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Vendor funnelling- REISA CEO says no

12 Feb 15

There is a proliferation of online companies at the moment either presenting information to vendors to assist them in choosing an agent or actually selecting agents and then facilitating contact between the agent and vendor.

All these companies then charge a fee to the agent the vendor selects and ultimately sells a property for.

Section 24H of the Land and Business (Sale and Conveyancing) Act 1994 states that an agent must not pay the whole or part of the commission to which the agent is entitled for services as an agent to a person other than (a) an officer or employee of the agent; or (b) a registered agent.  There is a maximum $5,000 penalty for contravention of this section.

The ultimate question I have asked myself is this – can a court construe the various arrangements that these online companies propose regarding the fee the agent must pay to them, as the sharing of a commission?

Given that the purpose of this provision is to protect the integrity and interest of the consumer in a property transaction, then I think yes.

Based on this, I hold grave concerns about these vendor funnelling scenarios.  Members are strongly advised not to partake in these activities – which could very well be a breach of the Act.

Furthermore, I note that in the ordinary course of agency business, promotion of an individual agent or sales representative with associated pictures (with or without consent) is not a problem.   However, given the very real potential for this activity to be a breach of the Act, I encourage all members to ensure the removal of the use of their images and names from these websites to ensure that no perception of legitimising these practices is allowed to occur.

Lastly, I note that these websites often state that they will supply a vendor with "all agents" in their nominated area based on data, experience, testimonials etc.   Firstly, often the data is out of date and inaccurate.  Members advise me of that occurrence regularly. Secondly, I am of the belief that facilitation of contact only occurs between a vendor and an agent who has signed up with the online company – not "all agents" as is often described.   I am sure that such statements are not acting in the best interests of any potential consumer.