Latest news with #BiddingBlind
The Age
2 days ago
- Business
- The Age
Desperately seeking cure for agent underquoting
To submit a letter to The Age, email letters@ Please include your home address and telephone number below your letter. No attachments. See here for our rules and tips on getting your letter published. REAL ESTATE As a parent of a child who has attended fruitless auction sales and paid for building inspections, my heart bled for the young couple who spent $500 for a building report on a place they 'could not afford' (″ This couple spent $500 trying to buy their dream home. They never stood a chance ″, 17/8. I am also concerned about the dishonesty of real estate representatives with underquoting. The 'cure' I see is relatively simple. Anyone placing their house up for auction should be required to provide three separate building reports similar to those provided by a vendor of a used car. Those three reports should be provided by building inspectors known to the agent and not the vendor. That would save the pain of potential buyers forking out and losing potential deposit money. The price guide has been a furphy for a long time. My wife and I attended an auction many years ago where we were told by the agent 'we would get it' at a price we found later was at least $40,000 lower than the reserve which that agent would have fully known. When a 'price guide' is given, it should also be mandatory that if someone offers the top reserve plus 5 per cent, that offer must be legally accepted. It may put an exaggerated price on a house but would give a buyer a fair guide and save the grief of auctions that many experience. Auctions do not contribute to economic productivity. At a federal level, any overseas 'investor' buying property – and not a resident – should be subject to a 100 per cent, or close to it, capital gains tax. If they have no intention of contributing to Australia economically on a full-time basis, why should they profit? Real estate is not productive investment. As for Australian investors and capital gains tax: For people who have been forced to relocate for work, two houses (one primary and one secondary residence) are fair enough. Otherwise, they should be subject to a far heavier capital gains tax than they do at present on a subsequent house. Trevor Gibbs, Ocean Grove Vendor should provide building report As The Age's 'Bidding Blind' investigation (17/8) shows, many house hunters are unnecessarily out of pocket in investigating a prospective property when the practice of underquoting renders that property out of reach. While revealing the reserve price prior to auction would go some way to resolving the situation, I consider there is another way similar to the private sale of a vehicle for which the seller must obtain a roadworthy certificate: Why not make the property's vendor responsible for providing an independent building inspection report? Not only would this redress the balance between vendors and potential buyers and reduce buyer futility, but it would also improve housing sector productivity by significantly reducing the number of unnecessary building inspection reports. Kevin Bailey, Croydon Lock in price expectations Significant disparity in the values between the real estate agent's ″quoted range″ and the vendor's ″locked in″ reserve figure for properties will continue until these two decisions have to be made concurrently and collaboratively. Andrea Middling, Canterbury Cooling on real estate agents Why is there no cooling-off period with real estate agents? There needs to be, as with most other contracts, particularly given the size of the asset. When selling, one agent was so rude the moment the contract was signed that I waited out the 90 days. I eventually sold very well with a responsible agent. Not everyone has the luxury of being able to hold off. This is a serious anomaly with contract law. Katharine Anderson, Windsor THE FORUM Not affordable Thank you, Daniella White for exposing the appalling failures of the Victorian government's fast-track planning regime ‴ Apartments for the rich': Developments fast-tracked with no affordable housing,″ (17/8). In metropolitan Melbourne, multi-storey apartment blocks are being fast-tracked under the guise of providing affordable housing while actually allowing expensive apartments affordable only by the well-off. In the Geelong suburb of Rippleside a similar story is unfolding. With 93 apartments and a marina built and a further four-storey apartment block approved, the site's developer consortium applied for an increase to seven storeys with a further 84 apartments. This was rejected last July by the Geelong Council. The developers have now gone to the DFP for fast-track approval of a seven-storey block of 83 apartments and a marina office on a waterfront site that already includes 96 apartments each valued at $2-$3 million and a marina. It is clear that affordable housing is, at best, the Cinderella of the planning story unfolding, while the developers get the golden slipper. The Allan government must stop this rort. Rosemary Kiss, Rippleside Bendigo festival Re ' Not quite a full stop for writers festival', (7/8). What good can come from placing restrictions on those engaged in literature? Writers' festivals should consider it an opportunity to discuss delicate topics in an intelligent and thoughtful manner. Craig Tucker, Newport
Sydney Morning Herald
3 days ago
- Business
- Sydney Morning Herald
This couple spent $500 trying to buy their dream home. They never stood a chance
