Real estate industry's influence on newspapers

Should you believe everything you read in the property section of your newspaper?

The big sell

Real estate sections in newspapers seem to be getting bigger, despite the fact that print media advertising revenues are steadily declining, along with circulation figures.

Through this investigation, CHOICE found there's often little difference between advertising and editorial in the real estate press. The industry argued that the property section is commercial, but this distinction is not always clear to consumers.

  • Vested interests. CHOICE found examples of real-estate industry professionals portrayed as 'everyday' men and women in positive property market stories.
  • Perks, including favourable profiles and overseas junkets are provided by newspapers in return for real estate agencies helping them reach sales targets.
  • No room for criticism. The relationship between media and real estate is apparently so cosy in some instances that big spenders are kept happy at all costs.

Mixed messages

If you were browsing the Sydney Morning Herald website on 3 September 2011, you may have come across this article: 'Spring property season not off to a great start'.

But while the news may seem bad for potential home-sellers, you needn't worry, because as another headline on the same day proclaims: 'Spring property market set to bloom late'. According to yet another article, you should hurry and "spring into action" to "beat the seasonal rush and put your house on the market early".

Another article placates buyers - it's "hunting season... if you're looking to buy a new unit, this spring is a great time...[it] is going to be the best time to buy for the last few years and for the foreseeable future".

The articles are contradictory: If you're buying, get in quick because the market is weak and you won't see prices like these again. If you're selling, now's the time!

But how can both be true?

"It's a complete myth, there's no evidence of it at all," says Terry Ryder, columnist with The Australian and former property editor for Brisbane's Courier Mail. "In fact that spring was the worst time of the year to sell. But people believe it because they keep hearing it. Now you'll have a lot of people putting their houses on the market, and you'll never find any of that challenged in the newspapers."

"Ad budgets influence editorial," says Ryder. "There's very little or no scrutiny by journalists when they receive press releases from the industry - either the developer lobby or real estate agents. Most of what is written about real estate is a very thin rewrite from press releases."

Alan Smith (not his real name), a former manager at Australia's largest community newspaper group, the News Ltd-owned Cumberland Courier Newspapers, agrees that "editorial" in real estate sections online and off should never be taken for granted.

Who pays for the real estate section?

"It's a commercial section of a newspaper," Smith says. "The real estate market works on the basis that the people who advertise their properties are paying for that section. While editorial isn't necessarily paid for, it's a symbiotic relationship where the online service will say 'I've got this percentage of space for editorial, submit something to me', and if it's good enough it will be published.

"Real estate journalists will take a feed of guff from the real estate industry any day. Journos can't possibly write a commercial section all themselves, so they're going to rely on information from the industry."

One veteran industry insider and current real estate academic (who chose to go unnamed) is shocked people still think the real estate press is a credible source of information.

"It staggers me that people still read [newspapers] with the expectation that they're getting property advice," he says. "It's a similar principle to getting marketing material in your letterbox. It's very rarely a bad time to buy or sell, it's always 'buyers wanting more property - contact us now'."

Vested interests

The papers are full of real estate success stories. But who exactly is behind those oft-quoted "first home buyers"?

A story published in The Courier Mail in 2011 referred to flood-damaged properties hitting the market. Property editor Michelle Hele wrote about a potential buyer, James Freudigmann, who was "undeterred by flood damage".

What Hele didn't disclose is that Freudigmann is the Queensland director of property advisory company Capital 360. According to the company's website Freudigmann uses his "extensive knowledge [of property]" to "exceed his clients' expectations".

When CHOICE contacted Hele for comment, she told us that "this story was about potential buyers of a flooded property and Mr Freudigmann's stated intention to live in it, not whatever his business may be".

A similar article, 'Deluged Brisbane houses cheapest of the capitals', published in The Australian in April 2011, stated: "For Brisbane potential home buyer Laura Kavanagh, the low prices have provided a great opportunity. Ms Kavanagh and other buyers said that the doubts over future levels of interest rates were not really a big factor in their decision to enter the market. 'I don't think they will go up, but even if they did it's still a good time to get into the market,' she said."

The fact that Kavanagh is an agent with Place Real Estate, one of the largest agencies operating in Brisbane, is not disclosed.

Andrew Fraser, the article's author, blamed this on a tight deadline. "The story is based on a report which stated that Adelaide prices were going up while Brisbane prices were going down. I was asked at 4pm to urgently find a house buyer for the story so I contacted a real estate agent. The person they found me worked at the agency but was also a house buyer."

"I would have put in that she was real estate agent but I didn't think it was important because she was in there as a buyer. And the story was not about her... the reference to her is in the final three paragraphs."

Lack of disclosure

The practice of not disclosing vested interests in these 'everyday' men and women is widespread. MacroBusiness, a blog offering alternative views on investments, has uncovered the practice at a number of other newspapers including:

  • The Courier (Ballarat),
  • The Australian,
  • The Daily Telegraph (Sydney),
  • The Courier Mail (Brisbane), and
  • Adelaide Now (website of the Adelaide Advertiser).

Fact or fiction?

