No conflict of interest over judging, say Block South Yarra buyer's agents

The three buyer's agents who have been providing advice to the contestants on The Block Triple Threat are in a unique position.

Usually tasked with representing potential buyers, Greville Pabst, Nicole Jacobs and Frank Valentic have also been helping out the vendors, the Channel 9 television series production company giving advice to the contestants each week on what buyers value in a home.

When it was announced at the beginning of this season that the buyer's advocates would be joining the show, many speculated that the move was intended to prevent a repeat of last season's dismal auction results.

However, although at least two of the three buyer's agents will be representing bidders at the auction on 28 April, they insist there is no conflict of interest.

Nicole Jacobs, the founder of Jacobs Buyer Advocates, tells Property Observer that the situation is not too different from a buyer's advocates usual duties.

"Each week we gave advice as buyer advocates as to whether the couples were meeting the expectations of the South Yarra market; finishes, floor plan and fixtures," said Jacobs.

"All the couples engaged selling agents early on in the process. This campaign is no different to any other where we might be asked for advice or for feedback from a selling agent (acting for their vendor) on what we think about the property from a buyer's perspective."

The Real Estate Buyers Agent Association of Australia (REBAA) defines buyer's agents as "licensed professionals who specialize in searching, locating, evaluating and negotiating the purchase of property on behalf of buyers".

"They do not sell real estate," reads the REBAA website. "They are engaged independently and paid for by the buyer to act on their behalf. The key difference between a selling agent and buyer's agent is who they represent as, by law, an agent cannot act for and accept a commission from both parties in the same transaction."

Paul Bird of the Real Estate Institute of Victoria (REIV) says the role of the buyer's agents as judges does not quite reflect a selling agent's role.

"Under the estate agents act, you can't act as both a selling agent and a buyer's agent concurrently," says Bird.

"But this particular example is a little bit different, in that with The Block, there are some people who are giving a bit of advice to those who are looking to put the properties to market. It's really just a bit of interior design and other advice by these people."

"It is slightly different to acting as both a selling agent and a buying agent," Bird explains.

"If you were employed by the vendor to sell a house and you were wanting to bid at auction or have an associate bid on the auction, it would be a breach of the [Estate Agents Act 1980]."

He says the situation is "slightly outside of the standard clarity in the Act around being both a selling agent and a buyer's agent."

Greville Pabst clarifies that the contestants are not the actual vendors, although they stand to profit from participating in The Block.

"Our role on the show is very specific – help the contestants maximise the appeal of their properties to prospective buyers," says Pabst.

"More interest in the properties means greater competition, which may result in a better sales result for the properties, and hence what contestants walk away with on auction day. However, it is important to acknowledge that in this case the vendor is in fact Watercress Productions, not the contestants."

Advantage Property Consulting's Frank Valentic, who has successfully bid on multiple Block properties before, will be attempting to do so again later this month. He notes the separation of his role as a Block judge and his role as a buyer's advocate, with his judging role wrapping up before Christmas.

"From Christmas my hat was on as a buyer's advocate," says Valentic. Jacobs also says she is well and truly working only as a buyer's agent in the lead up to the auction," she says.

"We are now focusing on pre-auction meetings with our clients and sharing with them the extensive research that we have done on each of the asset classes within the South Yarra market so they can make a fully informed decision."

Valentic explains how his judging role worked last year.

"All we're really doing is coming on and giving some tips from the buyer's perspective from what the buyers are looking for," he said.

"They've still got their selling agents guiding them and representing them."

His clients will have their budgets come auction day and he will be set on securing the properties for the best prices, while "the agents are going to be trying to sell at the highest price," says Valentic.

According to Pabst, he's received "a lot of interest" from potential buyers, especially investors.

"My role as a Buyers' Advocate is to advise my clients on how to select and successfully purchase property that will deliver high capital growth. What I can tell you is we have received a lot of interest from a number of potential buyers, particularly investors due to the tax depreciation and the rental income potential of each of the four South Yarra apartments.

"While the Buyers Jury provided guidance to Block contestants throughout the renovations, on auction day we represent the buyers and their best interests"

At the end of the day, says Jacobs, the buyer's agents are only there for the buyers.

"We hope all the couples get the outcome they are looking for but ultimately, we are there to represent our buyers' interests," she says.

Note: This article has been amended to include Greville Pabst's comments.