Ian Reid Takes Aim at Fellow Estate Agents
OPINIONby Peter Mericka B.A., LL.B
Real Estate Consumer Advocate
Real Estate Lawyer
Qualified Practising Conveyancer Victoria
Director Lawyers Real Estate Pty Ltd
High-profile Melbourne real estate agent Ian Reid has copped some heavy criticism in the past over his Gazumping Clause and his Finance Clause. However, it seems that Ian Reid can be a straight-shooter when it comes to exposing his fellow estate agents.
Ian Reid of Ian Reid Vendor Advocacy has become well-known to Melbournians through his radio and television advertising, as well as notoriety resulting from the use of his Gazumping Clause and his Finance Clause.
However, as part of his move into the fixed-price real estate market, Ian Reid has fired a broadside into the real estate industry over the manner in which estate agents conduct property inspections.
On his new website at WeHelpYouSell.com.au, Ian Reid reveals the way estate agents operate. In a particularly stinging attack, based on feedback in the form of consumer complaints (presumably by clients of other estate agents, and not Reid’s), Ian Reid reveals:
“Industry feedback tells us that there’s a better way to sell real estate. The most common complaints we receive from buyers are that the agents don’t really know the properties they’re supposed to be selling, and that they make it so difficult to organise inspections. They’re so hard to reach in the first place, and then all they want you to do is attend an Open for Inspection, at a time that suits THEM! And from vendors, we hear constant complaints that agents don’t seem to be showing their homes properly (standing at the front door taking names and phone numbers is hardly showing a home’s benefits off, is it!) and they’re only too eager to recommend another home “just around the corner”. For a vendor who’s invested considerable money in attracting buyers to their home in the first place, that can be a very upsetting outcome.”
The move to fixed-fee real estate sales is inevitable, and new variations of the concept have been coming into the industry for some years now. I started it off with Lawyers Real Estate over 5 years ago, and estate agents were quick to pick up on it.
One of the key elements of fixed-fee real estate sales is the elimination of the most expensive and unnecessary variable in the real estate sale process, the estate agent’s escorted inspection.
Now, it’s one thing when a lawyer or a conveyancer tells consumers that there are problems with estate agent escorted inspections, but it’s quite another when a well established estate agent like Reid takes aim at his own industry! Let’s take a look at some more of Ian Reid’s observations about estate agents and inspections.
There is no need for an agent to conduct inspections
Estate agents are simply an expensive waste of time when it comes to property inspections. The old argument that an estate agent should conduct inspections because the vendor is “too emotionally involved” is blown away by Reid, who acknowledges that a vendor who clearly loves their home is the best person to escort potential purchasers through it. According to Reid:
“When vendors (sellers) pay 2%, 3% or more to sell, what they’re really paying for is for the agent’s time in showing buyers through their properties. Why should you pay for someone to do something you can do just as well, if not better? After all, who knows your home better than you do? Who loves it more than you do? We’ve taken that huge part of commission out of the equation, leaving you to focus on what you do best…
Basically, we are putting control of the sale back in the hands of vendors, asking them to pay only for the services they receive. Why should you pay for something you don’t need?”
Estate agents divert purchasers to other properties
We have previously drawn attention to various forms of criminal deception used in the real estate industry (see Criminal Deception in Real Estate). Ian Reid confirms that the practice known as “purchaser diversion” is commonplace (where potential purchasers attracted by advertising paid for by one vendor are directed to properties of other vendors):
“When you engage a normal estate agent and when a buyer says he’s not sure about your home, the agent says, “that’s ok, I’ve got another one just around the corner. Let’s go and have a look at that.” (And whose marketing money got that buyer into the other home? Yours!)”
In such a case the supposed marketing ability and negotiation skills of the estate agent count for naught.
Everyone has to fit in with the estate agent’s timetable
Inspections with an estate agent require a double co-incidence. The vendor has to be ready at the same time as the purchaser, but then the estate agent has to be ready at the same time as both the vendor and the purchaser. And whose time is most important to the estate agent? According to Ian Reid:
“And when a buyer is keen to look at a home but can only get there Wednesday, and that doesn’t suit the agent, what happens? The buyer’s told to come to the Open for Inspection on Saturday, or miss out. (That’s if the agent returns the buyer’s call!)”