Clutching a bright yellow bidding panel, amid a crowd of onlookers stretched across a concrete driveway, Rebecca Borkman was quietly hopeful she was about to secure her dream home. Advertised at just $700,000, the two-bedroom townhouse in the Sydney suburb of Bankstown was within the budget of Borkman and her partner, Byron Tolley, with $150,000 to spare. The couple were so serious about the home that they had shelled out more than $500 to obtain pest, building and strata reports in preparation, and discussed bidding tactics. But it soon became clear they never stood a chance. What Borkman, 33, didn't know when she arrived at the auction was that the reserve price for the property was $850,000, more than 20 per cent above the advertised guide. The sale had lured 18 registered bidders, and the townhouse sold for $896,000. 'As soon as that auction started, we were wondering why we even bothered showing up or getting excited,' Borkman said. 'If they let us know that the reserve was anywhere even around $800,000, we wouldn't have put so much time and money into it. But they [the agent] were firm on the $700,000 guide.' Scenes like this are repeated at weekend auctions across the country. In response to an online survey, almost 5600 people told this masthead's Bidding Blind investigation that they had spent money and time investigating properties that they would later discover they could not afford. A separate data analysis of more than 36,000 auction listings reveals that more often than not Sydneysiders and Melburnians are being misled by advertised price guides. That means Australians are forking out thousands of dollars on multiple pest and building inspections, contract reviews and strata reports during extended property hunts, only for the homes they had fallen in love with to sell hundreds of thousands of dollars above the guide. Several Victorian buyers said they had recently paid for a building inspection on homes advertised within their budget. Then, even though auction bidding surpassed the top end of the sale guide – sometimes by hundreds of thousands of dollars – the home was passed in because it didn't meet the vendor's reserve. 'Agents often argue that it's the buyers and auctions that drive up the price, but conversations with the agent often indicate early on that the buyer wants a much higher rate than advertised,' said one of these prospective buyers. Another buyer looking in Sydney's inner west, a hotspot for underquoting complaints, said it felt like they were being constantly scammed. 'We are often lied to about vendor expectations and then spend money on building reports, contract reviews by lawyers ... We recently had an experience where the auction guide was $1.7 million and the reserve was closer to $2.2 million.' Following the Bidding Blind investigation, the Victorian and NSW governments are facing pressure from industry groups, consumers and opposition parties to stem the tide of wasted cash by overhauling underquoting laws. Victoria's peak real estate lobby group announced it would support the mandatory pre-auction disclosure of reserve prices by sellers, a significant policy shift for a group long resistant to such a proposal. Key real estate industry leaders in NSW have also backed that model, with both state governments promising to seek advice or continue consultation on potential solutions. Another idea to stem the cost of inaccurate price guides is to require vendors to provide prospective purchasers with free building and pest inspections before auction, as is the case in the ACT. 'There will still be buyers who will want to get their own independent report, but this removes the cost and the double up for a large portion of buyers, and it would directly remove the financial harm of underquoting,' said Consumer Policy Research Centre chief executive Erin Turner. In NSW, agents are required to provide prospective purchasers with a contract of sale and disclose issues such as whether the property has been subject to recent flooding, has any external combustible cladding or has been the scene of a murder or manslaughter in the past five years. In Victoria, sellers are legally required to provide a 'section 32 vendor's statement', which details information about any easements, zonings, strata scheme management and fees and whether a property is in a bushfire-prone area. However, buyers in both states are encouraged to seek their own building inspections, which usually cost between $300 and $1000 depending on the size of the property and whether a pest inspection is included. Contract reviews, also recommended, will generally cost $200 or $300. And in NSW, buyers have to pay a fee to access strata reports. 'It's not unusual to get 30 or 40 people through a home … let's just say half of them [arranged inspections and other due diligence] – there's 15 grand down the toilet,' said buyers agent Paul Mulligan. Loading 'There are a lot of gutted buyers out there, and what ends up happening is even worse than the cost [because] they go out and then they buy a place out of frustration, and potentially overpay or buy a lemon. It's huge. It's a huge consumer cost, emotionally and financially.' Victorian buyers advocate David Morrell, who described underquoting as 'cheating', said the practice came with an 'opportunity cost' for prospective buyers who missed out on properties when they didn't obtain access to enough pre-approved finance due to misleading price guides. 'If the agent hadn't lied to you at the start, you'd be living in your favourite home,' Morrell said. As a former property manager at a real estate agency, Rebecca Borkman felt like she should have been in a better position than most to navigate the auction process when she was searching for a home in Sydney last year. But the human resources professional said her experience was so painful that she eventually refused to consider buying any property that was being auctioned. Borkman and her partner instead bought a home in Carlingford, in Sydney's north-west, through a private sale. 'If something came up for auction, we would immediately write it off the list, no matter how much it suited our needs, because it was so damaging to our bank account, to our self-esteem and to our emotional wellbeing,' she said. 'If even I, with that experience [of being a property manager] in my past, feel almost scammed, then what's someone who has no idea what they're getting themselves into meant to do?' Borkman said the reason they had fallen in love with the Bankstown townhouse, with its front and back garden and 297-square-metre block, was because it had been undervalued by the $700,000 auction guide. 'The minute that we showed up there and looked at the property, I thought, 'This is so far beyond anything else that we had seen within that price range' … as it turns out, we were looking at a property that was worth $900,000.'
