Skilled agents key to consumer confidence in real estate

The Real Estate Institute of Australia (REIA) rejects outright claims made by Milton Cockburn of the Shopping Centre Council of Australia that it is trying to “torpedo” COAG’s national licensing plan for real estate professionals.

With all due respect, Cockburn is misinformed, pure and simple.  We do support national licensing, but we are determined to look after Australian property consumers by fighting for the highest possible standards across the board.

The REIA representatives involved in the Property Occupations Interim Advisory Committee (POIAC), prior to the release of the regulation impact statement (RIS) on national licensing, argued for diploma-level qualifications.  The rest of POIAC settled for lower qualifications.  The REIA argued for compulsory professional development to keep the profession up to date but again, the rest of POIAC did not.  The steering committee, compiled of state and Commonwealth regulators, not POIAC, made the final decision.

Diploma-level qualifications, currently in four states and territories, are desired by our members nationwide.  Real estate agents are proud of their profession and the important service they provide to the Australian public, and they want to grow their reputations, not go backwards.  Real estate institutes do not think it is “silly” to be highly qualified.

With regards to commercial property, agents are currently licensed, but the proposed regulations would strip that away.   This leaves the consumer completely vulnerable.  Quite literally, anyone could sell commercial property.  Yes, even a 16-year-old.

POIAC did support licensing of commercial property agents.  A hurdle of $100 million was suggested at the time, but again, the steering committee made the final decision to deregulate commercial property transactions.

Contrary to what some may think, most commercial property sales are under $500,000. In Victoria 51% are under $500,000, so we are not talking the big end of town.  We are talking about “mum and dad” investors who invest in commercial property, either directly or through superannuation funds, and they should have the security and peace-of-mind of having a licensed agent manage their transaction.

For example, the owner of a family sandwich bar in the food hall of a shopping centre wants to sell. In the absence of a licensing regime for commercial sales that provides the consumer with information as to who has the appropriate qualifications and insurance coverage to handle such a complex transaction, the vendor would be vulnerable to anyone who wants to deal in commercial transactions without any qualifications.  On top of this, both parties would take a huge financial risk with their life savings.

I’m quite stunned at how the consumer point of view has been left out of the calculations in the RIS and that the process has been driven by regulators who are not experts on the real estate profession. Their proposals, if implemented, will be detrimental to consumers. The RIS on national licensing states that deregulating commercial property will save a comparatively small $2.37 million.  What this figure does not take into account are consumer costs.

The REIA is also concerned with the proposed deregulation of rural property.  Not all rural property is like Cubbie Station.  In Victoria in 2011, 76% of farms were sold for under $500,000.

The Real Estate Institute of Australia will continue in its endeavours to achieve outcomes that will provide for a national licensing system that supports high standards and not those of the lowest common denominator.