by Neil Jenman
READING TIME: Apx 4.5 minutes
Unlike so many modern agents, Brent Peters doesn’t look like a “rogue estate agent”. He hasn’t got a slick shifty look to him. The ‘profile’ on his website shows a photograph of a clean-cut, good-looking fellow facing the camera.
Reminds me of an ad I once saw that read: “Salesman wanted, must look honest.”
Yes, Brent Peters sure looks honest. If you were selling a home and you saw his photo, you’d probably move to the next stage. You’d see his reviews on ‘Rate My Agent’ and never know that agents pay that site, so you’d think his customers are happy. His profile contains the usual self-praise about how he’s “successful and highly respected”, so it makes you feel Brent is an agent you can trust.
If you check out his company, Hoskins Real Estate, you’d see they’d been going 60 years and they have a “reputation for honesty and integrity” that they “work to protect every day”.
As a seller, there’s a good chance you’d have chosen Hoskins. Once you’d signed-up, you’d probably have showed concern if they promoted your home at a price below what you wanted. But, still, they’d have likely given you the usual “trust us, we are the experts” pitch. That’s where agents say that promoting a lower price attracts more buyers. And it does. Unfortunately, it attracts buyers at the low price, not the price you want.
It wouldn’t have occurred to most sellers that an agent prepared to mislead buyers is also likely to mislead them as sellers. Few Australians have heard the statement of Theodore Roosevelt who said, “A man who will steal for me will steal from me.”
So, even though Brent Peters and his colleagues at Hoskins were doing what thousands of agents have done for many years (and still do, albeit more discreetly) – lure buyers with false low quotes – sellers would not have suspected that Brent was also involved in a scheme known as the “kicker scam”.
The ‘kicker scam’ works like this: Agents say to sellers: “We will charge you a low fee up to a certain amount but if we exceed that amount, you pay us a bonus.”
Like all real estate scams, this one sounds reasonable. It’s given a dignified name such as the Bonus Commission or Incentive Scheme.
Let’s say the agent says your home is worth $520,000. You may be charged, say, 1.5 per cent up to a certain price, say, $560,000 and then 25 per cent for any amount that your home sells above $560,000.
Back at the office, however, the agents are giggling. They know your home is worth more than they told you.
Eventually your home sells for $677,000. The agent effectively scams you out of a huge chunk of the “extra above the market value”. The truth is, however, that your home was always worth $677,000. Rather than persuade buyers to pay more, the agent persuades sellers that their home is worth less.
This is what Brent and his buddies at Hoskins were doing. Underquoting to buyers to create more enquiry. And underquoting to sellers to create more commission with the “kicker scam”.
On Thursday last week, Federal Court judge Peter Steward said that Hoskins Maroondah and Brent Peters had engaged in “unconscionable conduct” for underquoting and for collecting “incentivised commissions”. The judge said Brent Peters “aided and abetted” the flouting of the Australian consumer law.
He also made a statement that could apply to most sellers with most agents – the sellers “were in weak bargaining position when compared to the agents”.
Hoskins Real Estate and Brent Peters were fined $860,000. This is the second highest fine imposed on a real estate agent in Victoria. The dubious record for the agent fined the most is held by Fletchers Real Estate at their Canterbury and Blackburn offices. Fletchers were fined $880,000 in 2017.
Like Hoskins, on their website, Fletchers describe themselves as “trusted”.
Text messages were sent to Brent Peters and John Hoskins asking them for a comment about this matter and offering them the opportunity to respond. Neither responded.
HOW COMMON ARE THESE SCAMS?
Underquoting to buyers is very common. We estimate that at least 90 per cent of agents are guilty of this offence but have never been prosecuted. With the publicity of this case, most agents will just be more careful, a few will cease the practice and some will just continue being as dodgy as ever knowing that, in the mass of dodgy agents, their chances of being caught let alone prosecuted successfully are slim. The hypocrites will be out in force saying that agents like Hoskins and Fletcher are the “rogue minority who give the majority of good agents a bad name”. That’s nonsense. The truth is that it’s the majority of bad agents who give the minority of good agents a bad name.
The kicker scams are not nearly so common. Most agents do not stoop so low as to effectively ‘steal’ the equity in people’s homes. We estimate that less than 15% of agents are involved in using kicker commissions.
BEWARE OF REAL ESTATE REVIEWS
Real estate consumers should be wary of trusting “customer reviews” where agents are paying the company that rates their reviews. For example, the correct name for the company called ‘Rate My Agent’ should be ‘Rate the Agents who Pay Us’. The most credible reviews are those with a name and phone number, thereby enabling consumers to contact past customers or Google reviews which are not paid. In the case of Hoskins, here is a review that appeared on Google but not on ‘Rate My Agent’: “Have had the displeasure of dealing with this company while looking to buy and was not very surprised to see them fined $899,550 in the Federal Court for underquoting. Avoid.”
BEWARE OF KICKER SCAMS
Unless you are a property developer or a seasoned investor with a major project, beware of agents who ask you for extra money if your property sells for a higher price than they quote you. The kicker scams – or Bonus Schemes or Incentive Deals or whatever they may call them – are almost never suitable for ordinary mum-and-dad home-sellers.
Please read our earlier article on this subject: https://jenman.com.au/the-kicker-scam/
HOW TO FIND AN AGENT YOU CAN TRUST
Contact Jenman Support on 1800 1800 18 or email Neil Jenman at [email protected]. We do not charge sellers, nor do we ask you to sign anything. We will help you choose from all the agent in your area and we will support you through the entire sales process, from the time you first think of selling until you move out.
PLEASE NOTE: Our focus is upon helping consumers. Abuse from agents on our web site or Facebook page will be deleted or ignored or well publicised – it depends on our mood.
But one thing will never vary: We will never stop doing what we love most – helping polite and honest consumers to get the best deal possible in real estate. And, of course, if any agents are serious about taking care of consumers, we’d love to help you too. Thank you.