CONCERN OVER FINDER FEES
AGENT finder services are again under fire from the real estate industry, with the Real Estate Institute of Australia (REIA) asking the Royal Commission into Misconduct in the Banking Industry to treat them the same as financial advisers and be directly remunerated by the property seller.
The submission comes following the Commonwealth Bank and LocalAgentfinder entering into a partnership earlier this year.
REIA president Malcolm Gunning said agent finder services portrayed themselves as impartial consumer advocates offering a free service to choose the most suitable agent for the seller, however the reality was very different.
“Only those agents that are registered, or are in some way associated with the selection service will be referred to the vendor,” he said.
Mr Gunning said while the service appeared free to the vendor, the agent finder service was remunerated by the agent it recommended.
“The selection services charge the agent around 20 per cent of their commission and the agent will regularly seek a higher commission to off-set the costs of the selection service,” he said.
“The vendor thus pays more and does not necessarily have the most appropriate agent.”
Mr Gunning said there was a conflict of interest that needed to be addressed when the service provider was remunerated by the agent they recommended.
“Just as financial advisers are required to be remunerated by their client rather than the investment house where the client’s money is invested, REIA believes agent selection services should be remunerated transparently by the vendor,” he said.
REIWA supported the submission and president Hayden Groves said agent finder websites needed to be 100 per cent transparent about their fees so the general public were clear on exactly what they are paying.
“In the same way that financial advisers must be directly remunerated from the client, vendors should be paying the fee upfront, not disguised as part of the cost of hiring the agent,” he said.
In 2016, REIWA launched reiwa.com AgentFinder to provide West Australians with a free alternative to the commercial agent finder websites. “reiwa.com AgentFinder is an independent, credible source for finding a professional real estate agent or property manager,” Mr Groves said.
“Unlike other agent finder websites, reiwa.com AgentFinder is completely free – for both the public user and the agent.
“The vendor’s preferred agent won’t be handing over a portion of their commission for the vendor’s business.”