How unethical conduct is now compulsory.
by Neil Jenman
Reading time: Apx 4 mins
Cindy is a nice young lady. We always liked her, especially when she started in real estate. She was so enthusiastic, so keen to do the right thing. An honest and decent young lady, the sort of person the real estate industry needs.
But, sadly, also the sort of person that real estate ruins.
Cindy spent her first few years working in a unique real estate office. The owners insisted on ethics as a priority.
Cindy thrived. She loved coming to work. Her clients loved her too. She would get hugs and flowers. She was often told: “You are not like most agents, Cindy. We are so glad we found you.”
Last year, the owners of her real estate office retired. Cindy wasn’t keen on the new owners, so she looked for another agency. Soon, she started working for one of her city’s most prominent agents.
It wasn’t long, however, before Cindy was given a horrible choice: Follow “company policy” or don’t work here. She resigned.
A few days later she started work in another high-profile agency. They had the same policy.
Cindy was in tears. She loved real estate. Surely, she thought, she could treat clients ethically the way she had done at her first real estate office.
But no. No matter where she looked, all offices said the same: “Do it our way or don’t work here.”
Cindy’s choice was simple: Act unethically or leave real estate.
This is the choice faced by thousands of sales agents. It is one of the main reasons for the high turnover in the industry. Honest people won’t tolerate being forced to act dishonestly.
Sadly, not Cindy. Like many agents, she rationalises unethical conduct. She has been given ways to justify the terrible methods.
From Cindy’s view, she has heavy commitments. Where else can she earn such a high income?
And so, Cindy has chosen to go along with the status quo in real estate.
But what happens when she meets sellers who are educated, who understand common real estate rorts? Surely, she is allowed to do what clients insist.
The rule is simple: Do it dishonestly or don’t do it. That’s right, if the clients are too smart, don’t accept them as clients. Seriously.
What has just been described is common in most real estate agencies.
The most common of all the unethical real estate acts is the advertising scam. No matter what sort of home is involved, no matter whether it’s necessary, all sellers must pay advertising expenses.
Yes, even if the agents already have a buyer on their books, sellers must still stump up several thousand dollars.
Oh sure, with the introduction of “pay later” schemes, sellers can now opt to pay advertising costs in the future (regardless of whether their homes are sold). If the sellers are not happy with the agent, too bad (for the sellers). They must pay up. If the sellers object – even with a valid reason, too bad again. Troublemakers (known as “difficult” sellers) find themselves with a caveat on their home – a sort of legal wheel-clamp – meaning the home can’t be sold without paying the advertising bill. This trick is ideal for trapping elderly and trusting clients.
It’s horrible, it’s unethical but it happens in most offices. Incredibly, Australia is the only country in the world where this scam exists. In other countries, sellers pay nothing until their homes are sold.
As it should be in Australia. As it can be if sellers are strong enough, if they demand to be treated ethically.
And please, if you are a home seller, don’t fall for nonsense such as “It’s your home, you should pay advertising costs.” The reason for advertising is not to promote your home, it’s to find more leads for the agent. If you pay for advertising you should receive commission created by your advertising.
If you dare make such a suggestion, you’ll be classed a “difficult seller”. You’ll be told to take your business somewhere else. Which is exactly what you should do.
With the average commission to sell a home now exceeding $25,000, if that’s not enough, the agent with whom you are speaking is likely a greedy good-for-nothing rorter.
Okay, maybe, if the agent gets you a great price and works hard you might consider paying a bit extra.
But make them do the work and show you the price first. Don’t commit yourself to paying a huge sum of money regardless of the result.
In medical circles, it’s highly unethical to prescribe medication without diagnosing a patient. What goes on in real estate – what Cindy and most sales agents are forced to do today – is the same as a doctor prescribing the same expensive medicine for every patient, regardless of the patient’s condition.
Imagine if doctors got a huge financial benefit from forced prescriptions. There would be a national outcry.
There are moves afoot for a Royal Commission into real estate. If it happens, one of the first scams to be outlawed will be upfront advertising rorts.
There was a time in real estate, when an agent first listed a home, that the first thing they would do would be to contact existing buyers to see which ones were interested.
Today, the first thing most agents do is demand money for advertising. And the worst part, of course, is that this money is taken regardless of whether it’s needed.
I am sorry to say this because I always liked you: Cindy, shame on you.
Until there is a Royal Commission into the real estate industry, home sellers may feel totally alone when it comes to resisting unethical and unrealistic demands of agents.
Please don’t feel alone.
You still have me, Neil Jenman – and my son Alec Jenman – and all my colleagues. No matter how much they offer us, no matter how much they threaten us, no matter how much they abuse us, you have my promise. We will always put your interests ahead of the interests of any agents we suggest.
When selling, please contact us on 1800 1800 18 or firstname.lastname@example.org.
FOOTNOTE: Of all the publications we have issued over the years, one of our most popular is a booklet called ‘The 18 Worst Mistakes Made by Home Sellers – and the Solutions’. You can obtain a copy – either download or in booklet form – by clicking here.