Is it time for the federal government to take over certain aspects of real estate and property regulations from the states? Each state is governed by their own laws in relation to real estate agents and each state has its own Real Estate Institute. Here are some of my thoughts on this.
Property is the number one investment most Australians will make in their lifetimes. We have a national interest to make sure that homes are affordable and within reach of anyone who holds down a full time job. Going back 15 years or so there was no Internet and the majority of Australians purchased homes within their own area at the most their own state – in fact most people only new of home for sale in their own areas because of the limited reach of newspapers. I can remember driving around for a whole day searching for For Sale properties in my parents car, dropping into local agencies windows and having a peak.
Fast forward 15 years and we have the Internet, many people purchasing interstate and many more buying from outside their own areas. We now have more property investors than ever and a more savvy buyer market.
But where have we moved as far as rules and regulations? Each state government has it own rules governing the sale of properties, each government has a number of different rebates, taxes, duties that they provide/collect from buyers and sellers.
So what would it take to bring in some national regulations and strip some state authorities from their obligations? I am not advocating a complete strip down, but I am saying that anyone wishing to buy/sell a property through an agent should know what their rights are, and at present it is totally confusing and totally different from state to state.
I also think with the rise of private selling that will come into play over the next few years (maybe to 7-10%) there should be some regulations in place for anyone selling a property privately. The first thing we must do is to make sure as an industry that all parties are protected in these transactions.
Here are some things I think need addressing:
- National Regulations for advertising a listing – with Minimum Requirements.
- National Regulations for transparency in Negotiation of a Sale.
- National Regulations for disclosure – Full disclosure of Property History.
- Laws prohibiting auctioning Rental properties – Vendor must advertise a fixed price.
- National Regulations for Private Sales – Sellers must take a license test (online) and fill in all required forms prior to advertising.
- National Portal – A place where people can go to find out all of the taxes, duties, rebates for each state.
Now, I am going to be the first to put my hand up and say my experience with these things is minimal…I want a debate, vigorous and clean….I want to know who would fight against this and who would be for it….
Your thoughts?
47 Comments
Robert Simeon
Peter,
Very interesting analogies indeed – however I can never see it happening as the respective institutes prefer to maintain a vice like grip on their resoective members.
The broarder base taxes ie Stamp Duty and Land Tax for example vary from state to state. Come respective election times the states have in the past used these taxes as a vote incentive to attract voters by offering reductions. So they would argue that they want total control.
Then you have laws like gazumping where NSW (my understanding) is the only state in the Commonwealth that allows this. Why ? Because when the state government introduced their legislation around ten years ago the lawyers challenged the legislation and won.
The common theme across Australia is that they all agree to disagree with each other. I agree that today, the systems are far from transparent just that sadly the powers that be – prefer it this way.
Whilst your proposal has great merit – I just can’t ever see it coming to fruition. It is just too political. As it was once said ” Too many politicians are more concerned about running for office than running the country.”
John (Licensed Land Agent)
This topic will foster Great debate.
My few points at present.
I my opinion much of the Real Estate industry in South Australia has a scam angle.???
How could this be fixed???
Yes!! Regulation.
But what parts of the listing and sale process needs regulation??? That is the big debate.
We have an MP from the Labor party Mr John Rau trying to do something.
log onto http://www.reisa.com.au
And read all about it?
At present he is trying to regulate Auctions by introducing new legislation into SA Parliament.
My main beef is FULL DISCLOSURE when advertising a property in all medians eg Internet the press etc. That is full price or price range within 10% of possible sale price and full disclosure in vendors advertising costs.
Professional Fees or call them commission paid on sold price is totally negotiable.
The other point in South Australia is that Land Agents write up contracts of sale and in the early stages negotiate the sale on a Contract of Sale schedule which is a negotiable instrument used by agents to finally negotiate a selling price acceptable by vendor and purchaser.
This process is not the same in all States.
Already this is a major point of difference on how property is sold around Australia.
Letters of offer are used around the place but the write way is how we do it in SA.
I will talk some more later on this debate.
