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The Art of Illusion

9 Jul 14

What is vendor funnelling?  In short, it is the artful insertion of "perceived" valuable and presented data between an agent and your potential vendors by a third party.  Vendors choose agents and it is those potential vendors that are at the front end of any real estate transaction.

There has been a proliferation of this art of funnelling potential vendors of late - entities that present data to vendors to aid them in deciding who is the best agent for them to list with. 

However, whilst an agent's local knowledge, past sales, current listings and testimonials, and even ratings from previous customers are presented, the vendor's decision to list with such an agent leads to a referral fee - often to the tune of some 20% of the agent's professional fee.  Of course, to the vendor, the service is free.

This proliferation of companies suggests that it is enormously lucrative to insert themselves into the front end of the transaction.  In order to entice the vendor, it is often presented as the threat of choosing the wrong agent which leads to a lesser price in the market and hence the potential to cost them "tens of thousands of dollars".

Agents in South Australia need to ensure that there is no illegal sharing of their professional fee with a non-agent.

Further, the collection of this perceived relevant data and presentation of that data in order to enable and assist a vendor to better decide who is the best agent for their circumstances can often be flawed - generally a hotchpotch collection of publicly available data that is sometimes deficient in many respects.

Feedback from several members of REISA suggests errors in their data.  Also, feedback from several mystery shoppers of this sevice suggests a tenacious and relentless follow-up series of phone calls and emails by these companies to better ensure a referral fee is achieved then they make recommendations as to which agent to list with.

People who make big decisions often do a check on the internet to see "what feedback" might be available to assist in their decision making process.  This is particularly so with the younger generation - a virtual bible of "digitised word of mouth" feedback and these vendor funnelling entities are positioning themselves as providing the data in the form of knowledge to assist vendors in their decision making process.

A noble cause undoubtedly but it comes at a cost to the agent.

What can REISA do to protect the front end of the real estate transaction?