Watchdog probing agents' actions

Property

Commerce Commission says has started investigating real estate agency decisions to withdraw vendors' listings from Trade Me

5th Feb 14, 3:06pm by Bernard Hickey

<a href="http://www.shutterstock.com/">Image sourced from Shutterstock.com</a>

By Bernard Hickey

The Commerce Commission has said it is investigating the decisions by groups of real estate agency offices in Hamilton and Hawkes Bay to withdraw more than 1,700 listings from Trade Me Property over the last three weeks.

"I can confirm that the Commission is looking into this and is currently assessing all the information," Commission Spokesman Gordon Irving told Interest.co.nz, adding there was nothing more the Commission could add.

The Commission monitors compliance of companies with the Commerce Act and in particular anti-competitive activities, including collusion to lessen competition in a market. See more detail on the Commission's role and the issue of collusion in its fact sheet on the Commission's website.

Trade Me founder and director Sam Morgan tweeted yesterday that comments by agency groups about discussing withdrawing their listings was "agency collusion at its best."

The comments from agents were first reported in this article on Interest.co.nz, which included that Trade Me had sent more than 1,000 letters directly to vendors by courier offering to reinstate their listings for free. The agency groups pulled their listings in protest at a quadrupling of fees and said keeping the listings on Realestate.co.nz was sufficient for vendors. Some are continuing to offer Trade Me listings as an optional extra with an additional fee. They are continuing to to include other advertising, including print advertising, as part of their overall packages where the agency 'absorbs' the advertising cost as part of the commission.

Some of the vendors were not informed of the withdrawal of their listings before the event, angering many. Here's comments from one vendor in this article on Interest.co.nz.

The Commission also monitors compliance with the Fair Trading Act, including whether a business is supplying the product or service it had promised to supply. See more here in the Commission's fact sheet.

The vendor commenting in the Interest.co.nz said she was very angry to find the listing had been withdrawn before the house had been sold, given she saw the listing as part of what was paid for in the agency's commission.

Industry commentator and former Realestate.co.nz Chief Executive Alistair Helm also referred to the agency's risks under the Fair Trading Act and also said the agents may not be complying with the relatively new Real Estate Agents Act (2008), which requires that agents work in the best interest of the client at all times.

Real Estate Agents Authority CEO Kevin Lampen-Smith said the Authority was aware of the issue and was monitoring it, although it had not received any complaints.

"We would expect any agent who is changing an agreed marketing strategy to discuss and agree that change with a vendor," Lampen-Smith said.

Helm said the agents were taking a cavalier attitude and a big risk that clients would not get the best price because the highest possible number of buyers had not found the agents' properties.

See more of Helm's comments in this article.

About half of buyers find their homes through Trade Me, which is the preferred search tool for over 80% of home buyers. Only 9% of home buyers say they found their home through print advertising.

See more in this Interest.co.nz article on the research on how buyers find their homes and what they think agents are spending their advertising dollars on.

(Updated with comment from the Real Estate Agents' Authority)

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17 Comments

by iconoclast | 5th Feb 14, 3:37pm 1391567834

gee Bernard

did you actually read that commerce commission fact-sheet on their web-site on what is illegal ?

Or are you doing a spraypaint job?

by waymad | 5th Feb 14, 3:54pm 1391568879

Well, being as how ComCom has evidently woken up from its Christmas slumber, and checked its raison d'etre

("The Commission monitors compliance of companies with the Commerce Act and in particular anti-competitive activities, including collusion to lessen competition in a market")

would it be useful to saddle up the cavalry and mount an equivalent charge upon the building materials and grocery duopolies?

Or is it a case of, as per John Lennon's immortal quip - why is there only one Monopolies Commission? - too few Commissioners willing to take on the big playaz?

by iconoclast | 5th Feb 14, 4:09pm 1391569776

Woulda thought that a couple of real estate agents going over to the smaller outfit would increase competition and reduce the market power of the dominant player. Wouldnt you think?

Anyway, there is a difference between the providers of a service and the buyers of said service. The ComCom fact sheet applies to providers of products and services not buyers

Any bunch of buyers can get together into a buying group - and go where they like - cant they? - Collectively or independently. - is that illegal? Is it collusive? I doubt it.

by iconoclast | 5th Feb 14, 4:57pm 1391572669

But, hey, someone with friends in high places, has complained that it is collusion, and Comcom has jumped

Name of complainant: Sam Morgan

by Boatman | 5th Feb 14, 5:10pm 1391573445

This is rent seeking behaviuor .... the ugly face of Capitalism

Both parties are out of line here

Trade Me is being a bully and taking advantage of its market dominance , which is an anti -competitive and unfair practice.

Imagine if Genesis engergy took advantage of its market dominance and quadrupled energy prices.

Their costs have not quadrupled, the increase is without any justification and is rent seeking , ...its the ugly face of Capitilsm

The RE Agents are being silly in not negotiating the issue before it exploded in public .

by JB | 5th Feb 14, 6:37pm 1391578652

The SOE energy companies including Genesis have done exactly that and have increased energy prices by 7-800 % over the recent past.

That's what Geoff Bertram is on about. Their costs haven't increased either - mainly water. No sign of CC intervention there I might add.

by dh | 5th Feb 14, 7:30pm 1391581805

The Electricity Authority was on the evening radio ness, insisting that over the past three years, based on the way they calculate costs, prices have been going far slower than prices, and this is a triumph of the present system.

