‘Biggest liar gets the listing’: The tricks some agents use to pressure home sellers

‘Biggest liar gets the listing’: The tricks some agents use to pressure home sellers

Tom Panos credits himself with being Australia’s top real estate coach, so when he arrives at an agency for a private training session, agents take note.

After all, his Real Estate Gym website has about 20,000 subscribers, who pay to learn the art of selling real estate – or what he dubs in one training video as the “list, reduce, sell strategy”.

It is a familiar scenario for many Australian home sellers, whether they know it or not. Panos describes it as “vendor management”, but it is easily confused with the more manipulative practice known as “vendor conditioning” that is commonly derided in the industry.

Vendor conditioning is a dirty, open secret in the property industry that is practised by many agents despite the fact they are being paid to act in the vendor’s best interests.

It’s a process whereby an agent exaggerates or blatantly lies about a property’s value to get the listing, only to start massaging the seller’s expectations down once the agency agreement is signed.

“It’s one of the more dubious tactics that are out there in the industry,” said Louis Christopher, managing director of SQM Research.

Whether you call it vendor conditioning or management, few sellers imagine that’s what they are signing up for when they welcome an agent into their home.

Panos outlined his tips, later posted briefly as a video to social media and watermarked as part of his training website, in a session at the office of high-profile agent Josh Tesolin, whose licence was recently suspended for four months by NSW Fair Trading following an investigation by this masthead’s Bidding Blind investigation.

“It all starts at the listing presentation. Trust me. That’s where the process starts,” Panos instructed Tesolin and about half a dozen others. “When you go to the listing, what you do is you win the listing, and you give them hope.”

Then comes the “set-to-sell meeting”. This is no time for small talk, Panos said.

“Go in early with the bad news. ‘We need to realign the value of your property from initial expectations by 5 per cent because I’d rather be sitting with you next week negotiating offers than having no offers’.”

Panos denies there is anything wrong with his strategy to shape vendor expectations, adding there’s a difference between training agents to factor in emotional buyers who will pay more for a property, and training agents to effectively buy the listing with lies.

Panos told this masthead the video was intended to train agents for handling tough markets, such as when interest rates rise, and related to a conversation held with vendors a week or so after the property was listed.

Lies and ‘distasteful’ manipulation

Whistleblowing agents and property insiders working across Melbourne and Sydney said the practice of deliberately manipulating vendors through lies and other dirty tactics, first by getting them to list their house with them and then convincing them to sell their property quickly, was “common”.

Two former Melbourne real estate agents, who spoke anonymously to detail practices at their previous workplaces, said sellers would also be “harshly conditioned” to accept less money than they originally hoped, or to get a quick sale. 

In one technique, detailed by a former agent at a major real estate franchise, vendors were given a report containing negative buyer feedback, much of it forged.

“A lot of it we made up,” he said. “They would manufacture this feedback most of the time and present it to the owner … when a lot of the time, buyers wouldn’t even be saying that.”

By the time auction day came around, the former agent said, many sellers would accept less money, or be pleasantly surprised if they fetched more than initially hoped.

Another former Melbourne agent said he was trained to encourage buyers attending early inspections to put in low bids, to scare the sellers into lowering their expectations.

While some sellers had unrealistic expectations, the former agent said, this manipulation “was just done in a very distasteful way” and wasn’t always in the vendor’s best interests.

Being successful as an agent was about the volume of house sales, rather than achieving the highest prices for each property, he said.

“If you sell a house for an extra $50,000, but it takes you a few extra weeks to sell, it’s not a substantial [increase to your commission], so it’s just about moving it … I really didn’t like that much, even more than the underquoting.”

This was a fairly common industry practice, said Christopher, whose research firm monitors the auction market closely. “It’s called, ‘buying the listing’.”

Melbourne-based seller advocate Julie DeBondt-Barker recalls hearing a trainer discuss the practice in a session focused on ethics in the real estate industry in the early 2000s.

DeBondt-Barker said the trainer ran through a chapter on ethics, closed the book and candidly addressed the students: “He said, ‘All that’s lovely, but guys, listen the reality out there is the biggest liar gets the listing’,” she said.

In practice, a real estate agent might secure a listing by assuring a vendor that their home is worth $1 million, when its real value is $900,000, and that they already have buyers looking for similar properties, DeBondt-Barker said. But when the ink dried on the sale authority, the agent would start “conditioning down” expectations.

“They come back three days later and say, ‘Actually, those buyers have purchased, and it’s probably more like $950,000’.”

The first lie

Vendor conditioning can have devastating financial consequences for home owners who have banked on their agent’s assurances their home will probably sell for more than it’s worth.

Retirees Jan and Jim Edwards almost lost the deposit on a new apartment this year after relying on their agent’s advice that their four-bedroom Newcastle home was worth between $1 million and $1.1 million.

The Edwardses said that after listing the property, the agent pressured them to drop the price guide. By the time of the auction, the guide was reduced to $850,000, and the home passed in at $948,000.

“But we needed more than $1 million because we had already paid the deposit on a two-bedroom unit, and because we are retired, we don’t work and we can’t get a bank loan,” Jan Edwards said.

