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Conflict of interest: Agents buys their own listing
A Perth property owner has allegedly been blindsided by the agents who are supposed to sell his home after they purchased the property themselves for $95,000 less.
Back in April 2024, Ideal Realty WA agents Roy Lee and Lynn Dean were engaged to sell the house of Chao Wu.
Six days later, the agents then proceeded to buy Wu’s property through another of their companies, Generation Two Pty Ltd.
Dean informed the owner by email about three offers, including the offer from Generation Two, which was described as the highest.
On the same day, Wu signed the sale contract after securing a $20,000 Australian dollar increase in the price, for a total of $705,000.
According to ABC News, Wu became suspicious after Li told him the buyers had accepted his counteroffer, despite the contract having already been signed by all parties the previous day.
Additionally, he noticed the buyer’s name on the contract had been altered.
Wu then obtained Australian Securities and Investments Commission (ASIC) records, which revealed that Generation Two was owned by Li and Ding and had been registered at Ideal Realty WA’s office address on the same day the offer was made on his property.
He alleges that at the time of the sale, he was not aware of who the buyers really were.
Wu then confronted the agents, who agreed to add another $10,000 and waive their sales fee of $10,000.
In Western Australia, Consumer Protection said that agents can buy a property from their client as long as they disclose their interest to the seller.
“It is not unlawful for a real estate agent to buy a property from their client; however, they must disclose the interest to the seller before any negotiations take place, so the seller can make an informed decision,” a spokesperson said.
Wu said that it was nearly six weeks after the initial sale contract was signed that Li sent a disclosure form to sign, highlighting their interest in the purchase.
Lin told ABC that Wu was aware that he and Ding were the prospective buyers before the offer was made, with the pair negotiating the price directly with him.
"The timing of the written disclosure was an administrative oversight, and our procedures have since been reviewed to ensure this does not occur again," Li said.
Since 2024, the watchdog received six complaints across the state that alleged a breach of section 64 of the Real Estate and Business Agents Act where the agent was also the buyer of their client’s property.
A Consumer Protection spokesperson said there have been no public findings in relation to this type of breach.
The watchdog issued a formal warning to Ideal Realty relating to the alleged conflict of interest.
While not published, a formal warning can be issued when Consumer Protection believes there is a prima facie case of a contravention of consumer law.
Real Estate Institute of Western Australia (REIWA) president Suzanne Brown said that while it was not ideal for agents to buy their own listings, the law was clear.
“Agents are legally required to disclose a beneficial interest in a transaction and to do so, in writing, before the transaction takes place. Our advice to real estate agents is to adhere to the law.” Brown told SPI.
She said that by putting it in writing, sellers may then have options such as whether to negotiate the commission on the sale.
Ghost open, low valuation
In addition to buying the property for themselves, Wu has alleged the property was sold for almost $100,000 less than it was worth in 2024.
According to Wu, a retrospective valuation put the property’s value at $800,000 at the time of sale, $95,000 above the price paid by Li and Ding.
Li said his own retrospective valuation placed the property’s value between $680,000 and $705,000, and suggested Wu’s dissatisfaction stemmed from the property’s subsequent increase in value.
Wu also questioned what inspections had taken place before Li and Ding made their offer, alleging Ideal Realty staged a “ghost” open home to inflate perceived buyer interest and suppress his price expectations.
He pointed to a cancelled inspection and said a prospective buyer had confirmed she was turned away from the property despite being scheduled to attend.
Li disputed the claim, saying the tenant had refused access to the property’s interior, and that private viewings were held before the offers were made.
Additionally, Ideal Realty had allegedly breached several provisions of the real estate code of conduct, including obligations to act in clients’ best interests, exercise due care, act honestly and avoid misleading or deceptive conduct.
While these breaches can attract penalties of up to $5,000 for individuals and $25,000 for companies, Ideal Realty WA was not fined.
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