today.
\n <\/p>\n

Transcript:<\/h4>\n

Kevin:\u00a0<\/b> I want to bring you a story now that\u2019s prompted by some comments made by a very high-profile industry figure, John Cunningham, who is actually the managing director of Cunninghams Real Estate and also the Real Estate Institute of New South Wales deputy president.
\nJohn, welcome to the show, and thanks for your time.
\nJohn:\u00a0<\/b> Thanks, Kevin.
\nKevin:\u00a0<\/b> The comment that I\u2019m referring was breaching of the act, which is fairly common I understand in a tight market, and that\u2019s really an undocumented selling activity. What\u2019s your concern around this, and what\u2019s actually happening, John?
\nJohn:\u00a0<\/b> What\u2019s happening in a tight market, Kevin, is that agents tend to try to find ways around the legislation to get buyers into properties that aren\u2019t on the market yet. In doing so, they\u2019re creating an environment, I suppose, where you really have to know whether the best outcome is achieved, but at the same time they\u2019re breaching laws that then can lead to fines and can lead to poor consumer outcomes, as well. I think it\u2019s just a tip of the iceberg in many respects.
\nKevin:\u00a0<\/b> Can agents actually get away with selling a property and achieving a commission when they don\u2019t have a clear agency to sell?
\nJohn:\u00a0<\/b> In different states, that does vary. In New South Wales, for example, they must have an agency agreement to be entitled to commission and they must also have a contract to sale of land in place. It\u2019s illegal to actually offer a property for sale without that. That does vary from state to state and from type of property, such as rural properties and so on. However, what it does do is it does leave the door open for it to be abused further, and I think the more people who get away with it, the more it\u2019s going to happen.
\nKevin:\u00a0<\/b> I believe, too, from a contact that we\u2019ve had that Consumer Affairs in Victoria say that agents can legally show a property with the owner\u2019s consent. That\u2019s showing a property, but what about when you get to the point of contract? At that point, does there need to be a document between the seller and the agent in any state?
\nJohn:\u00a0<\/b> Yes, most definitely, in every state that requires a document to entitle the agent to commission. If they don\u2019t have that, they\u2019re not entitled to commission. They can\u2019t charge commission and nor would a court uphold any claim for commission. The variation in the states is, in Victoria, you don\u2019t need a contract for sale of land to offer property for sale, so any seller can show the property, but the agent is risking a fee if they don\u2019t have the right documentation.
\nKevin:\u00a0<\/b> Yes, we have seen in the past in really strong markets like we have now, where agents attempted to take on client listings, these are listings that aren\u2019t necessarily going to be publicized so that they can get their buyers through it. This is the sort of activity you\u2019re talking about, John?
\nJohn:\u00a0<\/b> Very much so, yes. In New South Wales it\u2019s just problematic because of that legislation, so what people are doing is they\u2019re bypassing the legislation. They might have an agency sign, for example, but they don\u2019t have the right documentation in place to legally show that property. In that instance, the breach of the act is creating an un-level playing field in the marketplace. Buyers aren\u2019t going to object and sellers aren\u2019t going to object, so long as they get the outcome that they desire, but from an industry point of view, it\u2019s a problem and it\u2019s quite common.
\nKevin:\u00a0<\/b> For buyers and sellers, it\u2019s actually quite a desirable situation. For a seller, they\u2019ll say, \u201cWe don\u2019t have to do any marketing,\u201d and for a buyer, \u201cWe\u2019re going to get ahead of the market and maybe secure something before it hits the market.\u201d
\nJohn:\u00a0<\/b> Absolutely.
\nKevin:\u00a0<\/b> What are the dangers here for buyers and sellers by engaging in this type of activity with an agent?
\nJohn:\u00a0<\/b> Primarily from a buyer\u2019s point of view, you\u2019re not necessarily dealing with a genuine seller. It\u2019s one of those speculative \u201cIf I get the price, I\u2019ll sell it.\u201d They could be looking at properties and getting quite excited about properties that are completely unrealistically priced and a very low-motivated seller.
\nIn that respect, it can be quite misleading, and in many cases, these things never come off because the seller\u2019s expectations are way too high and they haven\u2019t got the motivation to actually put the legal documentation in place, which does cost them money to do through lawyers or conveyancers. That in itself from the buyer\u2019s point of view can be very misleading and deceptive.
\nKevin:\u00a0<\/b> And, John, from a seller\u2019s point of view?
\nJohn:\u00a0<\/b> From a seller\u2019s point of view, I suppose they\u2019re actually engaging in an activity that does breach the act and the agent can be up for fines. There are potentially fines for sellers, as well, but there\u2019s never been enacted, primarily because it is a breach of the Property, Stock, and Business Agents Act. An agent can face some quite hefty fines in the event that they do go down that path.
\nFrom the seller\u2019s perspective, they probably have very little to lose in doing it. They\u2019re just dealing with an agent who\u2019s obviously bending the laws, and you\u2019re going to have to wonder what else they\u2019re going to bend along the way.
\nKevin:\u00a0<\/b> I do wonder, though, that any seller who would do that is probably not just going to do it with one agent. They may do it with several, and even though there\u2019s no documentation between them, that could then lead to a dispute over commission, which can become very messy.
\nJohn:\u00a0<\/b> Completely, Kevin. That\u2019s another byproduct of it, that you end up in a very messy situation \u2013 multiple buyers with different agents viewing the property. Then they might make a decision to appoint a single agent, but you have this raft of people behind who\u2019ve seen it who are all going to be potentially up for a double claim of commission.
\nIt\u2019s messy, and I think it\u2019s unprofessional. I think that\u2019s probably more the point. As an industry, we\u2019re trying to become more professional, and these sorts of activities just bring us down to the lowest common denominator, and the consumer suffers from that in the end.
\nWe have to uphold higher standards in our industry to be treated seriously. I think the majority of agents do, but those that don\u2019t, little things like this that they get away with, I think it\u2019s the tip of the iceberg. If we\u2019re going to be wanting to actually provide better consumer and customer experiences, we have to lift our game.
\nKevin:\u00a0<\/b> Always good talking to you, John Cunningham. Thank you so much for your time, John.
\nJohn:\u00a0<\/b> A pleasure, Kevin. Thank you.<\/p>\n","protected":false},"excerpt":{"rendered":"

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