Peter Ricci
Robert, The first thing to make change is to know how change can be affected, John Howard was a non believer in Climate change until he knew the people wanted it, then all of the sudden he is no longer a sceptic…….
If the Institutes don’t want it, but the people do, backed by the Agents then it can bring about change….
Peter Ricci
All you need is voices from all industries coming together to make an acceptable agreement, it doers not mean agents will have less money, or for that matter Institutes, it means a more transparent process.
And it should not mean more work…..What it should do is make it easy to understand for anyone purchasing a home.
Every different regulation, fee, tax, duty – is just another hurdle in the sale process.
If it was uniform then it would be easier for everyone concerned…
max
Answer to the pricing debate. Simple, make the appraised price public info. I am sure they do this in most of the United States.
Elizabeth
Good Afternoon everyone,
Peter this idea of yours is extremely appealing.
However what you are essentially saying is that the institutes are doing a terrible job, and you are coming up with a solution.
Can it work? Yes. Although I do believe it would foster the growth of the Private Sales market.
Will it work? I do not think so. The institutes are far too political, often rivaling each other than collaborating. They think the big issues are online listings all while Private Sales, Protection of the industry, and a lack of standardisation continue to come to the fore.
If Peter
Peter Ricci
Hi Elizabeth,
Can it work? Yes, anything can with grass roots support. I really do think the Institutes need to have a good long hard look at what they are providing. If the comments here are anything to go by, then I do not think agents are very impressed with the services they are offering today. So how can they offer more services – when the current service levels are poor?
This is what I always come to: Do what you are good at well and leave the rest to specialised markets. It seems too many organisations are trying too hard to be everything to everyone.
Any new industry body will have to have equal representations from all parts of the industry: government, agents, consumers – as the Institutes are really working for the agents (or so I thought) and no one can profit from it……it should be a body that is funded by agents -0 I know this stinks – but once powerful enough – it should be self funded with complete transparency on who funds it…
I am not calling on Institutes to be gotten rid of, but clearly defining their roles….
Paul D
Elizabeth’s comment,
“The institutes are far too political, often rivaling each other than collaborating. They think the big issues are online listings all while Private Sales, Protection of the industry, and a lack of standardisation continue to come to the fore.”
That just indicates your lack of knowledge of how the REI functions. I wonder are you a member ? and have you ever contributed anything to the REI. Most agents don’t know the first thing about the REI, because they can’t be bothered to find out, and are the first ones to complain when something happens that doesn’t suit them.
If you think that private sales will flourish, remove the REI and see what happens. If there was no REI, real estate would be being sold at the corner store, the supermarket and the pertol station.
These agents then have the gall to criticise the REI when they have never contributed one second of their time to the betterment of an industry that the REI keeps relatively workable for them to earn a living.
The REI has a constant battle against incumbent state governments,of either persuasion, to keep the ever changing regulations to a minimum. There are many things that come out in legislation that agents are unhappy about. Without the REI challenging the State Government at every turn, it would be far worse. The Real Estate Institute has credibility with the State Government for two main reasons. They represent a large number of Real Estate professionals and they are a non- profit organisation. A bit like Employers First in the retail sector.
The tragedy is that the people who should be supporting them are too selfish to contribute to the support of the organisation that goes into bat for them every day. The REI has the best PI policy on the market, and what happens ? – for $200 less they can get a half baked PI policy that’s owned by an insurer who couldn’t care less about Australian Real Estate agents. The REI has great Education and Training Services, and what do the agents do? they support an overseas company owned by the Chicago Tribune, and the profits go offshore.
All you have to do to support the Real Estate Instituite, is to support the facilities they provide. The REI already has strength and credibility, support from the agents is all they want. I am a member of the Institute, and proud of it.
Anthony
The institute side of affairs could be managed – with some strong arming from the large franchise groups possibly.
Oh…they tried that with Homehound
MMMM…..
Next Suggestion
Elizabeth
Good Evening,
Paul D “These agents then have the gall to criticise the REI when they have never contributed one second of their time to the betterment of an industry that the REI keeps relatively workable for them to earn a living.”
