Escorted Inspections
Escorted inspections are little more than a control device used by
estate agents. They serve no genuine purpose, they separate the
vendor and the purchaser, and they add to the expense of real estate sales.
In addition, the expectation that the
estate agent will assume the role of
unqualified security guard and
unqualified crowd controller, places both the
estate agent and the vendor at great risk.
Escorted inspections don't make sense
Let's examine the escorted inspection from a common-sense point of view:
The block of vacant land
No-one needs assistance from
estate agents, or anyone else, to walk onto a vacant block of land.
Vacant land with an open shed
If the block of land has an open fronted hay shed on it the situation would be the same. There would be no point in having an
estate agent drive to the block, simply to tell the purchasers that they are looking at a hay shed on a vacant block.
Derelict house on land
A property is for sale for land value only, because the old house has fallen into disrepair. The house is structurally sound, but has no doors or windows, and is easily accessible. Again, there is no need for the
involvement of a third party if potential purchasers would like to examine the land and look inside the house.
Vacant house on land
A property is on the market, and prospective purchasers would like to look inside the locked but empty house.
An
estate agent may be of some assistance in unlocking the house so that the purchasers can look inside. However, the
estate agent would have
difficulty in providing full and accurate answers questions about recent renovations and cosmetic work performed by the owners.
Because the owners themselves attended to all of the works, they decide to provide access personally. The owners are able to answer a variety of questions about the age of the home, the origin of some of the building materials used, and the reasons for the works.
Nobody knows a property like the owners.
Owner-occupied home
Given that there has been no reason to involve an
estate agent in any of the previous examples, what possible reason could there be
for using an
estate agent to show potential purchasers through an owner-occupied home?
Does it make sense to have people who don't know the home shown through the
home by another person who doesn't know it?
The
estate agent can only relay to the purchaser what the vendor has told her, so why not
have the vendor answer the purchasers' questions? Wouldn't the purchaser prefer to deal directly with the person who is giving the
estate agent the information she is passing on?
Who is the
estate agent supposed to be assisting? Is she trying to convince the purchasers to buy the house (purchasers hate being told what they want), or is she helping the vendors by acting as a usher and messenger (at a huge and unnecessary cost to the vendors).
Usually the vendors will never know exactly what the
estate agent is contributing to the sale, because they will have been ordered out of house. (
Estate
agents don't like
vendors to know what goes on during inspections. Why? Because there is nothing of value that the
estate agent adds to the house inspection.)
Conclusion
Having an
estate agent involved in
the inspection process simply does not make sense. Escorted inspections are an unnecessary imposition on both vendor and purchaser.
The hidden cost of escorted inspections
Escorted inspections are extremely expensive to the
estate agent. The cost in time and fuel to the
estate agent, in driving visitors back and forth to properties can reach the point where a property becomes a liability.
What is an
estate agent
to do when a property generates a high number of visitors, but does not attract any offers?
The
estate agent
must either direct enquiries to other properties (in which case the vendor's advertising dollars will be wasted), or convince the vendor to lower the sale price in order to make a quick sale.
In all cases, the escorted inspection becomes time-based. The longer the property remains on the market, the greater a liability it becomes, particularly if there is also a risk that the vendor will put it into the hands of a rival
estate agent.
As the sale progresses, so too does the pressure to sell. This pressure may eventually result in
commission rage.
The cost of the escorted inspection eventually becomes a cost to the vendor in terms of a lower asking price, particularly where
commission rage becomes a factor.
How escorted inspections impede the sale
Escorted inspections actually impede sales by restricting the opportunities for purchasers to view the property.
Any inspection requires a coincidence - the vendor must be ready to receive the purchaser at the same time as the purchaser is able to visit. When a third person in the form of the
estate agent
must also be included in the arrangement, it must be a three-way coincidence.
Estate agents
cannot know every detail of every house, and so a great deal of time is wasted in contacting the vendor with purchasers' enquiries, and then getting back with answers. It is not uncommon for
estate agents
to simply guess or even make up answers on behalf of vendors, particularly when parties are becoming impatient.
Theft - a major problem
The risk of theft is a major problem in escorted inspections. The lack of security, the pressure on agents to preserve the integrity of the procedure, and the undesirable consequences associated with becoming involved in the criminal justice system all work against the vendor and in favour of the thief.
No security
Estate agents
are not permitted to take responsibility for security (they would have to be registered as security guards, and wear identity numbers if they did).
Workplace safety and personal insurance issues also prevent estate agents from having any role whatsoever in providing security during property inspections.
