Valuation Scam

Commission estate agent valuations are often like free cheese – their quality can be dubious, and they’re usually on offer for other reasons. And there’s that recurring real estate industry problem of the conflict of interests.

A Taste Of “Free” Cheese

Visit the website of Whatpricemyhouse.com.au for an example of “free cheese”.

This internet service advertises to consumers who want to know the “price” of their home, and offers:

“Simple, FREE comparable house prices over the net in three easy steps. You will receive information on what comparable homes have sold for in your neighbourhood recently… Totally FREE.”

But the service is described differently to commission estate agents. By clicking on a small link titled “agent info”, access could be gained to the following information:

Here’s How Any Real Estate
Agent Can Trade-InTheir
80-Hour-A-Week Job, and instead …
Work Only 25 Hours A Week
Sitting On Their Bum (At Home
Or On Holiday) … And Still Pull In
$200,000-$300,000 A Year
– no hassle at all.

and

What’s more, you are the only agent in your area that they have given this exclusive information to. They have contacted YOU for one reason only…

… You were smarter than the agent down the road because you put into action a KILLER lead-generation system that delivers bucket-loads of leads for little cost or effort”

and

“At this stage, generally their only loyalty is to the best promotion or offer – not to you. And so it is critically important to get past their defences the passive way. Marketing by stealth, you might call it.”

and

“Without doubt, the most profitable, turn-key, lead-generating system for real estate agents in Australia … if not the world. Designed by a real estate agent FOR real estate agents”

and

“Here’s how it works: This unique lead-generation system is the starting point for all Aussies and Kiwi’s thinking about selling their home. It connects prospective home sellers directly with YOU. And upon joining this amazing program, you get EXCLUSIVE access to your chosen postcodes. So that you can dominate your area, and the leads are solely yours. Isn’t that a good little concept? No competition.

Good question. And there are many ways this happens. Firstly,we know that more and more people are turning to the internet to obtain information about selling their home. And when they do, we have implemented some cunning search engine techniques that lead the majority of prospects to Whatpricemyhouse.com.au”

The website carries a disclaimer, stating “the information on this site should never be relied on as a basis for doing or failing to do something.” The site also confirms in its FAQ section that a valuation is the role of a “registered valuer”.

The lesson taught to consumers by Whatpricemyhouse.com.au is quite obvious: There’s always free cheese in the mousetrap.

Baiting Consumers For The “Listing”

Securing listings is the most important part of the commission estate agent’s job. The “free appraisal” is often used to bait vendors into signing an Exclusive Sale Authority.

The commission estate agent provides the “FREE appraisal“, tells the vendor that the property will fetch more than the vendor ever believed possible, then has the vendor sign an Exclusive Sale Authority which states that the vendor will pay the commission estate agent a proportion of the value of the property if the property sells for the amount quoted or for a lower amount if the vendor is prepared to accept a lower amount.

It then happens that the market “falls” or “deflates” or “softens”, and the commission estate agent is there to advise the vendor of this. The vendor is told that she really should consider accepting a lower amount. What lower amount should the vendor accept? The commission estate agent has the answer in the form of a fresh (free-of-charge) “appraisal“.

And what a coincidence; the “appraisal” matches the offer in the Contract Note he wants the vendor to sign!

(Perhaps it’s time to have another quick look at that term “conflict of interests“.)