Estate Agents & The “C” Word

Peter Mericka B.A., LL.BOPINION
by Peter Mericka B.A., LL.B
Real Estate Consumer Advocate
Real Estate Lawyer
Qualified Practising Conveyancer Victoria
Director Lawyers Real Estate Pty Ltd
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Estate agents don’t like using the word “CONTRACT”; it can shock consumers, and make them suspicious. Estate agents prefer to use the less unsettling term “OFFER”, when dealing with purchasers.

Contract. There, we’ve said it. Estate agents don’t like using the word “contract”. It’s a dirty word, as it can result in the loss of a commission if a purchaser decides to get independent legal advice before signing. The preferred term is “offer“; few consumers understand its legal meaning, and they are more likely to sign an “offer” than a “contract”.

We have said on many previous occasions that estate agents should not be permitted to control the contract stage of a sale. Misleading and deceptive conduct by estate agents is more likely to occur at this stage of the sale than at any other, particularly when the estate agent uses the “standard REIV Contract Note”.

Typically, the estate agent invites the intending purchaser to make an offer. But the offer has to be made formally, in writing. At this point the “offer” document is presented to the purchaser. The purchaser can see that the document is titled “Contract Note”, and quite readily forms the mistaken belief that the document is something less than a contract, perhaps a note from which the actual contract is to be drafted.

This was the approach taken by estate agent Graeme Oldfield of David McFarlane Real Estate in Eltham. Catherine and Matthew were interested in buying a house offered through David McFarlane Real Estate, and made contact with Graeme Oldfield. When requested by Oldfield to attend at the agency, Catherine and Matthew did so on the understanding that their attendance would result in the submission of a formal, written offer to purchase the property, but not to participate in the creation of a Contract of Sale.

Oldfield presented his REIV Contract Note and, avoiding use of the “C” word, referred to the document as “offer” or “Contract Note“.

If not deceived, Catherine and Matthew were certainly mistaken as to the status of the document provided by Oldfield.

When Catherine and Matthew approached us and explained the situation, we advised that they should simply withdraw their offer.

We sent a fax to David McFarlane Real Estate, advising that our clients’ offer had been withdrawn, and seeking a refund of the deposit. We received a telephone call from Oldfield, telling us that it was too late for Catherine and Matthew to withdraw, because he had obtained the vendor’s signature, and had left a message on Catherine’s mobile phone telling her that the deal was done.

It seemed that, as far as Oldfield was concerned, the matter was final. There was no enquiry as to why Catherine and Matthew wanted to withdraw, no offer of assistance to clear up any possible misunderstandings, no apparent interest in the purchaser’s side of the transaction. The deal was done, the commission was due, and it appeared that nothing else mattered.

We sent another fax, this time addressed to the Director of David McFarlane Real Estate, stating:

“We refer to our previous fax and our telephone conversation with Mr. Graham Oldfield of your office, and advise that our clients wish to invite the vendor to end the contract on the basis of misleading and deceptive conduct on the part of the real estate agent.

We are instructed that the Contract Note, signed by our clients at the invitation of the estate agent, was presented by the estate agent as something less than a contract document, and that our clients were permitted to believe that it was merely an offer to treat, with the possibility that further negotiations would lead to the possible signing of a formal Contract of Sale…”

We received no response whatsoever from the Director of David McFarlane Real Estate or from estate agent Oldfield. However, our client’s deposit was eventually refunded in full.


There are numerous points to be made about this incident, and the following are just some:

  • Estate agents should NEVER have anything to do with real estate contracts.
  • The conflicts of interests involved where the person representing the vendor also “assists” the purchaser to make an offer should be recognised as such by the regulating authorities.
  • The word “Note” in the title “Contract Note” serves no purpose other than invite consumers to mistakenly believe that the document is something less than a full and binding contract.
  • Misleading and deceptive conduct in the real estate industry is commonplace, and consumers should ALWAYS seek independent legal advice before signing ANYTHING presented to them by real estate agents.

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