Revelations by the AFR that Purplebricks agents pushed clients into cutting their asking prices to win a prize from the low commission estate agency are being referred to the NSW Office of Fair Trading by the REINSW.
Its agents had clients cut their asking prices by as much as 20 per cent to potentially win a $5000 cash prize offered by its co-founder Kenny Bruce.
The Real Estate Institute of NSW president Leanne Pilkington said the vendor discounting competition left her "horrified and speechless".
"Estate agents are paid to act in their clients' best interests by law. How can this be in their best interests?" said Ms Pilkington.
"This is an awesome opportunity to get our customers homes realigned with the market place and make sure we get the job done for them," said the Puplebricks email to agents.
The email advised agents with stock that had been on the market for more than 30 days "needed to realign pricing the most".
The company, founded by brothers Michael and Kenny Bruce, initially threatened to go to court to get an injunction to prevent publication of the newpaper's story about its "NSW Raffle", but has since defended its practices as "entirely normal".
More than 100 NSW Purplebricks vendors cut their asking prices. A seller in Panania agreed to cut their asking price from $1.2 million to $1 million. A Condell Park vendor cut their price from $1.4 million to $1.2 million.
Among the requirements of the NSW Property, Stock and Business Agents Act 2002 (the Act) and the Property, Stock and Business Agents Regulation 2014 (the Regulation) is that an agent "must act in the client's best interests always, unless it would be contrary to the Act, the Regulation or otherwise unlawful to do so".
However the heightened perception that Purplebricks's fixed-fee model is not working in Australia assisted in its UK share price tumbling to an 18-month low of £2.226
They peaked at £5.145 in August last year.
However Anthony Codling from broker Jefferies International pinpointed last week's decision by Purplebricks to halve the immediately payable upfront commission fee and the rest on settlement as a major catalyst for its share dip.
It also came as major UK estate agency Connells shut down its own hybrid agency Hatched because it was not "economically viable".
