Have you ever played cards with somebody who hides the good ones? You think you have a winner, but suddenly a pair of aces appears from nowhere in that person’s hand. Some people refer to that as being a card shark, but where I come from, they are just cheats.
The government has rules to make the game fair, for both the consumer and the trader. Remember, when we have a cheat in our midst it means that we are unfairly disadvantaged in the marketplace. Leverage has come across a story in the last month, which demonstrated why we need rules and an effective government instrumentality to enforce them.
Leverage was advised of an organised scheme between selling agents and buying agents. We were advised that the selling agent, after each open house, provides a copy of the open house list to a buyer’s agent in the same area. That buyer’s agent rings that well qualified database and offers his or her services as a buyer’s agent.
The buyer’s agent then reintroduces these people to the property and negotiation occurs.
Due to the collusion between the buyer’s agent and the selling agent, both parties know where the purchaser is at in relation to price. The vendor’s agent therefore gets an unfair advantage in the negotiation. Most of all, the purchaser’s confidentiality is compromised.
What Leverage doesn’t know is whether money changes hands between the two agents. We have no evidence it does, but if ever exposed there will always be a suspicion that the selling and buying agent’s are colluding for the purpose of profit.
Let’s remind everyone what the rules are:
Rule Number 7 of Schedule 1 clearly sets out that an agent is not permitted to provide the personal information of a purchaser or a “prospective purchaser” to any person without their consent. This means that, the provision of this list without clear consent is a breach of Section 37 of Property, Stock and Business Agent’s Act 2002. Additionally, it is embedded throughout this act and it’s regulations that an agent has a fiduciary duty to act in the best interest of the person paying them. In this case, the vendor has every right to hope the selling agent is acting in their best interest and trying to achieve the highest price. In relation to the buyer’s agent, prospective purchasers have every right to believe their agent is going to try and get the lowest price in the marketplace.
In the time when everyone is bashing agents for their lack of ethics and skills, this practice is not one that promotes the industry. Leverage has spent the last fifteen years advocating the goodness of agents both publicly and privately. One of the agents who revealed this story to me said, “it makes you sick to your stomach”. This practice may be unfair to the consumer but it is worse amongst your mates. You can’t compete fairly when people break the rules.