Category: Uncategorized

Is using 3rd party referral services really a benefit to the vendor

In a submission to the Royal Commission into Misconduct in the Banking Industry, the Real Estate Institute of Australia has said that real estate agent selection services should be directly remunerated by the vendor, not by the agent.

REIA president, Malcolm Gunning, said businesses established to help vendors choose an agent “portray themselves as an impartial consumer advocate offering a free service.”

“On the surface this appears very attractive, the reality is however very different,” said Gunning.

“Only those agents that are registered, or are, in some way associated with the selection service will be referred to the vendor,” he said.

While the service appears to be free to the vendor, said Gunning, the selection service is paid for by the agent it recommends.

“The selection services charge the agent a fee of around 20 per cent of their commission,” he said. “Agents appointed by the service regularly charge a higher commission to vendors to offset the cost,” he said.

“The vendor thus pays more and does not necessarily have the most appropriate agent,” said Gunning.

Gunning said he was disappointed to see that the Commonwealth Bank has joined forces with agent selection service, LocalAgentFinder.

“The Commonwealth Bank took this step knowing the obligations of financial advisers, including that they be transparently remunerated by the client,” Gunning said.

“Just as financial advisers are required to be remunerated by their client rather than the investment house where client’s money is invested, REIA believes agent selection services should be remunerated transparently by the vendor,” concluded Gunning.​

Read more about the Royal Commission into Misconduct in the Banking Industry: