Things are about to get interesting in the online real estate market with the entrance of PBL’s Myhome.com.au to take on realestate.com (News Limited) and domain.com (Fairfax). But if you’re about to sell your house this is one instance where increased competition might not deliver what you’re looking for.
The word around the traps is that PBL is having quite a bit of success with signing up the major real estate franchises – such as LJ Hooker – with the promise of free ads for at least the first six months and a slice of up to 20% of equity in the business for the agents who sign up.
It’s an attractive deal but one that raises a rather intriguing ethical conundrum. When you hire an agent to sell your house you pay that agent to act in your best interests by running the best possible advertising campaign and negotiating the best possible (ie cheapest) deal.
But if the agent owns part of the media company running your ads, and stands to benefit from its success, just how independent will her or his advice be? How rigorous will the agent be in screwing down the media company he part-owns to get a better deal on your behalf?
On the face of it, it looks to be a flagrant conflict-of-interest that mirrors the troubles AMP has had with its allegedly independent financial advisors recommending that clients purchase AMP products – even when it was not in their interests to do so.
In Victoria the issue is most acute. In 2004 the Bracks Government changed the law to outlaw dummy bidding and kickbacks – sorry I mean rebates – and some industry sources have been wondering out loud if the Myhome.com.au franchise will fall foul of the law.
Not so, says Enzo Raimondo, CEO of the Real Estate Institute of Victoria. Not only is there no legal problem, he says: “I can’t see how agents are going to become wildly prosperous by having a minority holding in a portal that is media owned. They should be looking at doing their own media portal.”
Raimondo’s major concern is not that clients might be ripped off – it’s that agents are getting such a small slice of the action.
“With the ownership amount being so small I don’t think there is a conflict. It’s unfortunate that the real estate industry is fragmented and there’s a lot of people in with short term goals. The day estate agents understand they’ve got what everyone wants – that’s content – they can drive the eyeballs to where they want, not the media. And when that penny drops you’ll have another ballgame.”
A scary thought – if your name is James Packer, Rupert Murdoch or Ron Walker.