It is a very common complaint that estate agents can’t, or won’t, accommodate potential purchasers outside of business hours. However, vendors and purchasers usually share the same hours of availability, and can arrange a mutually convenient inspection time during the very first telephone call when there is no estate agent involved. And to drive the point home, Reid confirms:
“Now, with We help you sell.com.au, you are in control of the showings. After all, YOU are never too busy to show a potential buyer through your home! You want to show buyers through. YOU are not going to take them up the street or around the corner to look at another property. You’re going to focus exclusively on the job at hand – pointing out all the features and benefits of buying YOUR property. And, as we say, who really knows your property better than you do? Who loves it more? Who wants to see it ‘sold’ more!?!”
The theme of control being returned to the vendor is a major focus of Ian Reid’s new website:
“This is all about empowering YOU to get the best price for your home while paying the lowest possible fee. Remember, we make you money and we save you money!”
It’s really a matter of over-servicing
Estate agents don’t have to conduct escorted inspections. They do so in order to justify their massive commission charges. Ian Reid provides and excellent explanation of this over-servicing, and provides a worked example in support:
“When vendors (sellers) pay 2%, 3% or more to sell, what they’re really paying for is for the agent’s time in showing buyers through their properties. Why should you pay for someone to do something you can do just as well, if not better? After all, who knows your home better than you do? Who loves it more than you do? We’ve taken that huge part of commission out of the equation, leaving you to focus on what you do best…
Basically, we are putting control of the sale back in the hands of vendors, asking them to pay only for the services they receive. Why should you pay for something you don’t need?
This example may give you a better understanding of what we’re all about:
Let’s say your home sells for $400,000. You’ve signed up with a conventional agent for, say, 2.5% commission.
You therefore pay that agent a fee of $10,000.
With We help you sell.com.au, that commission would have been only $4,000.
Now, doing the maths:$ 10,000 plus $1,000 GST = $11,000 What you paid
– $ 4,000 plus $400 GST = $4,400 What you would pay with us= $ 6,600 What you save!!”
To eliminate any doubt in a vendor’s mind, Ian Reid then provides a thought-provoking proposition:
“That amazing difference leads us to ask this question of you: if we wrote you a cheque for $6,600, would you show some buyers through your home?”
Purchasers don’t really want to deal with salespeople
Estate agents try to convince vendors that purchasers prefer to deal with salespeople, and are reluctant to deal with the actual owners of a property. Our experience is the exact opposite – purchasers want to be able to meet with the owners, ask questions about the property and the neighbourhood in an informal and friendly manner. Buying or selling real estate is all about the individual vendors and purchasers, whereas estate agents tend to want to play “expert on everything” to all parties.
Ian Reid acknowledges the desire of purchasers to have direct contact with vendors when he tells purchasers,
“And you do not have to deal with a salesperson, and you contact the owner directly. You can quickly get all the information you want and arrange inspections at a mutually convenient time.”
and
“The contact telephone number appearing on all advertising is that of the owner (or their representative). Simply call them direct for anything you wish to know about the property. You may make arrangements directly with the owner for an inspection at a mutually convenient time. Photo i.d. and a contact phone number will be required for your inspection.”
Conclusion
Ian Reid has always been regarded as an innovator and visionary when it comes to real estate practice. Some of Ian Reid’s innovations have left him open to criticism and bad press. However, Ian Reid’s move into fixed-price real estate sales, his preparedness to identify some of the questionable methods currently in use by estate agents, and his move to eliminate the estate agent escorted inspection auger well for the future direction of the real estate industry.
A couple of questions arising from Ian Reid’s move to fixed-fee real estate sales are:
“Will Ian Reid & Staff Real Estate adopt the approach ofWeHelpYouSell.com.au?”
and
“Will Ian Reid Vendor Advocacy Australia recommend that its clients useWeHelpYouSell.com.au rather than commission-sharing estate agents?”
We put these questions to Ian Reid about this but he declined to respond.
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