Valuers acting as real estate agents. Is there a conflict of interest?

[j]

I was checking out the Sydney market looking for a valuer on yellow pages

See here http://www.yellowpages.com.au/searc...real+estate&locationClue=Sydney+NSW&x=39&y=20

What was fascinating is that the licensed/registered valuation companies were acting as real estate agencies and providing listing/selling services, property management services and other real estate agent services

check out a few sites

http://www.vjray.com.au/ - small operator
http://www.raineandhorne.com.au/valuationssydney - Is a real estate agency any way.

Surely if these businesses are providing licensed valuations of property and they are also selling the same property there is a conflict of interest?
Where is the independance?
Where is the impartiality?

Could the valuation company for example place a value on a house and land development, and then also act as the listing selling real estate agency?

It's all a bit dodgy....
Buyer beware!

I am a bit skeptical about valuers acting as real estate agents and vice versa.

 

[boods99]

Hi j,

This is quite common, especially in the commercial sector (Knight Frank, CBRE, Colliers etc)

I can't see any real issue with it as long as the purchaser conducts proper due dilligence and takes the fact that the valuer is the selling agent into consideration.
And, it always pays to get an "independant valuation".

Boods

 

[RightValue]

Could the valuation company for example place a value on a house and land development, and then also act as the listing selling real estate agency?

.

Yes indeed.. If the firm also holds a RE Agents licence.

If the valuer is a registered valuer in NSW .

Mind you; no one forces you to pay the asking price of any property regardless of it being backed up by a valuation, or do you pay asking price for all the property you buy?

One should note that getting registered as a valuer in NSW is ludicrously easy. All you have to do is prove that you have done an approved valuation course, you do not need any actual experience.

However unless the valuer or counter signatory is also an Associate or Fellow of the Australian Property Institute and a Certified Practising Valuer, no bank will likely accept the valuation and under the valuation standards conflicts of interest must be disclosed in a valuation report.

cheers

RightValue

 

[Leghorn]

It is only a conflict if the agency selling the property is also valuing it. Given that the top firms for valuations are all agency based it is not an issue that there are sales agents and valuers within the same real estate organisation.

 

[j]

Valuers conflict of interest

Thanks Leghorn I have done some research.



There is no national legislation, no national regulation or licensing requirements, no national code of ethics and no national accreditation standards for valuers?



Legislation, regulation, licensing and codes of ethics are state by state. Some states do not have relevant legislation, regulation, licensing or code of ethics. In these states Valuers may be registered members of the Australian Property Institute (API) http://www.propertyinstitute.com.au/



The Australian Property Institute comprises members who are Valuers, property managers (Real Estate Agents), property educators, property lawyers, professional property advisors (Real Estate Agents), and analysts, bankers, fund managers, and accountants.



So valuers, real estate agents, developers and lenders all under one umbrella!



The API is not regulated by specific legislation and there are only institute penalties if members contravene a code of practice. There is no independant watch dog to regulate these guys.So industry self regulation only, to protect the public and consumers.



This industry is not like other professional industries that have national legislation, national regulation, national standards, national code of ethics etc e.g. see the Australian Health Practioners Regulation Agency http://www.ahpra.gov.au/ and the Medical Board of Australia http://www.medicalboard.gov.au/



Based on my research there are limited or nil legal penalties if valuers get it wrong or seen to act in the best interest of other parties (lenders, developers etc)



I am happy to share my research data with you indicating state by state what legislation, what regulation, what standards and what legal penalties apply to valuers.



At this point in time the Valuer Industry offers all care and no responsibility..



Not alot of protection for the consumer?



cheers

 

[RightValue]

j,

your post is a case of a little information is dangerous.

I suggest you actualy re-read my earlier post.

Do you have any idea what it takes to become a Certifed Practising Valuer?

Not all membes of the API are CPV's, just as not all members of the property profession are valuers.

As a consumer you have legal remedies if you think the valuer was wrong, you can sue them.

REA's are regulated .. mmmmmm .. that works well doesn't it?

State/Teritory registation of valuers only exists in NSW (refer to my earlier post) QLD and WA.

However even if you are a registerd valuer in any of those states a bank will not accept the valuation unless the valuer is a CPV, quite simple.

If you don't want to use a valuer, don't, no one forces you to do it.

Interesingly the banks rely heavily on self regulating valuers yet we do not have the mortgage crises that exists in other countries.

