High-profile agency owner Michael Boulgaris warns of 'bad eggs' in cooling market

Desperate real estate agents are set to turn on each other in a dirty fight for commission money as the sizzling propery market cools, a high profile agency owner warns.

"There's too many real estate agents out there," Michael Boulgaris told the Herald on Sunday.

"This is when the fighting starts. This is when agents start going through each other's rubbish bins and cracking the pass codes on their computers. When there's money involved it's desperate."

Boulgaris owns luxury Auckland firm Boulgaris Realty and has worked in the industry for 30 years. He said the property market usually moved in seven-year cycles and was now tightening after nearly a decade of good trading.

He warned of a spike in unethical and even illegal behaviour.

"You'll see a lot of desperation with agents that aren't making it and that's where integrity is tested and they start saying anything for a sale.

"They're not worried about scruples and longevity in the industry because they've only been in it one or two years. You'll see a lot more bad cases reported. This is what gives the industry a bad name."

After a prolonged period of rapid price growth, prices have plateaued or fallen in some areas this year as lending restrictions crimp the investor market and spooked homeowners delay selling.

As prices soared in recent years, so too did lucrative commission money, resulting in a surge of new agents.

Figures obtained by the Herald show 15,600 agents are now actively competing for work - more than half of them in Auckland.

The number of agents has jumped by about 1360 in the last two years alone nationwide - an increase of nearly 10 per cent.

Boulgaris said the industry was too open and anyone could become an agent under current licensing rules.

As listings dried up, many of the "rats" would start discounting their commissions before being driven out.

He also took a swipe at firms which re-employ rotten agents cut loose from other agencies for misconduct or unethical behaviour.

"It's a numbers game. They'll let a bad egg come in under their umbrella because they're going to make them money. But they come with so much risk."

Labour's consumer affairs spokesman Michael Wood said it was "deeply concerning" to hear an experienced agent warn that unethical and even illegal practices were set to spike.

"There can simply be no excuse for this. Business gets tight from time to time in many sectors, but we don't ever accept that this makes if okay for sharks to move in and rip off consumers.

"The bottom line is that people should be able to sell their home with confidence that they are not going to be taken advantage by predators."

Barfoot & Thompson director Peter Thompson said agent numbers would inevitably drop as listings became more scarce.

Up to 2500 had disappeared during the last slowdown in 2008.

"While it's good, everyone likes to make money. But the true professionals will always be in the market and work ethically, and still make good money."

In previous times agents had "cut corners" to make sales. But the new enforcement regime had helped clean up the industry, he said.

"If you cut corners you will get caught. Don't be the person that's on the front page of the Herald."

Real Estate Agents Authority chief Kevin Lampen-Smith said the agency was conscious that licensee numbers were still rising as the market plateaued, and monitoring for any change in licensee behaviour.