The Age
3 days ago
- Business
- The Age
This couple spent $500 trying to buy their dream home. They never stood a chance
Clutching a bright yellow bidding panel, amid a crowd of onlookers stretched across a concrete driveway, Rebecca Borkman was quietly hopeful she was about to secure her dream home. Advertised at just $700,000, the two-bedroom townhouse in the Sydney suburb of Bankstown was within the budget of Borkman and her partner, Byron Tolley, with $150,000 to spare. The couple were so serious about the home that they had shelled out more than $500 to obtain pest, building and strata reports in preparation, and discussed bidding tactics. But it soon became clear they never stood a chance. What Borkman, 33, didn't know when she arrived at the auction was that the reserve price for the property was $850,000, more than 20 per cent above the advertised guide. The sale had lured 18 registered bidders, and the townhouse sold for $896,000. 'As soon as that auction started, we were wondering why we even bothered showing up or getting excited,' Borkman said. 'If they let us know that the reserve was anywhere even around $800,000, we wouldn't have put so much time and money into it. But they [the agent] were firm on the $700,000 guide.' Scenes like this are repeated at weekend auctions across the country. In response to an online survey, almost 5600 people told this masthead's Bidding Blind investigation that they had spent money and time investigating properties that they would later discover they could not afford. A separate data analysis of more than 36,000 auction listings reveals that more often than not Sydneysiders and Melburnians are being misled by advertised price guides. That means Australians are forking out thousands of dollars on multiple pest and building inspections, contract reviews and strata reports during extended property hunts, only for the homes they had fallen in love with to sell hundreds of thousands of dollars above the guide. Several Victorian buyers said they had recently paid for a building inspection on homes advertised within their budget. Then, even though auction bidding surpassed the top end of the sale guide – sometimes by hundreds of thousands of dollars – the home was passed in because it didn't meet the vendor's reserve. 'Agents often argue that it's the buyers and auctions that drive up the price, but conversations with the agent often indicate early on that the buyer wants a much higher rate than advertised,' said one of these prospective buyers. Another buyer looking in Sydney's inner west, a hotspot for underquoting complaints, said it felt like they were being constantly scammed. 'We are often lied to about vendor expectations and then spend money on building reports, contract reviews by lawyers ... We recently had an experience where the auction guide was $1.7 million and the reserve was closer to $2.2 million.' Following the Bidding Blind investigation, the Victorian and NSW governments are facing pressure from industry groups, consumers and opposition parties to stem the tide of wasted cash by overhauling underquoting laws. Victoria's peak real estate lobby group announced it would support the mandatory pre-auction disclosure of reserve prices by sellers, a significant policy shift for a group long resistant to such a proposal. Key real estate industry leaders in NSW have also backed that model, with both state governments promising to seek advice or continue consultation on potential solutions. Another idea to stem the cost of inaccurate price guides is to require vendors to provide prospective purchasers with free building and pest inspections before auction, as is the case in the ACT. 'There will still be buyers who will want to get their own independent report, but this removes the cost and the double up for a large portion of buyers, and it would directly remove the financial harm of underquoting,' said Consumer Policy Research Centre chief executive Erin Turner. In NSW, agents are required to provide prospective purchasers with a contract of sale and disclose issues such as whether the property has been subject to recent flooding, has any external combustible cladding or has been the scene of a murder or manslaughter in the past five years. In Victoria, sellers are legally required to provide a 'section 32 vendor's statement', which details information about any easements, zonings, strata scheme management and fees and whether a property is in a bushfire-prone area. However, buyers in both states are encouraged to seek their own building inspections, which usually cost between $300 and $1000 depending on the size of the property and whether a pest inspection is included. Contract reviews, also recommended, will generally cost $200 or $300. And in NSW, buyers have to pay a fee to access strata reports. 