Max Brown Real Estate: Dodgy Advice & Conflicting Interests

OPINION
by Peter Mericka B.A., LL.B
Real Estate Consumer Advocate
Real Estate Lawyer
Qualified Practising Conveyancer Victoria
Director Lawyers Real Estate Pty Ltd

It is fitting that the logo of Max Brown Real Estate should depict the estate agent as a shadowy faceless figure, as it suggests the level of responsibility the estate agent assumes when “advising” vulnerable consumers.  By the time the consumer realises that he or she has received dodgy advice, the estate agent has melted back into the shadows, leaving the lawyer to pick up the pieces.

A client of ours recently received advice from an estate agent employed by Max Brown Real Estate of Main Street, Croydon, but fortunately she didn’t let the matter rest:

“Recently my partner Chris and I went through an ordeal, which we can only describe as traumatic and heart wrenching.   I am writing about our experiences not to relive the heartbreak but so others can learn from our experiences and about the tricks of the trade in real estate.

We had found our block of land where we thought we could build our dream home (though on a budget!).  We were convinced by the real estate agent to put a holding deposit on the block while we researched into it further.  This we did and in the mean time contacted our builder for him to look into the block and do appropriate soil tests and cost analysis.  A week later and we were told the block could no longer be held for us and we would need to sign contracts if we wanted to keep the block.  Scared we would lose the opportunity Chris and I went into the Max Brown (Real Estate Agent) and signed the contract for the block.  The real estate agent, Noreen, told us both that the vendor would not be able to sign til Thursday or Friday as he was overseas. 

In the meantime we received back our soil test results and information from the builder.  The builder felt we should try to find another more suitable block, for several differing reasons.  After a little research and contact with the council over these issues Chris and I decided that we would prefer to find a more suitable block. 

On Thursday morning (prior to 9am) I went into Max Brown to discuss changing to another block (more expensive) as both blocks were selling through the same agent.  The second block we had chosen would eliminate the issues that we were looking at with the first block.  I spoke to the manager Greg, I explained about the vendor being away and that we wanted to change to a different block, he told me it shouldn’t be a problem and he would look into it and get back to me.

At 3pm Thursday afternoon after not hearing from Greg I called him.  He was not available to take my call but rang back at 4:30pm.  He told me that it would be ok to swap blocks, that the vendor had signed but we could now exercise our 3 day cooling off period.  I asked what I should do now and he told me Noreen would ring me the next day to make all the arrangements but in the meantime he would hold the new block for us.

We were really excited, went to look at the new block and thought it was perfect for our new home!  The next day Noreen called me to only say “you can’t do that” and that there was nothing we could do, our cooling off period had expired and basically it was bad luck.

At no time between signing contracts and going into Max Brown on Thursday morning had anyone from the office told us that our offer on the block had been accepted and at no time had we been told that the vendor had signed the contracts (apparently on the Tuesday, when we were told he was overseas til Thursday).  At no time had we been told that the sale on the block had been successful.

After pleading with Max Brown to talk to the appropriate vendor, which they were unwilling to do and exhausting our options with our conveyancer who tried to find appropriate loop holes we came to Peter Mericka (recommended both by a friend and by our conveyancer).  Peter looked into our situation, said it was quite typical and fought our case for us.  Fortunately, Peter was successful in cancelling us out of the sale for the first block.  Sadly for us Max Brown had in the meantime sold the second block too.

A very valuable lesson was however learnt, anything a real estate agent tells you verbally means nothing unless it is written into a contract!  Be very careful before signing, get someone with appropriate knowledge to advise you first!”

We by-passed the estate agent, and went to the true representatives of the vendor, their solicitor.  We wrote to the vendor’s solicitor, explained the situation, and stated:

“We…confirm that no sale took place.  We are instructed that our clients’ offer was withdrawn…The withdrawal was effected by our clients when they visited Mr. Gibb at his office…before acceptance of their offer had been communicated to them.”

The vendor’s solicitors agreed with us, and replied as follows:

“We are instructed by our client’s agent that they accept that the offer was withdrawn before communication of acceptance.  We will authorise the agents to release the deposit monies to your client.”

In my opinion there is only one reason why estate agents meddle with real estate contracts, and that is to secure and safeguard their commission.  The estate agent does not represent the vendor (the vendor’s solicitor is the true representative), nor does the estate agent represent the purchaser.

The advice offered to our client by the estate agent was legal advice, and it was wrong.  Had our client relied upon the estate agent’s advice she could have lost many thousands of dollars.

The lessons this incident provides for consumers are:

1. NEVER allow the estate agent to meddle with the contract!  Whether you are a purchaser or a vendor, don’t sign anything until your solicitor gives the OK.
2. NEVER accept what an estate agent tells you about the law.  Always check with your own solicitor.”

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