How to report ‘deceitful’ real estate agents

PHOTO: Real estate agents will typically communicate offers to all potential buyers. Picture: iStock

A NSW woman feels a “deceitful” play from a real estate agent cost her $22,000 and she wants to see them punished.

Welcome to Sisters In Law, news.com.au’s weekly column solving all of your legal problems. This week, our resident lawyers and real-life sisters Alison and Jillian Barrett from Maurice Blackburn advise what to do about a real estate agent tricking you into a bidding war.

Question:

I bought a place in Sydney last year after years of saving for a deposit. It’s just a humble one-bed but I’m super happy with it. My only issue is that I think I may have been scammed into paying more by my real estate agent.

When I put in an offer the agent said that one other person was also very interested. My initial offer was $725,000 but I wound up paying $764,000 after a bit of a bidding war. Each time I was gazumped I asked the agent to put it in an email so I had it confirmed in writing. The last email I got from the agent confirmed that their bid was $762,000 which was when I offered the final price.

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The issue is, I recently discovered that the person I was bidding against was a friend of a friend. Such a small world! I met her at a party and she said she bowed out of bidding at $740,000 – which means I potentially overpaid by more than $22,000.

What can I do about this? It feels like such a sneaky move from the agent but I’m not sure how I can prove it! – Elena, NSW

She bought an apartment in Sydney for $764,000. Picture: Supplied

Answer:

Having a level of scepticism of real estate agents is very healthy and stands you in good stead to ensure you are not being taken for a ride.

In your case, on the information you have it does seem like you could have been taken for a ride, unless of course there was a third bidder who you weren’t aware of.

Agents have a statutory obligation to get the highest possible price for the seller (who is their client) and to achieve this, it often means taking offers from multiple buyers which must then, by law, be communicated to the seller.

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To achieve the highest price, real estate agents will also typically communicate all offers to the potential buyers, which, as a buyer feels like the agent is playing buyers off against each other.

This practice is legal in NSW.

You should also be aware that until you exchanged written contracts with the seller, the agent could lawfully continue to negotiate with other buyers, even if there was a verbal agreement.

As such, your friend may have bowed out of the bidding war, but another potential buyer may have made an offer/s.

The Australian Consumer Law makes it unlawful for real estate agents to behave in a misleading or deceptive way, which includes telling buyers there are competing offers when there are not, or increasing the value of competing offers.

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Outside of your suspicions there is unfortunately no way for you to know for sure if the agent was being truthful with you about the offers made.

Helpfully though you have done the right thing by having the real estate agent put details of the offers in writing.

Contact the owner of the real estate agency where the agent worked first off. Picture: iStock

A first step would be to contact the owner of the real estate agency the agent was working with about your concerns. We expect the principal agent will take the matter very seriously as their business could be put at risk by this alleged conduct.

Further, because you suspect the agent was being deceitful and this alleged conduct potentially caused you to overpay for the property we recommend that you call Fair Trading for more information.

You can lodge a complaint with Fair Trading online and they can investigate and take disciplinary action if there has been a breach of the law.

As part of their investigations Fair Trading will likely request the agent’s records of all conversations held about offers made.

The penalties imposed on agents who breach the law vary depending on the seriousness of their conduct.

Agents can be fined up to $22,000 and lose commissions earned from the sale. Picture: iStock

An agent may have their licence suspended or cancelled, can face fines of up to $22,000 and lose commissions earned from the sale.

You could also be entitled to bring a civil claim against the agent under the Australian Consumer Law for misleading and deceptive conduct which you should seek legal advice about.

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This legal information is general in nature and should not be regarded as specific legal advice or relied upon. Persons requiring particular legal advice should consult a solicitor.