If the ACCC is serious, consumers will be big winners.
Article originally published OCTOBER 1, 2003 –Reviewed and approved.
By Neil Jenman
If the federal government wants to pick up several million dollars in fines, it should make sure the ACCC acts against real estate agents who mislead and deceive consumers. It’s about time taxpayers got back some of the hundreds of millions of dollars they have lost through real estate deceit. For decades consumers have been mercilessly fleeced. It’s pay back time.
On September 1, in New South Wales, new real estate laws came into effect. One of the most talked-about points was the new rules against dummy bidding. All bidders are now required to register before an auction. Upon registration, each bidder is then given a numbered paddle.
In the weeks prior to September, agents held a series of meetings to discuss the new laws. Some agents were trying to figure out ways around the laws. Perhaps the most novel and obvious solution to the “ban” on dummy bidding came from a North Ryde agent. Chatting to his pals he said, “These dummy bidding laws aren’t going to ruin my auctions. I’ll just get my dummy bidders to register.” After all, who’s going to know that the person holding the paddle is a dummy. “Public dummies,” laughed one agent.
Yep, business as usual.
Well, not quite. On September 2, the day after the new laws began, the Australian Competition and Consumer Commission (ACCC) issued a press release saying it would target the issue of dummy bidding. Ooops. Now, that could be serious. For decades, real estate regulation has been considered a state issue. Provided they don’t steal from their trust accounts, agents in all states know that when it comes to misleading and deceitful conduct, they basically have the green light from their local Fair-Trading departments.
The ACCC is another matter. If the full brunt of the Trade Practices Act hits the real estate industry, thousands of agents could cop multi-million-dollar fines.
Suddenly the industry is nervous. Is the ACCC serious? It’s like a police car in the rear-view mirror. Agents are taking their foot of the deceit peddle.
Yesterday, the Real Estate Institute of Victoria (REIV) – which, like all the institutes has been condoning and covering up deceit for years – sent an “important notice” to its member agents warning them about the ACCC.
The institute’s CEO, Enzo Raimondo – who once told ABC Radio that he didn’t know what was meant by a dummy bid – said the new Chairman of the ACCC, Graeme Samuel, was looking at the conduct of agents. Mr Samuel had announced that agents “may be engaging in deceitful and misleading conduct”. Make that “definitely”. Still struggling to cover up dummy bids, Raimondo called them “undisclosed vendor bids”. He suggested that agents should “disclose all vendor bids”.
Be careful, agents.
What the real estate industry is doing, of course, is waiting to see if the ACCC is serious. Will it really act? In the short term, most agents will be careful. If there is no real action by the ACCC, the agents will realise it’s all a bluff. And the deceit will be back. In spades.
Let’s hope that, unlike the state authorities, the ACCC does not fall victim to the age-old real estate spin machine. Let’s hope the ACCC discovers the truth – the real estate industry is rotten to the core.
Dummy bidding is an excellent place to start an investigation. For decades almost every auction agent has been doing it. The evidence is all there. Prosecutions could be launched immediately. The Trade Practices Act came into force in 1974. There is a trail of deceit stretching back 29 years.
The ACCC could, for example, look at the agents who have publicly admitted to dummy bidding. One agent, Rob Exall, was exposed on national television explaining how, during auctions, he uses secret signals to instruct his paid dummy bidders.
Another agency, in South Yarra, became so cocky about dummy bidding that it sent invoices to homesellers for the cost of having paid dummy bidders in the crowd.
There are thousands of examples of misleading and deceptive conduct in real estate. It’s even documented in many industry training manuals.
The question is – at what point in time will the ACCC consider that the deceit started? From the date the Trade Practices Act commenced. Such a thought will terrify thousands of agents.
And the CEO of the REIV may regret his claims that those who criticise the real estate industry are making “unsubstantiated comments”. As lawyer, Sarah Henderson, writes in the Herald Sun, “The REIV continues to live in the Dark Ages.”
The dark evidence of rampant deceit is all there, Mr Raimondo. You and many of your agents must be hoping the ACCC does not start looking into your past.
If they do, your game of deceit will be up. And consumers may finally have a real estate industry they can trust.
Power to the ACCC.
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