'It's not unusual to get 30 or 40 people through a home … let's just say half of them [arranged inspections and other due diligence] – there's 15 grand down the toilet,' said buyers agent Paul Mulligan. Loading 'There are a lot of gutted buyers out there, and what ends up happening is even worse than the cost [because] they go out and then they buy a place out of frustration, and potentially overpay or buy a lemon. It's huge. It's a huge consumer cost, emotionally and financially.' Victorian buyers advocate David Morrell, who described underquoting as 'cheating', said the practice came with an 'opportunity cost' for prospective buyers who missed out on properties when they didn't obtain access to enough pre-approved finance due to misleading price guides. 'If the agent hadn't lied to you at the start, you'd be living in your favourite home,' Morrell said. As a former property manager at a real estate agency, Rebecca Borkman felt like she should have been in a better position than most to navigate the auction process when she was searching for a home in Sydney last year. But the human resources professional said her experience was so painful that she eventually refused to consider buying any property that was being auctioned. Borkman and her partner instead bought a home in Carlingford, in Sydney's north-west, through a private sale. 'If something came up for auction, we would immediately write it off the list, no matter how much it suited our needs, because it was so damaging to our bank account, to our self-esteem and to our emotional wellbeing,' she said. 'If even I, with that experience [of being a property manager] in my past, feel almost scammed, then what's someone who has no idea what they're getting themselves into meant to do?' Borkman said the reason they had fallen in love with the Bankstown townhouse, with its front and back garden and 297-square-metre block, was because it had been undervalued by the $700,000 auction guide. 'The minute that we showed up there and looked at the property, I thought, 'This is so far beyond anything else that we had seen within that price range' … as it turns out, we were looking at a property that was worth $900,000.'
Sydney Morning Herald
4 days ago
- Business
- Sydney Morning Herald
‘Biggest liar gets the listing': The tricks some agents use to pressure home sellers
Tom Panos credits himself with being Australia's top real estate coach, so when he arrives at an agency for a private training session, agents take note. After all, his Real Estate Gym website has about 20,000 subscribers, who pay to learn the art of selling real estate – or what he dubs in one training video as the 'list, reduce, sell strategy'. It is a familiar scenario for many Australian home sellers, whether they know it or not. Panos describes it as 'vendor management', but it is easily confused with the more manipulative practice known as 'vendor conditioning' that is commonly derided in the industry. Vendor conditioning is a dirty, open secret in the property industry that is practised by many agents despite the fact they are being paid to act in the vendor's best interests. It's a process whereby an agent exaggerates or blatantly lies about a property's value to get the listing, only to start massaging the seller's expectations down once the agency agreement is signed. 'It's one of the more dubious tactics that are out there in the industry,' said Louis Christopher, managing director of SQM Research. Whether you call it vendor conditioning or management, few sellers imagine that's what they are signing up for when they welcome an agent into their home. Panos outlined his tips, later posted briefly as a video to social media and watermarked as part of his training website, in a session at the office of high-profile agent Josh Tesolin, whose licence was recently suspended for four months by NSW Fair Trading following an investigation by this masthead's Bidding Blind investigation. 'It all starts at the listing presentation. Trust me. That's where the process starts,' Panos instructed Tesolin and about half a dozen others. 'When you go to the listing, what you do is you win the listing, and you give them hope.' Then comes the 'set-to-sell meeting'. This is no time for small talk, Panos said. 'Go in early with the bad news. 'We need to realign the value of your property from initial expectations by 5 per cent because I'd rather be sitting with you next week negotiating offers than having no offers'.' Panos denies there is anything wrong with his strategy to shape vendor expectations, adding there's a difference between training agents to factor in emotional buyers who will pay more for a property, and training agents to effectively buy the listing with lies. Panos told this masthead the video was intended to train agents for handling tough markets, such as when interest rates rise, and related to a conversation held with vendors a week or so after the property was listed. Lies and 'distasteful' manipulation Whistleblowing agents and property insiders working across Melbourne and Sydney said the practice of deliberately manipulating vendors through lies and other dirty tactics, first by getting them to list their house with them and then convincing them to sell their property quickly, was 'common'. Two former Melbourne real estate agents, who spoke anonymously to detail practices at their previous workplaces, said sellers would also be 'harshly conditioned' to accept less money than they originally hoped, or to get a quick sale. In one technique, detailed by a former agent at a major real estate franchise, vendors were given a report containing negative buyer feedback, much of it forged. 