My Dear Paul D, I am a registered, fully financial member of the REINSW. I have supported the REI through fees, attending meetings, turning up to my CPD seminars (thank you for that one), and at times become involved in the various committees for many many years now.
During this time I have seen the REINSW climb to new heights, then sink to no mans land. However one thing certainly is consistent, for a non-profit company the salaries of the executives are considerable.
The last good thing to come out of the REINSW occurred when Rowan Kelly was there. Since then all we get are people misquoting statistics in the press only to bring ridicule to the institute itself.
Paul D “Most agents don
Robert Simeon
Paul D,
I read your comments with great interest and yes, I too and my business are members of the REINSW.
In recent times I have read with interest the weekly eNews sent to members discussing on their ongoing lobbying with members of the state government for the purpose of representing the membership most particularly on tax issues. Unfortunately, as we have seen in past experiences that the concerns of the institute for many years remain on ignore by incumbent governments and their representatives. The institute simply don’t have the weight in numbers and I support your claim that more real estate agencies should take up membership.
I would have preferred to have seen the institute organising members to join together in the marginal seats and take their concerns direct to constituents. I am sure that way the incumbent government would have taken stronger measures to appease the concerns of the REINSW.
No elected body should assume that they can win this argument over biscuits and English Breakfast tea. To this date all the elected state government has conceded is that Michael Costa announced that he is more than comfortable for an across
Robert Simeon
Anthony,
I agree totally with Homehound – from our experiences a total failure. I, like a few others will sit back and wait for Google to launch into the Australian property markets.
Then – the markets will face the mother of all challenges. Unlike other portals that require time to build relationships. The Google model could launch tomorrow and be an instant hit.
max
Robert, what makes you say google will actually do this? Just a hunch or something you have actually been told?
I think google would find the ACCC blocking this move…
Robert Simeon
Max,
In recent times we have sold and met Google employees who were in the process of settling in Sydney. I have asked them this very question and they just smiled and thrown away comments like … “wait and see”, “maybe – maybe not” and “Google – has many plans for the Australian markets.”
Given that Google are already here in our markets with their search engine. How, could the ACCC intervene ? They have for some considerable time been a player in Australian online – just that in the future I think they will become much more user specific.
max
ok..
How could the ACCC get int the way? The internet was founded on freedom of information. More people search with google than any other SE. If google then controls most of the info by setting up portals of its own wouldn
Robert Simeon
Well if their property portal was free how could it then possibly be anti – competitive ?
What this does highlight are the soon to be relaxed media ownership laws. As we all know presently there are many slants on this, more importantly how the major players will protect their self interests. This has led many down the paths of property industry diversifications where they acquire associated businesses or establish themselves in new markets.
Why do you think Fairfax Digital launched http://www.brisbanetimes.com.au last week ? Not to provide Bronco supporters faster match updates. Rather to build and expand furtherand future brand acknowledgement/awareness.
These are very exciting times indeed – the cheque books are out and media companies busy cementing their market longevity.
Peter Ricci
The ACCC would not even think of getting in the way. Why? Because Google work in a space where anyone can play and the cost to entry into any market is very small. The ACCC comes in when a company controls a market and makes it hard for anyone else to compete.
With the Internet, the user has the choice between hundreds of search engines, classifieds sites etc.
max
Robert, to be fair I didn
max
trafition ? traditional…
Robert Simeon
Max,
What excites me most about all these new developments is that we are all kept guessing, experimenting and challenging entirely new initiatives. This does not just simply apply to property portals it applies to all who run property based businesses.
Today, you can’t take anything for granted if you run a real estate business. Rather forget the what if’s and adopt the when and where mentality.
We are all being challenged – some will come to fruition some not. However, if they do – are we ready ?
I just happen to like these rules as it makes one think.
max
“With the Internet, the user has the choice between hundreds of search engines, classifieds sites etc”
there was also a fair bit of choice when MS gave away IE with windows… there was also a fair bit of choice when Rockefeller was seen to be using his position to dominate the world oil markets.
