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Case Study 8

A litany of the worst real estate practices

Shirley’s case

Shirley had an ordeal with the same agency, though a different salesperson. Partway through the marketing campaign for her home in the upmarket suburb, Shirley realised she was being deceived, lied to and manipulated.

In the end, her home did not sell. But worse, Shirley received a demand from the agency for payment of $2,305 in commissions and marketing costs.

It began when Shirley looked at sale prices in her area before placing her home on the market. She found comparable homes had recently sold for between $400,000 and $470,000, and decided $400,000 was a reasonable asking price for her home.

Two sales personnel visited her home, made positive comments about the features of the house and agreed that a sale price of $400,000 was achievable.

Shirley says that the salesperson, 'W’, commented: "A house of this quality in this area should have no difficulties as the prices are going through the ceiling. I think your price is very achievable and I recommend that we take it to auction because this is the best method of selling if you want the best price."

Encouraged by that response, Shirley and her partner signed an agreement appointing the agency for three months, with an auction to be held on 13 February.

A week later Shirley received a letter and a "Service Guarantee", signed by W, which states in part: "We pride ourselves in providing the best marketing strategies and highest service possible in helping to achieve the best results for our clients."

A series of Open Inspection days followed, with written reports from the agency later. These included feedback from potential buyers wishing to spend from $175,000 to $250,000 and references to the property’s price range as "$200,000 to $250,000" and (later) as "$250,000-plus".

Shirley says: "I was extremely alarmed ... it became evident that the marketing strategy and advertising campaign was obviously targeting the wrong market ... My worst fear became reality when I read in our advertisement displayed in the newspaper: Bidding from $200,000."

The next day Shirley confronted W and expressed her concern that her home had been advertised in that manner. She says W’s response was: "This marketing strategy is the way we get bums on seats at the auction, it’s all part of the plan to attract more buyers. This approach attracts a wider market - it’s all under control, just trust me."

W also revealed that she and the other salesperson agreed, when they had taken the listing, that the likely selling price was $325,000. Shirley says: "I spoke to the other salesperson and he confirmed that he and W did speak out front (on the footpath) and discussed pricing after I signed the contract, and as a result he wrote $325,000 on a piece of paper."

Shirley phoned the agency principal to complain. She refers also to receiving "conditioning" letters from the agency.

The final written report from W, following seven Open Inspections, stipulated: "Price range: $250,000 plus. Shirley visited the agency and set the reserve price at $380,000.

The next day the home went to auction as one of six properties presented at an auction evening and was passed in. The property remains unsold.

Shirley received a legal letter demanding payment of $2,305 to the agency for "marketing expenses". She was also advised that a caveat had been lodged on the title of her home.

She intends to lodge an official complaint with the Office of Consumer and Business Affairs if the agency’s invoice for marketing costs is not withdrawn, is prepared to test her case within a South Australian court and wishes to make a claim against the agency "guarantee".

The HHPF has taken a Statutory Declaration from Shirley and legal representation has been organised to help her remove the caveat.

Official complaints have been forwarded to various State and Federal authorities.

The Office of Consumer and Business Affairs in South Australia completed an investigation into Shirley’s complaint and recommended that Shirley pay the advertising costs demanded by the agency. The bill remains unpaid and the HHPF presently intends to assist her defence.

Ginger’s case
Two-tier marketing