Security remains the responsibility of the vendor, and the only way a property owner can prevent theft is to be physically present each and every time a visitor is given access to the property.
Misleading & Deceptive Conduct
An
estate agent who leads
a vendor client to believe that security is provided during inspections may be engaging
in misleading and deception conduct, contrary to the
Trade Practices Act. Further, the
estate agent
risks breaking the law by allowing the vendor to believe that her home and personal property are being protected during escorted inspections, even though the
estate agent may have
said nothing to create this impression. In its publication "Fair and Square: a guide to the Trade Practices Act for the real estate industry" the ACCC states:
"Remaining Silent
For estate agents silence is not golden - on the contrary, you should be open and frank with clients and customers. By
remaining silent where you have a duty to disclose something of concern to a client or a potential buyer,
you risk breaking the law."
No witnesses
An
estate agent is unlikely to volunteer as a witness if anything is stolen during an inspection. Consider the following:
 |
Is the estate agent likely to accuse a visitor of theft, particularly when there are no other witnesses, and where the thief may have a witness of his own present? |
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How does the estate agent prevent the thief from leaving? Does the agent make a "citizen's arrest", and risk being charged with the criminal offence of "False Imprisonment", or being sued for making a false arrest? |
| |
If a local newspaper reported that an estate agent had caught a thief during an inspection, how would other vendors feel? Would they allow estate agents to take potential thieves into their homes? Would the estate agent's boss praise his actions, or criticise him for being foolhardy, and for making escorted inspections appear risky? |
| |
The agent accuses a woman of theft, and the police are called. The woman denies everything, and accuses the agent of having behaved improperly with her when they were alone in the vendor's home. What damage could this do to the agent's reputation and that of the agency he works for. |
| |
Estate agents don't want to become involved. They won't be paid for time spent making police statements and attending court hearings. |
| |
It may be impossible to know exactly when a theft has occurred. There may have been other inspections between the time of the theft and the point at which the vendor realised that the theft had occurred. |
| |
When told that a theft has occurred the estate agent is unlikely to say, "It wasn't me, but it may have been one of the visitors I took through the house." Rather, the most likely to response will be, "Well it didn't happen while I was there, and if it did I would have reported it." |
The "Not On My Watch" Syndrome
Reluctance to assume role of witness can well develop into a form of protection for the thief. Whether he was aware of the theft or not, the
estate agent is likely to declare that it was not possible for any visitor of his to have committed the theft because all visitors were under strict observation for the entire time they were in the home.
No insurance
Because the
estate agent has the vendor's permission to invite people into the vendor's home, such people are regarded by insurance companies as "invitees". Insurance does not cover thefts committed by invitees.
Conclusion - Who's Responsible?
Just think about the situation where an
estate agent
escorts strangers through a vendor's home and the vendor subsequently discovers that something is missing. The vendor may simply accept that items may go missing during inspections, or may blame the
estate agent
. Both the vendor and the
estate agent
may blame the visitor. What if the theft is not discovered until the second visitor is shown through?
Everyone is at risk - the vendor risks the loss of personal effects, while the
estate agent and the visitor both risk loss of reputation.
Visitors are entitled to believe that they are being properly invited into a home, and that the person inviting them has the authority and the responsibility to protect them from being wrongfully accused. Only the true owner of the property has such authority.
Other risks associated with escorted inspections
The risks associated with escorted inspections include the lack of security and insurance, the opportunity for
estate
agents and purchasers to collude against the vendor, and illegal conduct on the part of
estate agents acting as unlicensed security guards.
Liability for unlicensed security guards
An
estate agent whose role includes watching over a clients' belongings during inspections must hold a security guard licence under the
Private Agents Act 1966.
Where an
estate agent acts as an unlicensed security guard, the vendor may be liable for the behaviour of the
estate agent when dealing with a person who is in the vendor's home as the vendor's invitee.
Agent integrity issues (collusion)
Some purchasers will prefer to be escorted through a property by an
estate agent because they know that the
estate agent can be used to their advantage. Secret conversations between purchaser and agent can lead to improper collusion, resulting in the purchaser buying the property for a lower price, while the agent gets a sale.
This is known as turning the vendor's agent into a buyer's agent.
"Snooping trauma"
Two examples
The violation of personal property has been likened to rape. The knowledge that a stranger has rummaged through personal effects in a person's own home can leave that person severely traumatised.