Cashed up manufacturers of goods can even be fined for undercutting their competition if its seen to be
Paul D
Another day, another challenge !!
Elizabeth, I thought being a member somehow inferred that you would be financial. What kind of question was that ?? Further, there are several communications per week from the REI (alluded to by Robert) either you are not getting them or you don’t bother to read them. In the last 10 days I have had 5 emails from the REI including enews, ePolitical Newsletter, and eNotice, about Real Estate World. How much more information do you want, and if you do, get onto the REI website where you can get mountains of information.
You should be congratulated for putting time and effort in voluntarily, and I too have been, and am still involved in the Institute’s affairs, and have held positions like divisional secretary, chairman etc. All it takes is a little effort from a lot of people, not a huge effort from a few. As far as the salaries of executive positions, these are determined by the market, you need quality people to manage an organisation of more than 50 staff. There is a lot of voluntary work done by the members, you can’t expect people to run the place for nothing – you pay peanuts – you get monkeys !!
Very insightful response Robert. It is always a battle against governments, but you can’t just throw your hands up and say it’s all too hard. As you so rightly say, strength comes with numbers, and when all said and done, governments are as arrogant as the electorate allows them to be. When you get tight electoral contests you get candidates who are willing to listen to the people. You can’t expect an organisation like the REI to change governments, however I am aware that all the divisions spoke to their respective members about key issues relating to real estate. Issues like land tax, stamp duty, stamp duty releif for over 65’s etc. There is a lot of work going on behind the scenes, and the reporting of this is getting better. You do however, have to read the reports or go to the website.
Peter Ricci
Paul…..If Institutes ever want to get anywhere with governments they have to set up a division for consumers….one that fights tooth and nail for consumers (buyers and sellers) with another division that represents agents.
Then come to an agreement between the two and put forward proposals to government.
This way you are not representing thousands, but millions and millions of votes count for allot more than a couple of thousand….
If the institutes did this and did it properly – then I would think they would gain allot more ground with consumers….
Ohhh and setting up a lip service consumer division would look silly…
Craig
max, I am not sure if you are aware but Google has already got it’s foot in the door of becoming a major RE player in the US, as well as many other verticals. Do you think those US portals didn’t advertise with Google as well? Google will have some presence in RE in Australia at some stage, it’s just a matter of time.
John (Licensed Land Agent)
Bring the FREE stuff on. ASAP!!!
Eg FREE online advertising for all properties for sale on the net for Agents & Private Sellers.
Online everything in Real Estate sales.
But you will still need an Agent a licensed one at that in what ever State you reside in to properly negotiate a sale at an negotiated fee level because a PRIVATE Seller always has emotional backage in the negoitiation process.
But hay they will get FREE advets on the net but might have to pay for professional pics, editorial, etc etc to post advert on the net because hay, presentation is the most important part when offering a house for sale, just like when you try to sell your second hand car, you should detail it.
Bring it on!!!
Paul D
Peter, yes a very good solution to a very difficult problem. I guess the Office of Fair Trading is the current “watchdog” for the consumers, and whilst it is not the perfect solution, it’s the only one we have at present. The only problem with the various REI’s representing both sides of the case, is that there would be the inevitable accusations of conflict of interest. From the public’s perception, a Govt. department would never have a conflict of interest, although that isn’t always the case.
Anthony
John – the negotiation issue is a pile of crap…(excuse my french)
I am sure some agents are fabulous negotiators – but i believe some owners would be fabulous too – comeon – every agent must have experienced a property owner try and negotiate their fee. And i bet a buyer would be less comfortable offering a seriously ridiculous offer to a property owner direct then when they can remove themselves and use the agent to make that offer.
As for emotional baggage – agents have a fair amount involved too – especially if they are commission only. They “need” this deal.
Anthony
Hey – did we all notice a real estate agent won the CON TEST. i am sure the general public collectively said “that’d be right”
Now watch this comment bring it on.
