Estate Agents & The "C" Word

Posted on May 1, 2007 by | 1 Comment

Consumers Beware!Estate agents don’t like using the word “CONTRACT“; it can shock consumers, and make them suspicious. Estate agents prefer to use the less unsettling term “OFFER“, when dealing with purchasers.

Contract. There, we’ve said it. Estate agents don’t like using the word “contract”. It’s a dirty word, as it can result in the loss of a commission if a purchaser decides to get legal advice before signing. The preferred term is “offer“; few consumers understand its legal meaning, and they are more likely to sign an “offer” than a “contract“. We have stated on many previous occasions that estate agents should not be permitted to control the contract stage of a sale. Misleading and deceptive conduct by estate agents is more likely to occur at this stage of the sale than at any other, particularly when the estate agent uses the “standard REIV Contract Note”.

Typically, the estate agent invites the intending purchaser to make an offer. But the offer has to be made formally, in writing. At this point the “offer” document is presented to the purchaser. The purchaser can see that the document is titled “Contract Note”, and quite readily forms the mistaken belief that the document is something less than a contract, perhaps a note from which the actual contract is to be drafted.

This was the approach taken by estate agent Graeme Oldfield of David McFarlane Real Estate in Eltham.

Catherine and Matthew were interested in buying a house offered through David McFarlane Real Estate, and made contact with Graeme Oldfield. When requested by Oldfield to attend at the agency, Catherine and Matthew did so on the understanding that their attendance would result in the submission of a formal, written offer to purchase the property, but not to participate in the creation of a Contract of Sale.


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1 Comment

  • http:// says:

    I’d like to know what the purpose of the question in the Contract Note of “Loan being not less than $xxx” is meant to determine?

    As far as I understand, if I was purchasing a property for say $400,000 and I put an amount there of ‘not being less than’ $400,000 but I did in fact have a deposit amount of say $50,000 then my loan amount WOULD BE less than $400,000 and I would be in breach of contract. Is this correct?

    Why could I not then put for example ‘Loan not being less than $1.00″ because of course, the loan amount is never going to be LESS than one dollar is it. I’m under the impression that the agent is using this question to somehow determine my eligibility for the loan but without them knowing my own personal situation with regards to savings/deposit/previous home sale cash etc how is this meant to work?

    Really I would suspect that my financial situation is none of their business and all they need know is whether I get approved or not for the loan.

    Another question I’m going to throw in here too is.. do agents run credit checks on potential purchasers who place offers?

    If you could post a follow up comment that would be most helpful… or perhaps open your forum up with a general topic section and bung this in there? I couldn’t find anywhere on there that I could post an off-topic question like this.

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