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Published 12 February 2013 11:53, Updated 13 February 2013 10:18
Metro Media Publishing has lodged a writ in the Victorian courts against Geelong-based real estate agent Hayeswinck, saying it accepted payments and secret commissions from the Geelong Advertiser. Photo: Peter Stoop
Kickbacks are turning real estate agents into brokers of advertising rather than property agents, says a consumer advocate in the wake of accusations a regional publisher has made against a Geelong real estate agent.
Rebates benefiting real estate agents are outlawed in Victoria but legal in the rest of the country and the typical 20 per cent commission agents get on the value of advertising they buy leads them to place more ads than a client needs, says Neil Jenman, a former estate agent and industry commentator.
“Not only does it push up the price of advertising, it pushes up the quantity of advertising,” Sydney-based Jenman told BRW. “Because what happens is real estate agents are getting a bigger percentage commission than they’re getting on the real estate. The real estate agent becomes more like an advertising agent than a real estate agent.”
On February 11, Metro Media Publishing, half-owned by BRW publisher Fairfax Media , lodged a writ in the Victorian County Court against Geelong-based Hayeswinckle Agent, accusing the real estate agency of accepting payments and secret commissions from the News Ltd-owned Geelong Advertiser to place advertisements, despite the agency being a shareholder in MMP’s own publication and despite the agency having committed to an annual advertising spend of $470,000 over three years.
“He’s in breach of that contract,” MMP Group head Antony Catalano said. “He’s welcome to return his advertising to our publication and honour his contract.”
Catalano said he sought to unearth documents detailing payments by News Ltd, which he alleges include payments of up to $50,000, hospitality and a diamond ring, to the agency through the discovery process.
Hayeswinckle Agent managing director Daniel Hayes rejected the kickback allegations as “absurd”.
“Even though I’m a major shareholder [in MMP’s The Weekly Review Greater Geelong], I’m pushing both products,” Hayes told BRW. “Our agenda is to do the right thing by Geelong people. Unfortunately [Catalano’s] product is extremely expensive. We offer both [publications] so the vendor gets the right to select which they choose.”
News Ltd says it has done nothing wrong.
“We always welcome competition, but the fact is that the Geelong Advertiser offers better rates, wider coverage and helps sell many more houses than our print competitors,” a spokesman told BRW. “Any suggestion that we have behaved improperly is ridiculous.”
Real Estate Institute of Victoria chief executive officer Enzo Raimondo says he doesn’t know if kickbacks are widespread or not.
“There seem to be lot of unsubstantiated claims it may or may not occur,” he says.
The current case, he says, is a symptom of the structural change in media.
“They’re really disputing or trying to maintain a medium of advertising for real estate which is migrating to online.”
Raimondo is also a director of RealestateView.com.au, an online property listing site in which the institute is the controlling shareholder.
Jenman, who called the practice of kickbacks “rampant”, said that while they were illegal in Victoria they were allowed elsewhere in the country.
“They’re legal provided they’re disclosed to the person who’s getting ripped off by them – the sellers,” he said. “The disclosure is buried in the fine print.”
This is not the first time Catalano has accused News Ltd publications of giving inducements to real estate agents. In September, he said News operation realestate.com.au and News Ltd’s Leader Newspapers offered six-figure “sign-on fees” to real estate agents who signed long-term advertising contracts. At the time, News Ltd and REA, owner of the website, denied the claims and accused Catalano of hypocrisy, given that he gave agents an incentive to advertise by making them shareholders.
Jenman said people selling property through estate agents – the ones who pay the cost of the higher advertising – don’t complain.
“They write it off as a bad expense,” he said. “They’re like assault victims. They’re hurt and don’t want to be reminded of it.”