'A lot of it we made up,' he said. 'They would manufacture this feedback most of the time and present it to the owner … when a lot of the time, buyers wouldn't even be saying that.' By the time auction day came around, the former agent said, many sellers would accept less money, or be pleasantly surprised if they fetched more than initially hoped. Another former Melbourne agent said he was trained to encourage buyers attending early inspections to put in low bids, to scare the sellers into lowering their expectations. While some sellers had unrealistic expectations, the former agent said, this manipulation 'was just done in a very distasteful way' and wasn't always in the vendor's best interests. Being successful as an agent was about the volume of house sales, rather than achieving the highest prices for each property, he said. 'If you sell a house for an extra $50,000, but it takes you a few extra weeks to sell, it's not a substantial [increase to your commission], so it's just about moving it … I really didn't like that much, even more than the underquoting.' This was a fairly common industry practice, said Christopher, whose research firm monitors the auction market closely. 'It's called, 'buying the listing'.' Melbourne-based seller advocate Julie DeBondt-Barker recalls hearing a trainer discuss the practice in a session focused on ethics in the real estate industry in the early 2000s. Loading DeBondt-Barker said the trainer ran through a chapter on ethics, closed the book and candidly addressed the students: 'He said, 'All that's lovely, but guys, listen the reality out there is the biggest liar gets the listing',' she said. In practice, a real estate agent might secure a listing by assuring a vendor that their home is worth $1 million, when its real value is $900,000, and that they already have buyers looking for similar properties, DeBondt-Barker said. But when the ink dried on the sale authority, the agent would start 'conditioning down' expectations. 'They come back three days later and say, 'Actually, those buyers have purchased, and it's probably more like $950,000'.' The first lie Vendor conditioning can have devastating financial consequences for home owners who have banked on their agent's assurances their home will probably sell for more than it's worth. Retirees Jan and Jim Edwards almost lost the deposit on a new apartment this year after relying on their agent's advice that their four-bedroom Newcastle home was worth between $1 million and $1.1 million. The Edwardses said that after listing the property, the agent pressured them to drop the price guide. By the time of the auction, the guide was reduced to $850,000, and the home passed in at $948,000. 'But we needed more than $1 million because we had already paid the deposit on a two-bedroom unit, and because we are retired, we don't work and we can't get a bank loan,' Jan Edwards said. The couple read about the auction of their Newcastle home in last weekend's launch of the Bidding Blind investigation when would-be buyer David Witherdin spoke of his attempts to buy their house on behalf of his parents. 'I was sorry for the gentleman who missed out on buying our home,' Jan said. 'He was so misled by the agent who thought she would pressure us into accepting $160,000 less than we were asking.' While Witherdin lost hundreds of dollars in wasted due diligence costs through his failed attempt to buy the property, Jan said she and Jim would have lost about $10,500 on their failure to sell given storage, marketing and other costs. The couple terminated their agency agreement, relisted the home with a new agent and sold it two weeks later for $1.07 million. Veteran Sydney agent Bill Malouf, who heads eastern suburbs agency Highland Property, said agents were increasingly buying listings. As stock has dwindled, the number of agents has increased, which has meant greater competition, Malouf said. 