Treat real estate agents like advisers: REIA

Real estate agents should be treated like financial advisers and be directly remunerated by the real estate vendor, the Real Estate Institute of Australia advised in a Royal Commission submission.

REIA president Malcolm Gunning noted a proliferation of businesses, portraying themselves as impartial, who choose real estate agents for vendors for free.

"On the surface this appears very attractive. The reality is, however, very different," Gunning said.

"Only those agents that are registered, or are, in some way associated with the selection service will be referred to the vendor. The agent selection service is nothing more than a listing service for agents who subscribe to the service."

In other words, Gunning explained, the selection process is funded by the agents who get selected.

"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 off-set the costs of the selection service," Gunning said.

"The vendor thus pays more and does not necessarily have the most appropriate agent."

Gunning also noted that CBA had recently entered into a relationship with one of these selection services - a relationship he described as "disappointing."

"It is disappointing that CBA took this step knowing the obligations of financial advisers, including that they be transparently remunerated by the client," he said.

"Whilst REIA supports assisting vendors to select the agent that best responds to the vendor's specific needs when the service provider is remunerated by the agent that they select, there is a conflict of interest which should be addressed."

Read more: REIACBAReal Estate Institute of AustraliaRoyal CommissionMalcolm GunningFinancial advice
Link to something CU2taXjq