Brokers split over developer kickbacks

According to a new straw poll conducted by The Adviser, 50.5 per cent of brokers believe it is unethical to receive a kick-back from a property developer, while the rest argue otherwise.

Speaking to The Adviser, wHeregroup’s Todd Hunter said accepting a fee is ethical so long as it comes out of the developer’s profit margin and is not added to the property purchase price.

“Generally speaking, most property developers will tell a broker to add their fee onto the property price, but brokers that do that are, in my opinion, ripping off their clients,” he said.

“As far as I am concerned, all fees should be disclosed and they should come from the property developer’s profit margins.

“Of course, property developers do not want to do this because their margins are very big.”

Mr Hunter said he does not accept a referral fee from property developers at all, instead preferring to charge his clients a fee for service.

“The fee is clearly outlined, they can decide whether or not they want to pay it before progressing any further and there is no confusion between broker and property developer,” he said.

But while Mr Hunter is against accepting fees from property developers, not everybody is.

In a comment left on www.theadviser.com.au, one broker, who goes by the name iMac, said he sees nothing wrong with accepting a fee from developers so long as it is clearly identified to his clients.

“We get an introduction fee from the bank, it’s called commission. Why should we have the slightest problem, ethically or legally, getting an introduction fee from developers? Of course it must all be disclosed,” he said.

“I give the client the choice - They can pay me a fee, or, I get my fee from the developer. Guess which option all clients have chosen? If you guessed 'developer' then you're on the ball. We can't be fairer to our clients than that.”