The couple read about the auction of their Newcastle home in last weekend’s launch of the Bidding Blind investigation when would-be buyer David Witherdin spoke of his attempts to buy their house on behalf of his parents.

“I was sorry for the gentleman who missed out on buying our home,” Jan said. “He was so misled by the agent who thought she would pressure us into accepting $160,000 less than we were asking.”

While Witherdin lost hundreds of dollars in wasted due diligence costs through his failed attempt to buy the property, Jan said she and Jim would have lost about $10,500 on their failure to sell given storage, marketing and other costs.

The couple terminated their agency agreement, relisted the home with a new agent and sold it two weeks later for $1.07 million.

Veteran Sydney agent Bill Malouf, who heads eastern suburbs agency Highland Property, said agents were increasingly buying listings.

As stock has dwindled, the number of agents has increased, which has meant greater competition, Malouf said.

“So many agents are desperate to get the business and will say anything to secure it, even though they’re meant to be protecting their clients’ best interests,” he said.

Louis Christopher credits the disconnect between what agents have promised and what vendors will accept as the predominant cause of stale listings on the market for months longer than expected.

SQM Research found that in the year to May there were 7019 properties on the market for more than 180 days in Sydney, an increase of 29.5 per cent on the previous year. Likewise, in Melbourne there were 9614 properties still for sale in Melbourne after 180 days, a 15.8 per cent increase in stale listings.

A slow sales campaign is not something agents want either. Seller advocate Bernadette Hayes said agents would rather sacrifice a higher result, and therefore commission, for a faster sale.

The revenue stream for many agents is not about maximising their commission but maximising sales volume, especially for those who have to split their commission with the franchise head office, Hayes said. “The more properties they list and sell, the more they make.”

A Victorian government report on the state’s property market, commissioned in 2022 but never released, contains recommendations to discourage agents lying to vendors to win listings, according to co-author Enzo Raimondo.

Raimondo, a former long-term head of the Real Estate Institute of Victoria, calls the practice “overquoting”.

“It does occur, and it’s time for it to be eradicated as much as possible … I think the first step is to release the report,” he said.

NSW Fair Trading, meanwhile, is consulting on potential changes to rules governing price guides.

Under pressure

An agent’s first lie is telling owners they can sell for more than their property is worth, said Chris De Celis, a long-time agent in Sydney’s western suburbs.

The lies that follow are the agent’s attempts to crunch the seller on price and manufacture interest from buyers.

Merryn Calear knows too well what can go wrong between the hope-filled start of a sale campaign and the reality a few months later.

When she listed her Coogee home last year, she was told by Roger Wardy and his team at Ray White Touma Taylor that they would push for $4.2 million.

Calear said to sweeten the deal, she was also told the agents would only charge her half price for the advertisements, on a short-term contract and all while they already had a buyer who wanted to buy on her street. A doctor, no less.

“It just all looked golden,” Calear said.

She signed an agency agreement that stipulated a guide of $3.7 million to $4.07 million. “Keep in mind this in (sic) an agreement [that] allows us to guide a price we feel is relevant to get to our goal price,” Wardy texted.

It was a scenario he texted Calear that played out on another of his recent sales, a four-bedroom house on Wentworth Street Randwick: “We started at $3.8m, reserve $4.5m and sold $5.3m.”

According to Calear, Wardy said he could definitely achieve a sale price of at least $4 million.

Wardy denies that, and said he advised a likely selling range of between $3.4 million and $3.64 million.

And while Calear maintained she wouldn’t sell for less than $4 million, buyers were given a guide of $3.7 million. Worse, she said: “The only offers that came in were all around $3 million. The only offer in writing was for $2.98 million.

“That’s a $1 million difference. And meanwhile we are still living there, so we had to stage it twice a week to look like it was a home without two kids and a dog living in it. It was such a palaver.”

Calear said that as the campaign rolled on, she was advised to cancel the auction because there were only two parties.

She said that a few weeks later, Wardy asked her to sign a new agreement with a guide of $3.2 million to $3.52 million given the broader market had started floundering. Throughout she maintained she would only sell for $4 million.

A week before Wardy’s agency agreement was due to expire, buyer’s agent Matt Spooner found a Bronte couple willing to pay $3.5 million.

Calear said she wanted to think about the offer over a weekend, but Wardy wasn’t waiting.

According to Calear, and Wardy’s own texts, he told buyers the only reason she hadn’t signed was because she was attending to her sick child in hospital. None of Calear’s children were sick, nor in hospital.

When Calear still hadn’t signed the next day, he asked her not to stand outside the house in case the buyers saw her again because “I told them you were in hospital with your kid”.

Wardy’s take on the incident differs to his texts. “When I relayed this to the buyer, I said that given she wasn’t responding to calls or messages, she may be attending to a serious issue, potentially even at the hospital. The intention was not to mislead but to retain the buyer’s interest during a period of silence from the vendor.”

Calear cancelled the agency agreement.

“I felt he was dragging me into something really dirty,” she said.

A week later, Calear signed with a new agent, who sold the house a few weeks later for $3.5 million to a different buyer.

The last Calear heard from Wardy was in an email in which he demanded a 2.2 per cent commission on the sale. He has not been paid.

Lucy Macken, The Sydney Morning Herald & Aisha Dow, The Age