In an article in The Age's Sunday Life magazine (March 3, 2002 p.12) Melinda Houston writes of estate agent Claire Upton:
"She's constantly amazed and sometimes distressed by the behaviour of people during inspections: they have no qualms about sitting on the furniture, handling various objects, having a squiz in the bedside drawer. 'We're always very mindful of the fact that we're in someone's home, but purchasers rarely are' she says."
The fact that the
estate agent
is constantly amazed indicates that this kind of behaviour happens a lot when
estate agents
are showing people through homes. It also indicates that agents don't do anything about such behaviour (they really don't want to get involved in any trouble between visitors and the vendor).
Some estate agents actually encourage visitors to "snoop". In their booklet "Discover the top 10 things Real Estate Agents Won't Tell You", estate agent buyer advocates Nicole Marsh and Liz Wilcox of HotPropertySpecialists.com.au advise intending purchasers on effective snooping:
"The owners may be a lot more desperate to sell than the agent may tell you. Is it a divorce or relationship breakup? Or have they had a work transfer? Do a bit of detective work during the inspection...
Here are some clues to look for - is there only women's clothes in the cupboards? Maybe the husband has moved out and they will sell at ANY PRICE to dissolve the relationship and part ways! Also, take a sneak peak in the kitchen cupboards, is there any food there? Maybe they've both moved out and left the furniture in the house to aid the sale. Sometimes it can be more about what's not said, than what is."
Having the owner present
But when the person visiting the house knows that the owner of the house is present, there is a natural respect that comes with being the owner's guest. Our clients report that visitors always seem to be "on their best behaviour", and like to have the vendor nearby as they look through the house.
Visitors feel comfortable when the vendor is present as they inspect the house; not only because they can ask questions as they look, but also because they feel safe knowing that they really can't be accused of anything if they've stayed in sight. (It's a bit like counting money in the presence of the person who hands it to you - you know that it's all there, and the person who gives it to you is satisfied that you have accounted for the full amount.)
This is one of the major reasons why visitors actually prefer to inspect homes with the vendor rather than an estate agent.
We advise our clients to allow people to look through the property, but to be nearby to answer any questions. Genuine prospective purchasers expect the owner to be nearby during inspections, and will be more courteous to the owner of a home than to an estate agent who lives somewhere else.
Inability of purchasers to obtain accurate information
The
estate agent is never able to provide all the answers to purchasers' questions, and this can annoy purchasers. The vendor should always be available to answer questions about the property, and to confirm any preliminary comments made to the purchaser by the agent.
Exploitation as "impressions parade"
Escorting one visitor to one property after one enquiry is expensive for any
estate agent. However, by taking one visitor to a number of properties in one trip, the
estate agent is able to impress two or more different vendors with her efforts.
The problem for the purchasers is that they are being taken to properties they have not enquired about. The vendor suffers the inconvenience of having his property used by the
estate agent to impress people who may not be at all interested in that type of property.
The vendor whose property brought about the enquiry in the first place would also be disappointed to think that her advertising dollars were being used in this way.
Agencies as unlicensed security firms
Any estate agency that tells clients that its agents will "keep any eye on things" when visitors are shown through properties is, according to the
Private Agents Act 1966 an unlicensed security firm. This put both the agency and the vendor at risk.
Agents as unlicensed security guards
An
estate agent whose role includes "keeping an eye on things" during inspections becomes an unlicensed security guard under the
Private Agents Act 1966.
Agents as unlicensed crowd controllers
An
estate agent whose role includes ensuring that visitors and their children do not misbehave in the vendor's home becomes and unlicensed crowd controller under the
Private Agents Act 1966
Why do agents use escorted inspections?
You would think that the risks associated with escorted inspections would deter
estate agents from using them. The problem for the
estate agent, however, is that not using them means that it may be difficult to secure the commission.
In order to claim a commission the
estate agent
has to be able to prove that the property sold as the result of an
introduction
through the
estate agent.
It is extremely difficult for an
estate agent
to prove that she actually made the
introduction, particularly if the purchaser does not want to become the "meat in the sandwich" during a legal squabble between vendor and
estate agent over the payment of commission.
However, if the
estate agent
is able to give evidence that she actually escorted the purchaser to the property, then proving the
introduction is quite easy.
How should inspections be conducted?
As discussed above, when the person visiting the house knows that the owner of the house is present, there is a natural respect that comes with being the owner's guest.
Visitors always seem to be "on their best behaviour", and like to have the vendor nearby as they look through the house. There is also much less pressure for all parties, because the vendor wants the visitor to take an interest in the property, while the visitor does not want to feel under pressure to move on to the next house on an
estate agent's
list.
See our section on
Property Inspections >>
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