A Melbourne real estate agent has sparked outrage amid claims it demanded $2,000 from a home buyer before they would be allowed to bid at an auction.
The potential buyer claimed on Reddit that a real estate agent for Local Expertz Realty, in Melton, west of Melbourne, demanded the ‘deposit’.
He insisted he had attended auctions previously without having to pay any such fee.
‘They always make you fill out the same bidder registration form with all your personal details, along with a copy of your driver’s licence, which all makes sense to me,’ the post read.
‘Today however, after filling out the bidder registration form, I get a call from the agent saying I need to deposit $2000 into their company’s account.’
The buyer claimed he was told by the agent it was ‘standard practice’.
‘They tried to reassure me by saying that the money will be refunded if I don’t win the auction, but I wasn’t having it,’ the buyer posted.
‘There is absolutely no need for such a ridiculous stipulation. He told me it was a company rule and there was nothing he could do about it.
A Melton real estate agent has come under fire amid claims it asked a home buyer for $2000 to participate in an auction
‘I simply refused and said I’d just look elsewhere before hanging up.’
But Local Expertz Realty director Jesse Singh hit back at the claims, telling Daily Mail the buyer planned to call in his bids over the phone.
‘We do not ask a potential bidder to pay any deposit to attend an auction,’ Mr Singh told the Daily Mail.
‘However, if a potential bidder wishes to bid over the telephone and we’ve never met or transacted with the individual previously, we may ask the bidder to deposit $2000-$5000 in our trust account to validate that we’re dealing with a genuine bidder to protect the owner’s interest and avoid facing a false bidding situation.
‘The deposit sits in our trust account which is a non-interest bearing account and the money is fully refunded the next business day if the potential bidder does not win the bidding or chooses not to bid at all.
‘This is permitted by Consumer Affairs to filter out a false bidding situation.
‘It becomes tricky for the public when someone is telling part of a story.
‘That buyer obviously didn’t mention on Reddit that he wanted to bid over the phone and he was interstate.’
Local Expertz was named as the company that asked a buyer for a $2000 deposit just to bid on a house it was selling
The original poster mentioned that detail in a later post near the end of the Reddit thread, although it was almost hidden among the hundreds of comments on his post.
‘I only preregister because I don’t live in the area and can’t attend the auction in person,’ he noted.
A spokesperson for Real Estate Institute of Victoria told Daily Mail the practice was legal, adding: ‘Some agents may use this as a way to confirm the validity of a bidder.
‘The legislation does not prohibit this. The key is that it is fully refundable and held in the agent’s trust account,’ the spokesperson said.
Reddit users slammed the little-known practice and questioned if this was now considered ‘normal’.
Many noted the actual seller was likely unaware potential buyers were being put off even bidding due to the ‘refundable deposit’.
‘Lots of people out there looking to find a home would be attending more than one auction,’ one said.
‘When we were looking, we planned out a weekend with six auctions (fortunately, we found and “bought” a place before we needed to go through that…)
Reddit users mostly agreed they were not okay with being asked to pay large deposits to real estate agents just to bid at an auction
‘Having to front up with a deposit for EVERY auction they plan to attend is really cutting down on the amount of potential buyers.’
Some readers suggested other real estate agents across Australia have demanded similar deposits.
‘I had one tell me today I had to pay a $2,000 deposit to put in an offer,’ they posted.
‘It’s my first time going as far as wanting to put in an offer so have no idea if this is normal or not, but I thought they had to present the owner with all offers, so I don’t see why I’d need to pay a $2,000 deposit.
‘You got off easy, I was asked last year for a $5,000 deposit to make an offer. That was for a real estate agent in Eltham, VIC,’ another person claimed.
‘I would think it’s to make sure they’re only dealing with legit buyers; if you don’t have $5,000 then how can you possibly afford the property.
‘Didn’t have that experience when looking at any other properties.’
Other Victorians have shared similar stories on Reddit over the past year.
The Local Expertz team has come under fire amid claims someone demanded a despot from a home buyer to participate in an auction
One posted seven months ago that the home buyer needed to transfer a $2,000 holding deposit into the agent’s trust account and send a screenshot when it had been made.
‘We have registered for a few auctions and never had to do this before,’ the poster claimed.
‘The text also said that if we are successful, the $2,000 will go towards our deposit, or if we’re unsuccessful it will be transferred back to us within 24 hours.’
‘In Victoria there is no requirement to register for an auction, unlike in other Australian states,’ one reader responded.
‘You are better off not replying to this and just showing up at the auction and bidding if you feel like it.
‘Don’t lodge the money, don’t ask them about it, it will create some uncertainty at their end which is a good thing for the buyer.’
