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The Real Estate Institute of Australia has made a submission to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, calling for agent selection services to be more transparent, in particular for services like those offered by third-party lead generators.
Real estate agent selection agencies should be treated the same as financial advisers and directly renumerated by the vendor, according to REIA.
In the submission, REIA president Malcolm Gunning said that there has been a proliferation of businesses established to assist vendors selling their homes by choosing an agent for them.
“These businesses portray themselves as an impartial consumer advocate offering a free service to choose the most suitable agent for marketing their property,” Mr Gunning said.
“Only those agents that are registered, or are in some way associated with the service, will be referred to the vendor. The agent selection service is nothing more than a listing service for agents who subscribe to the service.”
Mr Gunning said that while the service appears free to the vendor, the selection service is remunerated by the agent that it recommends.
“The selection service charges the agent a fee of around 20 per cent of their commission and the agent appointed will regularly seek a higher commission to offset the costs of the selection service,” the REIA president said.
In February of this year, the Commonwealth Bank entered a relationship with one of these services, LocalAgentFinder, which was a disappointing move, according to Mr Gunning.
“While REIA supports assisting vendors to select the agent that best responds to the vendor’s specific needs when the service provider is remunerated by the agent that they select, there is a conflict of interest which should be addressed.
“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.”
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