The legitimacy of a News Corp-backed real estate agent comparison website has been challenged by the peak industry body, which criticised agent-finders as “opportunistic entities” that offer “services of questionable value”.
A relatively new phenomenon, real estate agent comparison websites claim to provide a free, unbiased service to customers looking to find the best local real estate agent to sell or rent their property.
But the Real Estate Institute of Australia (REIA) cast doubt on the trustworthiness of these emerging sites.
“These businesses portray themselves as an impartial consumer advocate offering a free service to choose the most suitable agent for marketing their property,” REIA President Malcolm Gunning told The New Daily.
“On the surface this appears very attractive, the reality is however very different.”
In a submission to the banking royal commission, REIA expressed particular concern about a new partnership between the Commonwealth Bank and News Corp-backed agent comparison service LocalAgentFinder.
“The Institute finds it disappointing that CBA would engage with this business model and the services [LocalAgentFinder] offer,” the REIA said in its submission.
The Melbourne-based company recently raised $5.5 million in a funding round led by Scaleup Media, a media-for-equity fund owned by powerful media industry players including News Corp Australia – which also owns property listing heavyweight realestate.com.au – as well as Nova Entertainment and Network Ten.
While agent comparison services appear free to the vendor, the business is instead remunerated by the real estate agent it recommends.
“The selection services charge the agent a fee of around 20 per cent of their commission and the agent appointed will regularly seek a higher commission to offset the costs of the selection service,” Mr Gunning said.
“The vendor thus pays more and does not necessarily have the most appropriate agent.”
REIA described typical agents who use comparison services as “inexperienced newcomers to the industry who find it difficult to compete with experienced, locally-recognised respected agents”.
“The algorithm that will be used to gauge the best agent in the area doesn’t exist. It’s all about whoever’s prepared to subscribe and pay a 20 per cent fee who gets the job,” Mr Gunning said.
In its submission, the REIA argued that the agent the comparison service appoints would “in all likelihood be far less competent and experienced” than other agents in the vendor’s area.
“This is clearly a breach of trust,” the REIA told the royal commission.
LocalAgentFinder dismissed REIA’s claims as inaccurate and a misrepresentation of the company’s services.
“Over 65,000 Australians used LocalAgentFinder last year to navigate the ever-stressful selling process and their satisfaction can be evidenced from the hundreds of customers who have reviewed our business positively on Trustpilot, whereas the REIA’s assessment of agent selection services misrepresents our business and services like ours,” LocalAgentFinder CEO Matt McCann told The New Daily.
“As a result, LocalAgentFinder is drafting its own submission to the royal commission to correct the inaccurate assertions made about our business and how we operate.”
The Commonwealth Bank, currently under fire at the royal commission for financial misdeeds, declined to comment to The New Daily about the concerns raised by the REIA.