Authorities in Western Australia have searched the offices of a Perth property firm amid allegations its owners used a shell company to buy their own client’s home without telling him.
Ideal Realty, based in the southern suburb of Willetton, was initially issued a warning by the state’s consumer protection department for an alleged breach of laws relating to conflicts of interest around the sale of a Kenwick home in 2024.
Home owner blindsided by agents who allegedly secretly bought his home
The department today sent officers to execute a warrant at the company and the ABC understands the raid was aimed at scrutinising documents related to that deal.
Disclosure failings
The ABC has previously reported that two years ago, Ideal Realty was hired to sell the home of Perth man Chao “Jack” Wu.
After six days on the market Mr Wu said he received three offers, the highest of which was from a company called “Generation Two”.
Mr Wu alleged that it was only after he accepted a final offer from this company that he learned that it was owned by two licensees of Ideal Realty — Roy Li and Lynn Ting, whose legal names are Liang Li and Lin Ding.
Roy Li of Ideal Realty conducted the sale. (ABC News: Gian De Poloni)
He said he proceeded with the sale because he feared that, as he had already signed the sale contract, he would be liable for damages.
Mr Li has denied misleading his client, and said he told Mr Wu before making the offer that he and his partner were the true buyers.
However, Mr Li has conceded that he failed to ensure Mr Wu signed a legally required written disclosure form acknowledging his interest in the transaction.
Roy Li is one of the owners of Ideal Realty, based in Perth’s southern suburbs. (ABC News: Mitchell Edgar)
He also conceded that at least one home open at the property was cancelled at the last minute, with potential buyers only able to view the outside of the property, due to the rental tenant refusing to grant access at the last minute.
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New evidence sparks raid
Consumer Protection Commissioner Trish Blake said new evidence allowed the case to be reopened.
She said investigators would examine documents related to the transaction with Mr Wu to determine whether a breach had occurred.
Consumer Protection authorities raided the office on Thursday. (ABC News: Mitchell Edgar)
Ms Blake said it was not an offence for a real estate agent to buy the property that they’re selling, but there must be full disclosure in advance.
“That’s really critical because the vendor has to be able to make a fully informed decision about whether they accept that offer or whether they maybe want to wait for a different offer to come in,” the commissioner said.
If a breach of this kind is established, companies can face fines of $25,000 while individuals can be fined $5,000.
Trish Blake said this marked an important stage in the investigation. (ABC News: Samantha Goerling)
The commissioner said such a finding could also lead to a question as to whether a person is fit and proper to hold a real estate license.
“For any real estate agent, to be fit and proper, we’re looking all the time at things like honesty, accountability, and respect for the law,” Ms Blake said.
“That would be a question that we might take to the State Administrative Tribunal.”
Ms Blake said it was important the public could have trust in agents and the industry more broadly.
Inflated sales figures
Last week, Mr Li was also referred to the Real Estate Institute of WA’s professional standards tribunal over discrepancies in the sales prices he listed with the agency.
Analysis by the ABC found discrepancies in around a third of the listed sale prices when compared to official prices recorded on the state land register.
Real estate agent’s sales data under scrutiny after awards disqualification
Mr Li told the ABC the inaccuracies were introduced when he inadvertently listed the asking price instead of the actual sale price for some properties.
He also listed around $10 million in sales of properties he or his fellow licensee, Ms Ding, owned, which were later removed from the site.
He said this occurred because they were initially listed but then withdrawn from the market.
Mr Li, who last year won a prestigious award given to the top one per cent of real estate agents by sales values and volume, has been banned from participating in the institute’s annual awards this year.