'So many agents are desperate to get the business and will say anything to secure it, even though they're meant to be protecting their clients' best interests,' he said. Louis Christopher credits the disconnect between what agents have promised and what vendors will accept as the predominant cause of stale listings on the market for months longer than expected. SQM Research found that in the year to May there were 7019 properties on the market for more than 180 days in Sydney, an increase of 29.5 per cent on the previous year. Likewise, in Melbourne there were 9614 properties still for sale in Melbourne after 180 days, a 15.8 per cent increase in stale listings. A slow sales campaign is not something agents want either. Seller advocate Bernadette Hayes said agents would rather sacrifice a higher result, and therefore commission, for a faster sale. The revenue stream for many agents is not about maximising their commission but maximising sales volume, especially for those who have to split their commission with the franchise head office, Hayes said. 'The more properties they list and sell, the more they make.' A Victorian government report on the state's property market, commissioned in 2022 but never released, contains recommendations to discourage agents lying to vendors to win listings, according to co-author Enzo Raimondo. Loading Raimondo, a former long-term head of the Real Estate Institute of Victoria, calls the practice ' overquoting '. 'It does occur, and it's time for it to be eradicated as much as possible … I think the first step is to release the report,' he said. NSW Fair Trading, meanwhile, is consulting on potential changes to rules governing price guides. Under pressure An agent's first lie is telling owners they can sell for more than their property is worth, said Chris De Celis, a long-time agent in Sydney's western suburbs. The lies that follow are the agent's attempts to crunch the seller on price and manufacture interest from buyers. Merryn Calear knows too well what can go wrong between the hope-filled start of a sale campaign and the reality a few months later. When she listed her Coogee home last year, she was told by Roger Wardy and his team at Ray White Touma Taylor that they would push for $4.2 million. Calear said to sweeten the deal, she was also told the agents would only charge her half price for the advertisements, on a short-term contract and all while they already had a buyer who wanted to buy on her street. A doctor, no less. 'It just all looked golden,' Calear said. She signed an agency agreement that stipulated a guide of $3.7 million to $4.07 million. 'Keep in mind this in (sic) an agreement [that] allows us to guide a price we feel is relevant to get to our goal price,' Wardy texted. It was a scenario he texted Calear that played out on another of his recent sales, a four-bedroom house on Wentworth Street Randwick: 'We started at $3.8m, reserve $4.5m and sold $5.3m.' According to Calear, Wardy said he could definitely achieve a sale price of at least $4 million. Wardy denies that, and said he advised a likely selling range of between $3.4 million and $3.64 million. And while Calear maintained she wouldn't sell for less than $4 million, buyers were given a guide of $3.7 million. Worse, she said: 'The only offers that came in were all around $3 million. The only offer in writing was for $2.98 million. 'That's a $1 million difference. And meanwhile we are still living there, so we had to stage it twice a week to look like it was a home without two kids and a dog living in it. It was such a palaver.' Calear said that as the campaign rolled on, she was advised to cancel the auction because there were only two parties. She said that a few weeks later, Wardy asked her to sign a new agreement with a guide of $3.2 million to $3.52 million given the broader market had started floundering. Throughout she maintained she would only sell for $4 million. A week before Wardy's agency agreement was due to expire, buyer's agent Matt Spooner found a Bronte couple willing to pay $3.5 million. Calear said she wanted to think about the offer over a weekend, but Wardy wasn't waiting. According to Calear, and Wardy's own texts, he told buyers the only reason she hadn't signed was because she was attending to her sick child in hospital. None of Calear's children were sick, nor in hospital. When Calear still hadn't signed the next day, he asked her not to stand outside the house in case the buyers saw her again because 'I told them you were in hospital with your kid'. Wardy's take on the incident differs to his texts. 'When I relayed this to the buyer, I said that given she wasn't responding to calls or messages, she may be attending to a serious issue, potentially even at the hospital. The intention was not to mislead but to retain the buyer's interest during a period of silence from the vendor.' Calear cancelled the agency agreement. 'I felt he was dragging me into something really dirty,' she said. A week later, Calear signed with a new agent, who sold the house a few weeks later for $3.5 million to a different buyer. The last Calear heard from Wardy was in an email in which he demanded a 2.2 per cent commission on the sale. He has not been paid.