While I haven't looked at these calculations, the EA calculations from earlier in the week do not inspire me with confidence in these ones.

by ARB | 6th Feb 14, 10:12pm 1391677947

I think you will find increase in regulation in the energy sector has been large, causing costs to rise. Dont know if this is correct, but I had been told that it is more than 10% of your power bill to cover the energy that is stolen and chase those that dont pay there bill when they should.

by Chris_J | 5th Feb 14, 6:32pm 1391578378

Boycotting a service provider because they put up prices can not be illegal. It certainly does not lessen competition and it certainly doesn't allow the agents to price fix.

Trademe should instead be investigated for using market dominance to eliminate competition then put up their own prices.

Trademe's golden ride is nearly over and soon those shares will be as worthless as one in Equiticorp or Allied Farmers...

by Gummy Bear Hero | 6th Feb 14, 11:00am 1391637632

TradeMe has shown an ability to innovate , and to react to changing circumstances ..... can't see those shares being as worthless as Equiticorp or Allied Farmers .....

.... and with Captain Kirk at the helm , they will continue to go where mankind has never been ... Beam me up , Sam !

by Max Percy | 6th Feb 14, 12:26pm 1391642777

Chris J what absolute rubbish in your claims that TradeMe shares will be useless...

Their is a saying that goes like this.

keeping your mouth shut and people may only think you are an idiot . Open it and it may well remove all doubt.

I would suggest you get a copy of Trademe finanacials and go through it with someone that can read such material and explain to you the contents of their balance sheet, profit and loss sheet, cash flow statements and so on.

Boycotting a service may not be illegal but it makes a mockery of the agency profession whom in almost all their advertising claims for new business make claims such as

1. we work in the best interest of our clients.

2 we are experts in marketing etc

3. we know the market. We can advise you on where best to market your property.

4 Trust us. We have been in business for x amount of years

and so much more but I am sure you get my drift Chris J.

Tell me if I am wrong. My guess is that you are a agent.

Personally I have never read such rubbish in regards to Trademe and its future.

by rjf | 7th Feb 14, 3:13pm 1391739182

TradeMe is one of New Zealand's quirks. If we were worth their time eBay would come in and stomp on them, maybe they will eventually.

by Chris_J | 8th Feb 14, 8:55am 1391802906

Careful who you call an idiot!

Firstly I'm not an agent but an investor who has personally purchased or sold about 90 times.

Next it is a physical reality that all companies will one day become worthless, just as all people will one day die. It's only the timeframe in conjecture.

Just like any business, trademe will one day be superseded, and given that a superior functioning site would capture their user base in an incredibly short timeframe, ownership of such stocks is purely short term and speculative.

They don't actually produce new ideas or innovate, so unlike an Apple, or Microsoft they are just a zombie on life support until the next big thing comes along...

by Chris-M | 5th Feb 14, 11:04pm 1391594662

This is incredible. It now appears that the state is going to dictate where the real estate agents advertise to favour the interests of one company at the cost of others. We are well down the road to a banana republic. What next?

by Your Landlord | 6th Feb 14, 10:47am 1391636845

Typical government employees behaviour.

This is a group of highly paid government employees - paid by the taxpayer and called the Commerce Commision - deciding they better justify their jobs and be seen to be doing work.

So they have started an inquiry.

Why are they not working more on criminal cases?

by Max Percy | 6th Feb 14, 12:10pm 1391641855

What absolute idiots those agents are that are boycotting TradeMe.

Agents already poll near the bottom in surveys such as the Reader's Digest on , have a credibility problem with the public and they wonder why?

Sam Morgan was very polite when he only referred to them as turkeys.

So much for agents that in their advertising for new business stating they are experts in marketing, work in the best interest of the client and so on.

Absolute crap and if I was their vendor/seller I would be having some robust discussions with them on their obligation to work in my best interest not theirs.

What a mockery the agents boycotting TradeMe make of these sort of statements.

ON AFFODIABILITY.

Consider the fact that generally speaking agents are charging a fee of around 3.5% on the gross sale price and that every time houses go up in price they effectively get a substantial pay rise.

Consider that much of marketing costs are paid by the seller.

Consider that real eastate agents are paid by commission , not wages , pay all their own expenses ie running a car, cellphone etc therefore very little wages paid by the agent business owner,

and there is heaps more I could expose when it comes to the cost to run a agency.

Now draw your own conclusions on these agents boycotting TradeMe on the excuse their businesscan't afford the increase in TradeMe fees...

You might also ponder how agents that charge from 1% to 2.95% commission are growing their business and appear to be flourishing yet these boycott dim dot agents say they can't absorb the Trademe increase.

It's the greed factor kicking in.

Note. My comments here apply only to those residentialagents boycotting Trademe. Do not apply to commercial real estate agents who as usual just get on with the job and are in my view very professional in their work pracices.

Nor do my remarks apply to the hardworking agents that pay more than lip service to the added value they bring to the table in genuinely wanting to assist their clients and there are many of them.

Real estate rules probably prevents them from speaking out against their idiotic greedy and stupid colleagues.

by Henry_Tull | 7th Feb 14, 3:09pm 1391738954

What gauge would do the best job.

The wheeze some speak about is agents getting after the fact rebates on bulk media buying, with however the vendor left with the pre-rebate list price media cost to fund....

Similar to the builders doing odd jobs for the agency, in return for the stream of agency directed landlord funded property repair tasks...

It's why we love 'me. Bless....