Unfortunately, dishonest real estate agents exist, and their conduct can have devastating consequences for their victims. But there are ways in which you can protect yourself from dishonest real estate agents.
Dishonest Real Estate Agents: Stealing From Trust Funds
In Melbourne, a real estate agent has been jailed for more than three years for misappropriating about $1.9 million of clients’ cash.
Anthony Vito Brancatella, 43, skimmed the money from scores of customers’ trust accounts, which estate agents use to safeguard deposits paid by buyers. Brancatella pleaded guilty in Victoria’s County Court to 62 charges of wrongful conversion and false accounts, admitting he had used clients’ money to help run his former business McDonald Real Estate in Melbourne’s eastern suburbs.
Consumer Affairs Director Simon Cohen said any abuses of trust-account management were unacceptable.
“Community confidence in how real estate agents deal with trust money is absolutely critical. Any real estate agent who breaches this confidence, and takes money from a trust account without proper authority, is committing a crime,” Mr Cohen said. “While most estate agents are doing the right thing, CAV (Consumer Affairs Victoria) will pursue any agent who is not meeting their legal obligations.”
The agency has paid more than $500,000 to Brancatella’s victims out of the Victorian Property Fund, set up to compensate consumers who suffer a financial loss by reason of an estate agent stealing from a trust account.
Dishonest Real Estate Agents: Exploiting Non-Disclosure Clauses
Current property laws in Queensland allow agents to exploit “non-disclosure” clauses and sell fundamentally flawed properties to unsuspecting buyers, according to Trish Mackie-Smith, the owner of a property inspection company who has a background in property law.
Ms Mackie-Smith said the current regime is based on the ‘buyer beware’ principle, which is “fundamentally unjust”.
“It is astounding that it has been left untouched to wreak havoc for so long,” she said. “This law causes immeasurable financial hardship to buyers who have no respite if they buy a house that has defects. Many buyers do not even get building reports to save money or because they think they don’t need to. Even worse for those buyers who do – these are only visual inspections – it is easy for dishonest sellers to cover up these issues so they are undetected. “It is outrageous that the most important and most expensive purchase in our lives is not covered by consumer protection laws.”
The petition is seeking to switch the onus back onto agents and vendors, in the interests of protecting buyers. “The winners in this current legal loophole are the sellers and some dishonest real estate agents, who can get away with non-disclosure. It leads to dishonesty and unscrupulous practices so that the sale gets through regardless of structural defects,” Ms Mackie-Smith said.
Dishonest Real Estate Agents: Accused of Collusion
A wealthy Melbourne real estate director is accused of colluding with associates to conceal almost half the true value of the family’s $8 million mansion in a divorce settlement.
“Mrs Barnes”, as she is identified in Family Court documents, wants a recount after discovering her former matrimonial home sold, allegedly for more than $3 million above its pre-settlement valuation. Mrs Barnes accuses her husband of cheating her out of $1.565 million — half of the extra true value of the suburban home that she claims was hidden from her during settlement negotiations.
Mrs Barnes says in an affidavit that she agreed to let “Mr Barnes” keep the property in return for a sum of money based on an independent valuation of the property.
Mrs Barnes says her former husband called her in February to say he had sold the house but refused to divulge the sale price. Ms Barnes says she again asked Mr Barnes the sale price in March.
“He initially refused to answer me, but then said that it had been sold for ‘north’ of $6 million,” she said.
Mrs Barnes claims she was then told by a friend of conversations with a third agent, who allegedly said he was asked by Mr Barnes to prepare a market appraisal of the home in the sum of $4.7 million which was then provided to Mr Harris to assist his valuation of the property.
When she yet again questioned the sale price in 2014 Mrs Barnes claims Mr Barnes said it sold for $6.2 million.
Mrs Barnes says she then obtained a copy of the title transfer which revealed a sale price of more than $8 million — $3.13 million more than the valuation that had been given less than eight months earlier.
A single expert valuer, identified in the court documents as “Mr Harris”, was engaged for this purpose and in 2014, allegedly valued the property at $4.7 million, increasing that to $4.9 million last year.
How To Protect Yourself From Dishonest Real Estate Agents
The Australian Competition and Consumer Commission (ACCC) says that it is unlawful for real estate agents to:
- intentionally mislead you
- lead you to a wrong conclusion or impression
- give you a false impression
- leave out or hide important information (e.g. in fine-print disclaimers)
- make false or inaccurate claims.
It makes no difference whether the agent meant to mislead or deceive you—it is how you perceived the conduct that matters.
You can protect yourself from dishonest real estate agents by:
Ensuring the agent has a licence. Check with your local state or territory consumer protection agency.
Do some research to understand the going rate for homes for rent or sale in the area. An independent evaluation may help.
Read contracts and documents carefully before you sign. Get legal advice if you are unsure about what the contract means. Ask for explanations to ensure you understand all costs and what they cover; any limitations; lease or settlement time frames and any cooling-off periods.
Ask yourself whether the information the agent has given you seems fair and accurate. Never be afraid to ask for a second opinion.
Be aware of high pressure sales tactics. Any agent who tells you that you must sign today or other similar high pressure sales tactics may be hiding something from you. You should always be given an opportunity to think about and seek professional advice about the purchase.
Never sign blank sales authorities, contracts of sale or rental agreements. The agent may pressure you into signing something because the property is so popular, and threaten you that you’ll lose property. You should seek independent advice about any legal document you sign to protect yourself.
If you’d like independent advice before going ahead with a property transaction or if you feel you’ve been exploited by a dishonest real estate agent, contact us today. We offer a free, 10-minute phone consultation.