Robert Simeon
Anthony,
You can also represent yourself in court too – however most always use a lawyer !! Unless you can’t afford the representation 🙂
Anthony
Ahhhh – but a solicitor or barrister has a professional qualification that substantiates they can represent me in court.
What is your qualification that substantiates you are a qualified negotiator?
🙂
Anthony
Hey i have a good idea – lets do a negotiation role play in here. Lets say i have a waterfront property in Mosman i want to sell. Now why should i use Robert?
I have had it professionally valued – lets say 3.6M
Sell me you should represent me!
Robert Simeon
For starters I hold the all time record for a waterfront sold in Mosman set in 2001 at $15,500,000.00 !!
That should be enough to satisfy most vendors 😉
John (Licensed Land Agent)
Anthony I live in Adelaide but hay I will take the challenge.
Firstly valued ?? By a qualified valuer? Well this is only a starting point.
The place could sell higher????
Firstly the place to advertise would be REA, have a professional display eg pics, editoraial etc. Then a Professional sign in front of the property with good inside features on the sign, plus full address.
The most important issue on the sale is what price or price range to ask????
Second type of sale eg private treaty, tender, or Auction???
I would charge a 1.1% Professional Fee of the sale price. And the vendor pay for allk marketing costs at cost up front.
Say if I was selling the place in Adelaide (hypothetically) I would write up all offers in REI contract schedule format, so these ofers can turn straight into negotriable instruments until both vendor and prospective purchaser negotiates a sale price.
The property if good enough should sell itself eg by its presentation and location.
All feedback positive or negative will be conveyed promptly to the vendor.
Plus offers.
Good luck with the sale.
Anthony
Oh comeon Robert – thats like saying you have the biggest &^%& and therefore all women should be satisfied – sorry i just listed exclusively with Ray White
John (Licensed Land Agent)
Anthony the only person getting Conned is the owner he/she/self by their mindframe!
Pure & simple.
They think they can sell???
Well bring it on.
Some sell OK some sell short and others find out it is not all roses and then end up listing with an Agent.
In South Australia one of the main points of difference is that us Agents actually negotiate contracts of sale impartially.
Emphasis on negotiate!!! Because these instruments are the only proper way to negotiate a sale in SA. Eg if you are part of the contract eg the vendor, there is no way you can negotiate the final price without being connected to the negotiable instrument emotionally or in mindframe.
Since agents negotiate on behalf of vendors normally then they are impartial to the contract.”Not favouring one side or the other”.
I ask how could an owner or private seller be impartial?????????????????????????
No way.
Most times they do not know a good offer when presented with one.
Most times shhitttee offers become the best offers!! But most private owners cannot see the wood from the trees at these points!!
And cannot turn a bad offer into a good one, which is finally accepted by further negotiation.
As in the Castle “Tell them their dreaming”
Anthony
“The property if good enough should sell itself eg by its presentation and location.”
Well John…why do i need you???
Plus i already have a valuation.
Tell you what…would you accept .9% commission on sale price – and i follow your marketing plan plus cover costs associated?
Peter Ricci
Honestly guys sometimes…………..
Peter Ricci
Now, if I were to sell a home in Mosman, of course I would want to know about the track record, I would also want to know about how much the agent knew about marketing my property……………….the mediums……….
And I would use an agent……………When you are talking about millions – I would assume I already had money…..so why would I waste my precious time….?
Things would be different if I was selling something in the $300 k range…..
Robert Anthony
Hey Robert! You got lucky. You are only as good as your last sale mate so I hope you have sold a waterfront property since 2001…..
P.S. You left yourself open mate, I could not help mysef. Yes!!! I would be telling sellers the same thing. Facts are Facts and yes I would love to have that record on my resume.
Anthony
Question?
Aside from this excellent area to chat real estate issues – is anyone aware of any other blog – forum where agents and industry representatives chat?
John (Licensed Land Agent)
Anthony:
I think I have answered that question Tony!
“Impartial negotiation” conducted for the sale.
Again how can an owner be impartial.
Now if you chose RW???
Best of luck.
I truly hope you get what you hope you will get.
What was the commission?
What was the marketing cost?