"The consumer knows when they're reading any commercial section of the publication – be it health, cars or real estate – that it's advertorial," says Smith. "You put hard news in the front of the paper. It's preposterous to think that commercial sections would be unbiased! If you were to [have an unbiased section], no real estate agent would submit any editorial."

"People believe what they read in the papers," says Ryder. "If you repeat the lie often enough people will accept it as the truth. Often people aren't even aware of where their attitudes come from – they just absorb media attitudes because they're there every day, and they'll repeat misconceptions as fact."

Playing favourites

The debut of a new haircut is not normally newsworthy - unless of course you're a celebrity like Jennifer Aniston, Natalie Portman, Brad Pitt or Anthony Toop. "Anthony who?" you may ask.

"Move over David Hasselhoff, South Australia has its own bike-riding, blow-waved bloke setting tongues wagging," proclaimed newspaper Adelaide Now on 26 June 2011. "After six months' hiatus from his clean-cut, executive life as boss of Toop & Toop Real Estate, Anthony Toop has returned to town with a head of flowing hair, rendering him almost unrecognisable."

And this is by no means a one off. So why is it that a new haircut or a real estate agent's birthday is news in a major city newspaper? You need only look to the back pages to find out, says Angelo Karantonis, a property expert and associate professor at the School of the Built Environment, University of Technology Sydney.

"Take note of the names of the agents and agencies they're referring to. Then have a look at the ads at the back – the ones who advertise a lot are the ones who get the write-ups," says Karantonis. "If Joe Bloggs Real Estate advertises a quarter of a page once in a blue moon, he won't get editorial."

One former real estate agent tells us: "It used to frustrate me... they had a preference for those who advertised more over the different papers."

The impact of these seemingly harmless profiles is powerful. After all, who would you ask to sell your house? "It would instinctively be someone you've seen in the paper all the time, because he seems like an active person. You wouldn't go to Joe Bloggs – what hope does he have? Success breeds success," says Karantonis.

Perks of the trade

There are other perks to newspaper advertising if you're a real estate agent. CHOICE has learned that Melbourne's The Age newspaper funds an annual overseas trip for agents who meet certain sales targets.

"We do run an incentive program, a part of which is an overseas trip, and we've been running it for a number of years," confirms Tony Blamey, general manager for real estate at Fairfax. "But that's run by the commercial part of the organisation, not the editorial section... [Real estate agencies] opt in to the program and it's based on a corporate advertising commitment. It's an opportunity for networking and there's a range of activities."

But Mr Ryder says it's nothing more than a freebie. "There are various kickbacks. The papers have for a long time paid bonuses to the agencies for their advertising, sometimes in the form of perks like overseas junkets. The irony is that the agents don't spend their own money on the advertising, they spend vendors' money. It's a major rort that's existed for a long time," says Mr Ryder.

No room for criticism

The relationship between media and real estate is apparently so cosy in some instances that big spenders are kept happy at all costs – even if it means forcing journalists to toe the line or rejecting competitors' advertising dollars.

Terry Ryder says he resigned from The Courier Mail in the late 1990s because he wasn't able to write freely without being dictated to by the real estate industry. He says one of his articles, which criticised the auction process, received high-level complaints from the real estate industry which went straight to the senior people at the paper.

"I know through speaking with journalists over the years that they feel constrained. They know they will lose their job if they don't toe the line, so they don't write anything harshly critical of the industry, which is a major shame from the consumer's point of view," Ryder says.

Unfavourable advertising banned

Neil Jenman spent a decade working as a real estate agent before turning to public speaking and publishing books about ethics in real estate.

"For 10 years the local newspapers haven't allowed me to advertise my books," he says. "Cumberland, News Ltd, the Leader newspapers in Victoria, and Quest in Brisbane have outright banned me."

Sure enough, CHOICE has seen a copy of a memo sent to all branch managers and real estate sales consultants of Cumberland Newspapers stating: "Please be on the lookout for any attempt to have advertising for [Jenman's] book Real Estate Mistakes placed for publication... any ads promoting this publication are not to be accepted for publication in any Cumberland newspaper."

Alan Smith admits to being one of the architects of this memo. "The view we held at the time was that we needed to be careful of his material because it was just sensational headline type stuff to promote his own brand. We didn't refuse to advertise the books completely. That was the initial advice, but we were happy to take those ads in the general news, just not in the real estate section."

Greg Cooper from Cooper Newman Real Estate in Burwood, Victoria, also had his advertisement rejected, this time by Melbourne's Whitehorse Leader newspaper on 2 September 2011. The reason? Sellers are often contractually bound to reimburse real estate agents for advertising, regardless of whether a property sells. Cooper, who is accredited by Neil Jenman, offered to pay the bill, stating: "Trapped with an advertising bill and no sale? Talk to us about a solution."

"They believed readers might view those words as a negative toward advertising," says Cooper. "Two hours before deadline, they said they would run it provided we removed the words, which I refused. A lot of our ads have been blocked. I would say it was likely other agents complaining. It's because they have more advertising."

Whitehorse Leader confirmed to CHOICE that the advertisement could not be run unless Cooper agreed to remove the reference to advertising costs.