MAJOR NETWORK TO CEASE BAIT PRICING
Can we stop bait pricing?
Article originally published JANUARY 24, 2005 –Reviewed and approved.
By Neil Jenman
Bait pricing in real estate is a simple method. It involves agents deliberately advertising properties below the price the sellers are willing to accept.
Like most networks, many agents in the Ray White network have used bait pricing for years. Indeed, one of their former trainers once admitted that he taught the method at the company’s training sessions.
The purpose of bait pricing is as simple as the method – it’s designed to get buyers to bite.
For the Ray White network, however, bait pricing has attracted the attention not just of homebuyers, but of the Australian Competition and Consumer Commission (ACCC).
Following a complaint lodged against Ray White Alderley in December 2003, the ACCC commenced an investigation.
The complaint focused on homes that were advertised with a price followed by a plus (+) sign. Two properties that were each advertised for auction as “$300,000 +” were passed in at $380,000 and $395,000.
Late last week, the ACCC advised that it had completed its investigation.
Both Ray White Alderley and Ray White Real Estate Pty Ltd in Queensland have now provided undertakings to the ACCC.
Ray White must bring to the attention of all its offices the concerns of the ACCC about bait pricing. It must also conduct training sessions for all its managers and salespeople in order to ensure compliance with the law. The network will convene a specifically designed training program in January 2005. In addition, all training manuals must be amended to include mention of the laws about bait pricing.
The network must also “issue a formal policy that all of its offices must comply with the specific provisions of the Act as they relate to ‘indicative’ or ‘bait pricing’.”
The ACCC said, “The undertakings provided by Ray White are particularly beneficial in that they seek to ensure compliance with the Act by the entire Ray White network across Queensland rather than by a single Ray White agency.”
The ACCC also said the undertakings sent an important message to all Queensland real estate agencies that it is in their “commercial interests” to comply with the law. In other words, the punishment for agents who break the law may, for the first time, exceed the rewards of breaking the law.
Is this, finally, an end to bait pricing?
Probably not, because some agents may still be too arrogant to stop. Bait pricing will only stop when high profile agents or major networks are whacked with huge financial penalties for breaking the law.
Meanwhile, consumers have good reason to hope that all agents get the message. Bait pricing will certainly be reduced as a result of the ACCC’s investigation of Ray White.
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UPDATE – SEPTEMBER 2020.
After more than 15 years, has bait-pricing disappeared in the real estate industry? Not at all. Indeed, it’s worse ever. And yes, the main reason is that so many agents are so dodgy. But another reason is that consumers rarely complain. Please buyers and sellers, think of others who are going to be buying and selling houses. Help them by complaining when you are the victim of bait pricing.
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