Regulation doe not ensure comptence, just lke your limited research and knowledge does not ensure correct couclusions.

RightValue

 

[Leghorn]

Don't forget an additional requirement is for all CPV's under the API to have professional indemnity insurance.

 

[j]

Right Value

you stated " Real Estate Agents (REA)'s are regulated .. mmmmmm .. that works well doesn't it? "

Yes there is state by state regulation for REA's and standards of practice are always being questioned and practices improved. A healthy system of regulation allows input from the public and consumer. Unless there is something to hide?

Have you seen any details on real estate scams recently?

Real Estate Agent Rips Off Terminally Ill Women

Real estate agent jailed

Real estate veteran Winston Neville Brown jailed for fraud

Real estate agent gets jail

Investment Seminar Scams

Real Estate Scams


Real estate agents accused of price inflation scam

Anatomy of a property scam . . . or how to make an easy $3m

Co-Develop property schemes to be wound up

Property spruikers remain active

ASIC finalises proceedings with Jamie McIntyre

Melbourne property developer John Gerard Sage jailed

People’s life savings and homes have been lost in the Westpoint collapse

Steps taken by ASIC to recover funds for the benefit of Westpoint investors

I discovered this interesting story on real estate ethics in the USA below. I am sure this type of discrimination does not occur in Australia??

How to lose your Real Estate License - Realtor Ethics

Are you suggesting that the Valuation Industry is beyond reasonable questioning?

That this industry is beyond reproach?

Are you suggesting there is no room for improvement?
That the valuation industry is beyond scrutiny?

LOL

 

[VYBerlinaV8]

I deal with conflict of interest quite a lot professionally (my profession is unrelated to property). My opinion is that conflict of interest is a customer issue - it's up to the customer to determine whether a conflict of interest exists, and the level to which the conflict may impact them. Some customers are paranoid, some don't care.

I personally don't care, provided I understand the situation, the motivations, and what's really going on. If you're careful, you can sometimes get a conflict of interest of another party to work for your benefit.

 

[RightValue]

Yes there is state by state regulation for REA's and standards of practice are always being questioned and practices improved. A healthy system of regulation allows input from the public and consumer. Unless there is something to hide?

Have you seen any details on real estate scams recently?

I see these scams almost weekly and protect the banks interest in letting the lender know that the property is not worth the sale price.

By saying that regulation works well.. it was scarcasm.

It implied that although REA's are regulated, the regulations are not enforced..

Since deregulation of valuers in many state, how many scandals have there been?

Govt regulation is not really needed as the institute does a pretty good job of self regulation.




Are you suggesting that the Valuation Industry is beyond reasonable questioning?

Not at all, just question with some real facts, very few valuers actually work for for agencies where your perceived conflict of interest occure, this is especially so outside of commercial property.


That this industry is beyond reproach?

No there are some useless valuers out there, like there are some useless professionals in every profession.

Are you suggesting there is no room for improvement?

No, but what improvement do you want .. aside from Governmant regulation which does little? I am of the "if it ain't broke don't fix it" philosophy.

That the valuation industry is beyond scrutiny?

No not at all, go for it.

RightValue

 

[j]

Fine for well educated and skilled investors

I deal with conflict of interest quite a lot professionally (my profession is unrelated to property). My opinion is that conflict of interest is a customer issue - it's up to the customer to determine whether a conflict of interest exists, and the level to which the conflict may impact them.

I personally don't care, provided I understand the situation, the motivations, and what's really going on. If you're careful, you can sometimes get a conflict of interest of another party to work for your benefit.

Thanks Margaret I understand if an investor is well educated in this area, has competent communication skills, competent negotiation skills, competent strategic skills etc your approach would work well. You are self sufficient. I too understand the importance of conducting due diligence, being business like and being objective.

However some of the general public are not very well educated and not competent or experienced negotiators.

So should that matter when first home owners are buying property for $340K with LVR of 80%, 90% or 100%?

What they don't know they don't know

 

[VYBerlinaV8]

Thanks Margaret I understand if an investor is well educated in this area, has competent communication skills, competent negotiation skills, competent strategic skills etc your approach would work well. You are self sufficient. I too understand the importance of conducting due diligence, being business like and being objective.

However some of the general public are not very well educated and not competent or experienced negotiators.

So should that matter when first home owners are buying property for $340K with LVR of 80%, 90% or 100%?

What they don't know they don't know

Good point, but my name's not Margaret...