In a recent development that has captured the attention of Sydney’s real estate community, Fair Trading has confirmed an investigation into Josh Tesolin and the Ray White Quakers Hill office. This inquiry follows a proactive compliance blitz targeting underquoting and complaints from affected parties regarding Tesolin’s controversial incentivised sales commission practices. While Fair Trading has refrained from further comment due to the ongoing nature of the investigation, Tesolin’s clients have been more vocal, expressing concerns over last-minute commission changes aimed at attracting new buyers.
The crux of the controversy lies in Tesolin’s incentivised commission model, which, according to Fair Trading, is not a common practice but is permissible if agreed upon at the start of a sales campaign and documented in the agency agreement. Typically, such a model involves a bonus commission if a sale exceeds expectations, but it can also mean reduced commissions for lower results. However, Tesolin’s approach appears to deviate from this norm, as he reportedly introduces these incentives late in the process, a practice that has raised ethical concerns.
Industry Reactions and Ethical Concerns
Matt Lahood, chief executive of real estate at The Agency, highlighted the unusual nature of Tesolin’s approach. “It appears as if the incentive is framed as a last-minute payment to encourage other agents to bring in new buyers on auction day,” Lahood remarked. “This is akin to placing a bet at the end of a horse race, and could be seen as coercive, especially when dealing with vendors who may be elderly or unfamiliar with industry norms.”
Real Estate Institute of NSW chief executive Tim McKibbin echoed these sentiments, stating, “While it may not be illegal, there certainly isn’t a good smell about it.” He emphasized that agency agreements are typically signed with the company, not the individual agent, and that the entire agency should work towards the sale without additional incentives.
“That’s illegal,” was the tongue-in-cheek response from one member of the SMS group chat.
Case Studies and Client Experiences
Several case studies illustrate the impact of Tesolin’s practices. In one instance, a house in Acacia Gardens sold for a record $1.78 million, resulting in a commission of $75,300, significantly higher than the standard $48,950 due to the 20% bonus. Similarly, a three-bedroom house on Calandra Avenue sold for $1.55 million, incurring an $82,625 commission, nearly double the standard rate.
Sue Roughley, one of Tesolin’s clients, recounted her experience, noting that Tesolin introduced a 10% incentive bonus days before auction, claiming it would drive up the price. While the sale was successful, Roughley later discovered that the buyers had shown interest long before the auction, leading her to feel misled. Her extra commission was eventually returned after she voiced her dissatisfaction.
Another client, Jamie Lynne, shared a similar story. Despite Tesolin’s warnings of low bidder turnout, their home sold for $1,651,000, with the buyer having already inspected the property prior to the commission increase. “If I had my time again, I would definitely not go with Josh,” Susan Lynne stated.
Broader Implications and Future Outlook
The investigation into Tesolin’s practices highlights broader issues within the real estate industry, particularly the need for transparency and ethical conduct. As Omid Rahmani, a law student and son of one of the buyers, pointed out, many buyers and sellers in the area are not well-versed in the sales process and rely heavily on agents’ advice.
Ray White Group’s NSW chief executive, Tim Snell, emphasized the importance of transparency in bonus schemes, stating that agreements should be unique to each sale and fully disclosed to the vendor. Despite these assurances, correspondence suggests that Tesolin’s incentives were often introduced at the last minute, raising questions about their transparency.
“It was the night before the auction, and we were willing to say yes to anything if it meant we got a better price,” said Jim Del Rosario.
As the investigation continues, Tesolin’s practices remain under scrutiny, with Fair Trading yet to determine any regulatory breaches. Meanwhile, Tesolin has reportedly made compliance improvements, including hiring an experienced licensee-in-charge to oversee operations.
This situation underscores the need for ongoing vigilance and regulation in the real estate sector to protect consumers and maintain ethical standards. The outcome of Fair Trading’s investigation could have significant implications for industry practices and the future of incentivised commission models.
