Bait Pricing is a No-Go.
Article originally published DECEMBER 8, 2003 –Reviewed and approved.
By Neil Jenman
The Australian Competition and Consumer Commission (ACCC) is taking legal action against a member of the Real Estate Institute of Victoria (REIV) over misleading and deceptive conduct.
The REIV member, Gary Peer and Associates, advertised a home at a price of “$600,000 plus”. It was later passed in at auction for $781,000. The reserve price was reported to be $850,000.
The CEO of the REIV, Enzo Raimondo, who once told radio listeners that he did not know what was meant by dummy bidding, was on radio again yesterday. Asked if he thought the ACCC’s action would influence the real estate industry, Raimondo replied. “I don’t think so. I think, I am actually surprised that the ACCC, er, er, is investigating into this at this stage.”
Referring to the coverage of the matter in the weekend press, Raimondo described it as “a beat up”.
False price quoting is rampant in real estate. According to research conducted last year by property writer and analyst Terry Ryder, more than 90 per cent of the prices quoted by agents for properties being auctioned are inaccurate. “Bait pricing is the norm, not the exception,” said Ryder who was responding to a claim by Raimondo that another reported case of bait pricing was “highly unusual”.
Bait pricing is one of the first tricks taught to new agents. It is so blatant that one real estate educator, David Pilling, has given it a name – “Buyer Ranged”. Astonishingly, he even claims to have a trademark on the name. Pilling, who is based in South Australia, has educated real estate institute members across Australia and New Zealand for a decade. In his courses, he openly shows agents how to advertise properties at prices below what owners will accept. For example, if the lowest price an owner will accept is $200,000, the agent advertises the price as “Buyer inquiry range $170,000 – $210,000”. According to Pilling, this is not deceptive. On Friday, the Real Estate Institute of South Australia responded to the ACCC’s action by saying, “Education is the key to ethical behaviour in the real estate industry.”
From Queensland to Tasmania and across to Perth, bait pricing in its various guises has chewed its way like a plague of white ants into the pillars of mainstream real estate. Whether it is auction or private sale, whether it is false low prices to attract buyers or false high prices to sign-up sellers, bait pricing has become a massive infestation which costs property consumers millions of dollars in needless expenses. Not to mention the heartbreak of being the victims of a common deceit. Or the frustration of reporting the scam to real estate institutes and being told it is “isolated” or a “beat up”.
The purpose of real estate institutes is to protect agents, not consumers. In 2001, in Victoria, an agent who was the branch president of the REIV described bait pricing as “scandalous”. He urged consumers to report incidents to the REIV. And yet, this agent, Lou Rendina, was one of the biggest culprits in the use of bait pricing.
In the Age on Saturday, the REIV was reported as saying that it would “conduct its own investigation” into this case. Using his usual slippery spin, Enzo Raimondo said, “Any agent caught underquoting should be made accountable.” In real estate, the people doing the investigating are the people who are now being investigated. It’s about time.
In a prepared statement released on Friday, Gary Peer said his company “vigorously denied the allegations”. He accused the ACCC of being “grossly unfair and prejudicial” to his company.
Unlike the real estate institutes, the purpose of the ACCC is to ensure fairness to consumers. Its chairman, Graeme Samuel, says that the commission is determined to eradicate dodgy real estate practices. If he’s serious, then Raimondo and his cronies across the country will have a formidable opponent.
Gary Peer may feel like the scapegoat for a deception used by thousands of his peers. But there is an ominous clue in a short phrase used by the Age. It said that Gary Peer is “the first to face legal action from the ACCC”.
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