Enzo Raimondo – Valuation Misinformation From REIV

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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Enzo Raimondo, CEO of the Real Estate Institute of Victoria (REIV) is a master of the partial-truth. In a recent article in the Herald Sun newspaper Raimondo purports to advise consumers on “forming an accurate view about the value of a property” but deliberately avoids informing consumers of the easiest and most accurate method of all.

CEO of the Real Estate Institute of Victoria (REIV) Enzo Raimondo
In his regular propaganda piece in Melbourne’s Herald Sun newspaper “Home Truths”, Enzo Raimondo tells trusting consumers:
“One of the biggest challenges prospective homebuyers face is forming an accurate view about the value of a property.”
(Herald Sun, Saturday 11 July, 2009 p.8)

So far, so good. It is indeed difficult for anyone to determine an accurate view about the value of a property. This was made particularly clear by an article on page 15 of the same newspaper about the deceptive practices of real estate agents who underquote on properties, declaring “Top real estate agency under investigation“. Reference was also made the Raimondo’s REIV having voted against measures that would stop this disgraceful practice. (See “REIV Votes Against Corruption Remedy“)

The problem of “forming an accurate view about the value of a property” is easily solved. Just get a formal valuation from a professional, qualified valuer. Whenever banks, courts, the Australian Taxation Office, other government departments or lawyers need to determine the true current market value of real estate they call for an independent written valuation, prepared by a professional valuer.

But real estate agents don’t want consumers to be independently informed about property valuations. So, instead of suggesting the most obvious, accurate, fair and reliable method for estimating the value of real estate, Raimondo leads consumers on a wild goose chase, which eventually ends up with the consumer being cooked. Here’s Raimondo’s suggestion to consumers:

“To improve your understanding of the local market you need to follow what is sold in the local area by watching the media” (Comment: This is where real estate agents publish their underquoted prices), visiting open houses (Comment: This is where real estate agents verbally state underquoted prices) and attending auctions (Comment: This is where real estate agents tell consumers that bids have not reached the underquoted reserve). You can also buy reports, similar to those used by real estate agents…(Comment: This data is obtained from, and used by, the same real estate agents who underquote). Taking these steps will provide you with the knowledge and tools to increase your chances of success.”

Determining the value of real estate is not as simple as Raimondo makes out, and neither the consumer nor the real estate agent have the skills to undertake such a task properly or to obtain the degree of accuracy required. As API National Professional Board Chairman Cameron Harris states in his paper “Valuation Uncertainty In Troubled Property Markets“:

“API (Australian Property Institute) members are the most highly qualified and best placed property professionals to provide expert valuation advice in the current market.”

Taking the matter even further, the President of API Victoria sent an open letter to the Chairman of the Australian Competition and Consumer Commission, setting out the following proposal:

“The API supports the ACCC announcement proposing the introduction of legislation aimed at preventing underquoting. Imposing fines on both real estate agents and vendors gives strength to the existing CAV and REIV Guidelines which are designed to prevent false and misleading estimated selling prices.

The API is in a unique position to assist the ACCC in this matter as API valuer members:

  • are tertiary qualified
  • are qualified certified practicing valuers,
  • have undergone rigorous admission processes
  • have to adhere to the institutes codes of ethics and practices
  • are required to maintain significant professional development each year, and
  • very importantly, are independent.

We further note that consideration is being given to the possibility of including a vendor’s reserve price as part of the marketing process for a property. Whilst this approach appears to alleviate the current concerns about underquoting by some agents, its does not rule out the possibility of the vendor and agent setting a low reserve which, from one interpretation, puts the process in the same situation it currently faces.

Accordingly, the API recommends that every auction authority be accompanied by an independent valuation by a qualified Certified Practising Valuer. This proposal provides a practical way to combat instances of poor practice by real estate agents and will go a long way to protecting the public. It also acknowledges and supports the real estate agents that are acting professionally.

By requiring professional and independent valuers to make these assessments of selling price, agents and vendors are engaging those best qualified to interpret the market. The valuation could then form the basis of quoted prices (eg a quote price range) giving independence to the process and protection to the vendor, purchaser and public.”

There are some real estate agents who are prepared to offer consumers honest advice when it comes to determining value (see “Real Estate Agents are NOT Valuers” and “Estate Agents Are Not Valuers II“) and Enzo Raimondo and the REIV would do well to follow their example.

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