Shame File

iStock_000008186252XSmall-reduced.jpgWelcome to the Shame File. The purpose of this section is to help you avoid being caught out by unscrupulous real estate agents and cunning tenants. We intend to report actual events and situation that we experience or clients have brought to our attention in an effort to educate you so that you don’t get caught out which could cost you thousands of dollars and many sleepless nights.  

If you have something to report then please e-mail or contact us so that we can list it and hopefully save others like yourself from being caught out.

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arrow-orange1.jpg T-Bone steak with your rent sir..?

The real estate agent is operating out of a butcher shop. When we went to collect the property file for a new client we were shocked to find that the agent had a make-shift set up in a butcher shop. Not only was the tenant status atrocious and 5 months in arrears but the client was even more surprised when we informed them of their former agents operations. 

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Why not drop in and visit your agent once a year to say g’day and have a coffee with them. It is well worth getting to know who the person is looking after your property and you can get a general feel for the agents operation by viewing their premises. The working environment of good agents usually changes for the better over time whereas not so good agents tend to slacken and look tardy over time. If an agent can’t look after their own premises then how can they look after your property?

 

arrow-orange1.jpg Bigger doesn’t mean better..! 

A new client came to us in December 2006 and said that their agent was having trouble renting their property in Strathfield. The agent told the client that it was because of a weak rental market, the time of year and the property needs to have further rent reductions. The client informed us that they had there property with this agent because the agent convinced them that they would achieve the best results because the agent was the largest renting agent in Strathfield, they had more exposure and property managers. Well it appears that their size may have had the opposite effect. We did our own investigations and found that yes the agent is the area but they also had a proportionately large property vacancy list. When we did a market analysis for the property we found that the problem wasn’t with the property but rather the agent. The agent had 66 properties advertised for lease in December 2007 which would represent about a 5% vacancy rate. At the same time Sydney had a vacancy rate of 1.5% and our office were advertising only 2 properties which were not yet vacant. So it cost the client thousands of dollars in lost rent to learn the lesson that Bigger is better for the agent but not necessarily better for the landlord

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Use the Property Manager Assessor tool to assess the quality of the agent and use the Rent Calculator tool to assess the general rents for similar properties in the area. 

 

arrow-orange1.jpg Adequate security is essential

A Tenant made a claim against the landlord that the property they occupied had inadequate security and as a consequence they were burgled. The Tribunal held in favour of the tenant to the sum of $10,000.

Background: The apartment was on the top floor of a modern 6 story building which had restricted key security access and the front door to the apartment had a commercial grade lock.

The Tenant claimed that the burglary took place during mid morning whilst they were out for about 2 hours and the building front security door was being worked on by tradesman. The Tenant was not insured and they signed a lease confirming they accept the level of security provided.  

If common sense prevailed then the Tenant would have had their claim thrown out of the Tribunal but unfortunately the Tribunal Member on the day was severely lacking and overly sympathetic to the Tenant. It was held that adequate security means a separate “deadlock” to be placed on the front door of the apartment. Fortunately in this case the Landlord had insurance which covered the claim in full.    

 

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 Approved Deadlocks should be placed on all external doors of houses and town houses and entry doors to an apartment regardless of the level of security in the building.

Make sure you have adequate Landlord Insurance to cover such events.

 

arrow-orange1.jpg  Who is really managing your property?

Did you know that your property may be managed by another company without you knowing it?

When we collected the management files from the real estate agent that was on the lease we learnt that the actual property management function was subcontracted out to another company.

There is nothing wrong with this as it often results in a specialist management company doing a better job at looking after the property than the local agent.

But there is a problem when the landlord is unaware of it and was very disturbed when we informed them of the situation. The subcontracted company was in fact a company that the landlord had bad experiences with in the past and would have not given the property to them having know this.

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 Ask the property manager the question “do they do the property management themselves or do they subcontract it out to another firm”. If the answer is yes then do your research on that firm as they will be the ones responsible for the management of your property.

Also include in your agency agree

 

arrow-orange1.jpg  Rogue agent caught out 

An established and well know agent in Manly was caught out for taking advantage of a vendor client when selling their home. The agent exploited his relationship with the elderly vendor to purchase the property which was sold 12 months later at double the purchase price.

Following legal action by the vendor’s family, the agent has been banned prosecuted and banned from holding a real estate license for 10 years.

This is all well and good but it doesn’t compensate the family for their financial and emotional suffering from such scrupulous actions.   

The NSW Fair Trading should use the $billions of dollars they obtain from real estate related fees and charges and interest received from the banks from rent money held in trusts to create a fund to help compensate victims of such crimes where there is no chance of recovering compensation from the perpetrator.

A similar scam occurred in Hervey Bay Queensland by a prominent agent who auctioned a property which was purchased by a related property company at the auction. The interest of the agent was not disclosed. The property was sold soon after settlement to a developer for a substantial profit. The media got hold of this case and only then did the Queensland government show any interest in the case. Yet no action was taken against the agent involved and they are still free to continue doing the same thing.

And the Queenslanders call us southerners Mexicans..! Doesn’t figure.

Click here for full details of the case

 

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There will always be rouges operating in any industry whether that be real estate, legal, medical etc. What is important is that youm take the right steps to minimise the risk of being caught out.

In the above situation the easiest and cheapest way to aviod this from happening is to obtain written appraisals from atlest 2 local agents. Then for the cost of around $400 you should obtain a written valuation report from a sworn licensed valuer. This will not only avoid underpricing but it will also prepare you better for over pricing by agents. If the valuation price is significantly lower than the agents appraisal then negotiate for the agent to pay the valuation fee if the property is not sold at the price that they are claiming in their appraisal. It is important to note here that valuations are usually based on historical data and not real time market conditions so a good sales agent should usually be able to give you a more accurate indication of an expected sales price specific to your property and the prevailing market.  

   

Continually being updated, so stayed tuned  

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