The Age
4 days ago
- Business
- The Age
‘Biggest liar gets the listing': The tricks some agents use to pressure home sellers
Tom Panos credits himself with being Australia's top real estate coach, so when he arrives at an agency for a private training session, agents take note. After all, his Real Estate Gym website has about 20,000 subscribers, who pay to learn the art of selling real estate – or what he dubs in one training video as the 'list, reduce, sell strategy'. It is a familiar scenario for many Australian home sellers, whether they know it or not. Panos describes it as 'vendor management', but it is easily confused with the more manipulative practice known as 'vendor conditioning' that is commonly derided in the industry. Vendor conditioning is a dirty, open secret in the property industry that is practised by many agents despite the fact they are being paid to act in the vendor's best interests. It's a process whereby an agent exaggerates or blatantly lies about a property's value to get the listing, only to start massaging the seller's expectations down once the agency agreement is signed. 'It's one of the more dubious tactics that are out there in the industry,' said Louis Christopher, managing director of SQM Research. Whether you call it vendor conditioning or management, few sellers imagine that's what they are signing up for when they welcome an agent into their home. Panos outlined his tips, later posted briefly as a video to social media and watermarked as part of his training website, in a session at the office of high-profile agent Josh Tesolin, whose licence was recently suspended for four months by NSW Fair Trading following an investigation by this masthead's Bidding Blind investigation. 'It all starts at the listing presentation. Trust me. That's where the process starts,' Panos instructed Tesolin and about half a dozen others. 'When you go to the listing, what you do is you win the listing, and you give them hope.' Then comes the 'set-to-sell meeting'. This is no time for small talk, Panos said. 'Go in early with the bad news. 'We need to realign the value of your property from initial expectations by 5 per cent because I'd rather be sitting with you next week negotiating offers than having no offers'.' Panos denies there is anything wrong with his strategy to shape vendor expectations, adding there's a difference between training agents to factor in emotional buyers who will pay more for a property, and training agents to effectively buy the listing with lies. Panos told this masthead the video was intended to train agents for handling tough markets, such as when interest rates rise, and related to a conversation held with vendors a week or so after the property was listed. Lies and 'distasteful' manipulation Whistleblowing agents and property insiders working across Melbourne and Sydney said the practice of deliberately manipulating vendors through lies and other dirty tactics, first by getting them to list their house with them and then convincing them to sell their property quickly, was 'common'. Two former Melbourne real estate agents, who spoke anonymously to detail practices at their previous workplaces, said sellers would also be 'harshly conditioned' to accept less money than they originally hoped, or to get a quick sale. In one technique, detailed by a former agent at a major real estate franchise, vendors were given a report containing negative buyer feedback, much of it forged. 'A lot of it we made up,' he said. 'They would manufacture this feedback most of the time and present it to the owner … when a lot of the time, buyers wouldn't even be saying that.' By the time auction day came around, the former agent said, many sellers would accept less money, or be pleasantly surprised if they fetched more than initially hoped. Another former Melbourne agent said he was trained to encourage buyers attending early inspections to put in low bids, to scare the sellers into lowering their expectations. While some sellers had unrealistic expectations, the former agent said, this manipulation 'was just done in a very distasteful way' and wasn't always in the vendor's best interests. Being successful as an agent was about the volume of house sales, rather than achieving the highest prices for each property, he said. 'If you sell a house for an extra $50,000, but it takes you a few extra weeks to sell, it's not a substantial [increase to your commission], so it's just about moving it … I really didn't like that much, even more than the underquoting.' This was a fairly common industry practice, said Christopher, whose research firm monitors the auction market closely. 'It's called, 'buying the listing'.' Melbourne-based seller advocate Julie DeBondt-Barker recalls hearing a trainer discuss the practice in a session focused on ethics in the real estate industry in the early 2000s. Loading DeBondt-Barker said the trainer ran through a chapter on ethics, closed the book and candidly addressed the students: 'He said, 'All that's lovely, but guys, listen the reality out there is the biggest liar gets the listing',' she said. In practice, a real estate agent might secure a listing by assuring a vendor that their home is worth $1 million, when its real value is $900,000, and that they already have buyers looking for similar properties, DeBondt-Barker said. But when the ink dried on the sale authority, the agent would start 'conditioning down' expectations. 'They come back three days later and say, 'Actually, those buyers have purchased, and it's probably more like $950,000'.' The first lie Vendor conditioning can have devastating financial consequences for home owners who have banked on their agent's assurances their home will probably sell for more than it's worth. Retirees Jan and Jim Edwards almost lost the deposit on a new apartment this year after relying on their agent's advice that their four-bedroom Newcastle home was worth between $1 million and $1.1 million. The Edwardses said that after listing the property, the agent pressured them to drop the price guide. By the time of the auction, the guide was reduced to $850,000, and the home passed in at $948,000. 