Monday, 1 June 2009

National Association of Estate Agents and commission payments

I came across a great post from Housing Dabble which I can't do justice by paraphrasing, so here it is in full for discussion:

'...Last week there was some controversy surrounding the ‘shock revelation’ that agents are profiting from their delivery of Home Information Packs to their clients. One of the groups lining up to condemn the practice was the NAEA who warned that their members could be fined or even expelled for taking undisclosed commissions.

The NAEA told Channel 4 News: “We can take somebody in front of a disciplinary panel. If they’re found guilty then we fine them up to £1,000 per breach. If it’s very serious we chuck them out.”

According to the rule book – Rule 11 states: “Duty not to accept secret commissions: Neither a firm, nor any principal, director or employee of the firm shall accept from any person in connection with the affairs of a client of the firm any commission, discount, rebate, or other profit unless the details thereof have first been disclosed to the client.”

There has been much debate over whether adding commissions to additional services is good practice, the reality being that many Estate Agents wouldn’t have survived the last eighteen months were it not for additional income generated from the services provided such as HIPs, Conveyancing, Financial Services. Why shouldn’t they generate income in this way?

The matter that stood out to me however is my memory of the NAEA writing to HIP providers prior to launch in their search for HIP partners to recommend to their members. This process led to the production of an approved partner list and LMS topped the list as THE preferred Partner.

An excerpt from the questionnaire is as follows:-

6. Benefits to NAEA and its members

What can you company do to provide a price benefit to NAEA members and at what level?

Is your company prepared to offer a commission to the NAEA and if so at what level?

Is your company prepared to offer white labelling of the HIP with the NAEA logo. What format would this be in and how would you envisage this operating?

I draw your attention to the second question where HIP companies were teased on the issue of offering the NAEA a commission for their involvement in recommending the NAEA to their members. Hold on a minute…

How they could begin to think that it was a good idea for a professional body to earn from making recommendations to their members about using certain HIP providers, particularly if that criteria had influenced their decision on who those providers were to be and bearing in mind that it would breach the code of conduct they insist their members follow.

It all seems to me that the NAEA have showed again why they are not respected amongst a large proportion of Estate Agents. Despite the hopes that the NAEA could help improve the reputation of the Estate Agency industry if they would drop the old boys’ network approach, they seem to continually fail to effectively represent their membership or to have any understanding of how they can lead the property industry in to better times...'

Anyway, I am off to meet a HIP provider in the services to collect a large brown paper bag stuffed full of cash.

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