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Case Study 7 and 8

A litany of the worst real estate practices

Ginger and Bob say they are "bewildered", "disgusted" and "devastated". Shirley and Leon say they are angry and horrified by "unethical and immoral" conduct.

Both couples dealt with the same agency which has sued them for commissions and marketing expenses for properties which failed to sell. In both cases, the homeowners have refused to pay and, assisted by the HHPF, have committed to defending the matter "to the bitter end".

The cases read like a catalogue of the worst real estate practices: -

Over-quoting of the likely sale to win the listing

Recommendations that auction was the best and only method of sale

Extraction of thousands of dollars for newspaper advertising

Under-quoting of the likely sale price in auction advertisements

A series of Open House days to create an impression of "activity"

A persistent campaign of "conditioning" to achieve a lower reserve price

Auction day pressure on the sellers to lower their price

Failure to achieve a sale by auction

Damage to the sellers’ home value and personal reputations through inappropriate comments to prospective buyers and others

Demands for payment of marketing costs, despite the failure of
the campaign

Demands for payment of commissions, despite there being no sale

Intimidation of the sellers through threats of legal action

The lodging of caveats on the sellers’ homes

Ginger’s case

Ginger lives with her husband Bob in the suburbs. They say they are shocked at the treatment they have received because, in the beginning, their agents seemed friendly and concerned for their welfare. Now, the agency is demanding $16,492 in commissions and marketing costs for a property that has not sold.

A legal document was delivered to the owners demanding payment by 10am the next day. When payment was not made by this deadline, a caveat was lodged on the home. They describe the situation as "madness".

Ginger’s and Bob’s problems started when the agent, 'T’, visited them to discuss the sale of their home. They told T they wanted $600,000 for the property. Ginger said: "T indicated to us verbally that this price was achievable and at no stage did she indicate that this price was unrealistic."

Ginger and Bob signed the agency agreement because of T’s confirmation of the sale price and because "she seemed friendly, gave the impression that she cared about us and gave positive comments about the features of our home". T strongly recommended an auction - to take place as part of an evening of multiple auctions in a local hotel.

Their faith in their agent changed when they saw the newspaper advertisements. Ginger said: "My husband and I were absolutely disgusted and bewildered that advertisements which were placed within the newspaper stipulated bidding from $350,000 ... When we raised our concerns with T about the ridiculously low advertised price, she dismissed our apprehensions and indicated that this was normal practice as it attracts more buyers and exposes the property to a wider market.

Regular reports from the agency followed the open inspections, with numerous references to buyers who could afford between $300,000 and $450,000 or expected the house to sell in that price range. Ginger says: "I believe it was T’s intention to manipulate the market by conditioning us down in price."

On the evening of the auction T asked Ginger and Bob to nominate their reserve price and was told firmly that it was $600,000. There was only one bid at auction - $405,000 - and a verbal offer of $410,000 soon after the property was passed in. Ginger says: "We were devastated by the failed auction; however, we half expected it because the wrong market had been enticed to inspect the house."

Ginger claims the agency "lost all interest" in their property after the auction and their refusal to compromise on price: "When we did speak with T, she was often rude, disrespectful and was now constantly talking about the negative aspects of the house."

Subsequently, four couples visited the home, saying they were interested in the property but were unable to contact T who did not return their calls. Another person told them that she spoke to T about the home and was told "Ginger and Bob are always drunk and are impossible to communicate with". Neither Ginger nor Bob is a drinker.

Ginger also said: "A friend of mine has told me that while in the agency, this person overheard T talking about Bob and I to another couple. This person heard T state: Don’t worry - the bank is about to foreclose on the house. You can have it for $300,000."

Ginger said: "I have subsequently heard from my bank manager that T has been liaising with him, stating that we refuse to accept and sign legitimate Contract for Sale documents. If you call a verbal offer of $410,000 and an incomplete Contract for Sale for $450,000 - no purchaser signatures and subject to a $400,000 finance loan - legitimate offers, then I am guilty. However, our asking price was $600,000."

Ginger said T had been hired to sell the home for the best market price. "We didn’t hire her to advertise bait pricing; attract the wrong market; damage the value of our home; mislead, deceive and tell lies to potential buyers; and tarnish our good name and reputation".

A Statutory Declaration made by Ginger was delivered to the agency. Five days later a letter arrived from the agency’s lawyers. It stated: "You are indebted to our client for the agreed commission and marketing costs of $16,492." They were given until 10am the next day to pay.

This included an invoice for commission for $12,825. The couple had not previously seen or been told of this invoice. The other invoice was for $3,667 in marketing costs. Ginger said, "Please tell me how an agent can claim a commission for not selling our home?"

Ginger and Bob were advised that the agency had lodged a caveat on their home because of their refusal to pay these invoices.

The HHPF has taken Statutory Declarations from Ginger and Bob, and legal representation has been organised to help them apply to have the caveat removed. Official complaints have been forwarded to various State and Federal authorities.

At this stage Ginger has not paid the commission and the caveat is still in place.

NSW couple loses $35,000 under auction day pressure
Shirley’s case