'But we needed more than $1 million because we had already paid the deposit on a two-bedroom unit, and because we are retired, we don't work and we can't get a bank loan,' Jan Edwards said. The couple read about the auction of their Newcastle home in last weekend's launch of the Bidding Blind investigation when would-be buyer David Witherdin spoke of his attempts to buy their house on behalf of his parents. 'I was sorry for the gentleman who missed out on buying our home,' Jan said. 'He was so misled by the agent who thought she would pressure us into accepting $160,000 less than we were asking.' While Witherdin lost hundreds of dollars in wasted due diligence costs through his failed attempt to buy the property, Jan said she and Jim would have lost about $10,500 on their failure to sell given storage, marketing and other costs. The couple terminated their agency agreement, relisted the home with a new agent and sold it two weeks later for $1.07 million. Veteran Sydney agent Bill Malouf, who heads eastern suburbs agency Highland Property, said agents were increasingly buying listings. As stock has dwindled, the number of agents has increased, which has meant greater competition, Malouf said. 'So many agents are desperate to get the business and will say anything to secure it, even though they're meant to be protecting their clients' best interests,' he said. Louis Christopher credits the disconnect between what agents have promised and what vendors will accept as the predominant cause of stale listings on the market for months longer than expected. SQM Research found that in the year to May there were 7019 properties on the market for more than 180 days in Sydney, an increase of 29.5 per cent on the previous year. Likewise, in Melbourne there were 9614 properties still for sale in Melbourne after 180 days, a 15.8 per cent increase in stale listings. A slow sales campaign is not something agents want either. Seller advocate Bernadette Hayes said agents would rather sacrifice a higher result, and therefore commission, for a faster sale. The revenue stream for many agents is not about maximising their commission but maximising sales volume, especially for those who have to split their commission with the franchise head office, Hayes said. 'The more properties they list and sell, the more they make.' A Victorian government report on the state's property market, commissioned in 2022 but never released, contains recommendations to discourage agents lying to vendors to win listings, according to co-author Enzo Raimondo. Loading Raimondo, a former long-term head of the Real Estate Institute of Victoria, calls the practice ' overquoting '. 'It does occur, and it's time for it to be eradicated as much as possible … I think the first step is to release the report,' he said. NSW Fair Trading, meanwhile, is consulting on potential changes to rules governing price guides. Under pressure An agent's first lie is telling owners they can sell for more than their property is worth, said Chris De Celis, a long-time agent in Sydney's western suburbs. The lies that follow are the agent's attempts to crunch the seller on price and manufacture interest from buyers. Merryn Calear knows too well what can go wrong between the hope-filled start of a sale campaign and the reality a few months later. When she listed her Coogee home last year, she was told by Roger Wardy and his team at Ray White Touma Taylor that they would push for $4.2 million. Calear said to sweeten the deal, she was also told the agents would only charge her half price for the advertisements, on a short-term contract and all while they already had a buyer who wanted to buy on her street. A doctor, no less. 'It just all looked golden,' Calear said. She signed an agency agreement that stipulated a guide of $3.7 million to $4.07 million. 'Keep in mind this in (sic) an agreement [that] allows us to guide a price we feel is relevant to get to our goal price,' Wardy texted. It was a scenario he texted Calear that played out on another of his recent sales, a four-bedroom house on Wentworth Street Randwick: 'We started at $3.8m, reserve $4.5m and sold $5.3m.' According to Calear, Wardy said he could definitely achieve a sale price of at least $4 million. Wardy denies that, and said he advised a likely selling range of between $3.4 million and $3.64 million. And while Calear maintained she wouldn't sell for less than $4 million, buyers were given a guide of $3.7 million. Worse, she said: 'The only offers that came in were all around $3 million. The only offer in writing was for $2.98 million. 'That's a $1 million difference. And meanwhile we are still living there, so we had to stage it twice a week to look like it was a home without two kids and a dog living in it. It was such a palaver.' Calear said that as the campaign rolled on, she was advised to cancel the auction because there were only two parties. She said that a few weeks later, Wardy asked her to sign a new agreement with a guide of $3.2 million to $3.52 million given the broader market had started floundering. Throughout she maintained she would only sell for $4 million. A week before Wardy's agency agreement was due to expire, buyer's agent Matt Spooner found a Bronte couple willing to pay $3.5 million. Calear said she wanted to think about the offer over a weekend, but Wardy wasn't waiting. According to Calear, and Wardy's own texts, he told buyers the only reason she hadn't signed was because she was attending to her sick child in hospital. None of Calear's children were sick, nor in hospital. When Calear still hadn't signed the next day, he asked her not to stand outside the house in case the buyers saw her again because 'I told them you were in hospital with your kid'. Wardy's take on the incident differs to his texts. 'When I relayed this to the buyer, I said that given she wasn't responding to calls or messages, she may be attending to a serious issue, potentially even at the hospital. The intention was not to mislead but to retain the buyer's interest during a period of silence from the vendor.' Calear cancelled the agency agreement. 'I felt he was dragging me into something really dirty,' she said. A week later, Calear signed with a new agent, who sold the house a few weeks later for $3.5 million to a different buyer. The last Calear heard from Wardy was in an email in which he demanded a 2.2 per cent commission on the sale. He has not been paid.