Please give details on the marketing eg split costs, especially on the internet listing cost, for us to gain some knowledge here Tony.
Also sign costs, brochures cost etc. What type of press adverts and cost also?
Kind Regards
JD
John (Licensed Land Agent)
Peter, million dollars or $290,000 properties, there is no difference.
There is only a right way to conduct the sale for either.
Full disclosure.
Proper asking price or range.
The right or appropriate marketing depending on the type of property.
Good presentation of the subject property on sale.
An ethical Agent negotiating impartially.
Bingo the subject property is sold at an appropriate price for the vendor.
Anthony
John you make it sound so easy – and your reference to agents from “RW” suggests i should be worried.
Gee i am not sure what to believe anymore – RW told me this you told me that…
I think i will sell privately
Robert Simeon
John (Licensed Land Agent),
I would strenuously debate that there is a “H U G E” difference between negotiations for million dollar properties, as compared to a residence for $290,000.
Agents from all walks love nothing more than to “talk the talk” – this changes dramatically, when they are asked to “walk the walk”.
From my experiences the top agents charge higher fees based on the results that they have delivered, as against the “talkers” who offer much lower fees. Given, that they price their services based on their ability to deliver given, that at that price point they don’t have the points on the board.
We find at the top – end here, (as Peter pointed out earlier) vendors are only too well aware who consistently delivers these results.
Today, we are placed on performance based fees for top – end properties. The higher the bar the more we love the challenges and the equation !!
The end price is afterall what the negotiation should be all about. Awesome price – great fee !!
Robert Simeon
Anthony,
I have been selling real estate since 1985, and I must admit that many many private selling agencies have appeared and fallen off the radar over my time in the industry.
I would think that today, your business would be one of the very few still trading that I am aware of.
I am not having a go at you just that most of the companies that started off like your business are today – buyer agencies.
John (Licensed Land Agent)
Robert S,
Your last post says it all RS.
High Commissions & Professional Fees are the beiggest scam in the industry.
I will talk Adelaide and I bet much of this is happening around Australia.
Low fee does not imply low service.
In fact the reverse.
The industry is DEREGULATED in Adelaide Town.
I will be straight to the point. YES I have a low fee package, meaning the low fee eg 1.1% curtails you have to pick a certain high exposure crsip image marketing package that will eventually show your valuable property in the best light to prospective purchasers and thus acheive the vendor the best selling price. This marketing package has a cost, eg up front. If the vendor does not want or cannot afford this package OK I have others with higher fees and I carry the marketing costs till sale or withdrawal. Simple as that. No scam, all up front explanation. Nothing is for free. User pays.And total Risk Management.
RS your reply has a scam angle to it, you cannot fool me, but hay I get it all the time meaning low fee curtails low service. From other agents trying to discredit me.
That is all you high fee agents can throw at the truth.
I have never said on this forum some of the statements as come out of RS’s mouth eg walk the walk, eg runs on board.
But hay, I have all of that under my belt but wish to keep the brag factor under my belt.
I find ethically the best way is to show good advertsing images, inform the prospective vendor all options, show past sales, etc and educate them of the sale & marketing process involved.
I have the BIGGEST this and that is only BIG CAR talk and that is a BIG PROBLEM in the industry.
RS if you were in Adelaide TOWN and bragged BIG talk about $Million sale this and that this and that you would not last long. Reason is that not many million dollar properties sell in the marketplace.
More money in fees is made out of salts of the earth property.
In fact in Adelaide Town over $million property earns the least in % fee’s.
Your go now RS?
John (Licensed Land Agent)
Tony your choice at the end of the day. Which Agent you pick.
In Adelaide over $million dollar properties earn the lowest commission fees for agents if you use a % of the sale price equation.
Properties at the lower end earn the highest fees based on % of the sale price equation in today’s deregulated Adelaide Town Realo Estate market.
Yes in the old days eg 1980’s & 1990’s I can remember selling $70,000 to $80,000 inner burbs properties and earning $3,500 to $4,000 commission on sale. Those days are gone now.