NSW Fair Trading to examine real estate deals between PRD Presence Newcastle and buyer's agency Henderson Advocacy

But PRD Presence Newcastle, majority owned by high-flying real estate agent Mark Kentwell, is facing a litany of concerns over some of its business dealings.

A month-long Newcastle Herald investigation into the franchise has raised questions about PRD Presence's dealings, including allegations of conflicts of interest, lack of transparency, data sharing and possible privacy breaches.

The potential conflicts of interest could cast doubts on the appropriateness of millions of dollars' worth of property deals done across the Hunter.

NSW Fair Trading, the state's property services watchdog, has confirmed PRD Presence Newcastle and another real estate firm linked to Mr Kentwell, Future Property Co, which trades as Henderson Advocacy, are the subject of "active inquiries".

It's understood NSW Fair Trading is looking at a number of property sales where PRD Presence represented the sellers and Henderson Advocacy, run by Jack Henderson, a 26-year-old former construction worker who boasts he has a $26 million property portfolio, represented the buyers.

Agents in NSW are not permitted to act for the buyer and seller of a property at the same time, or to profit from both sides of a sale.

Mr Kentwell has denied any wrongdoing, saying he does not work for Henderson Advocacy, has not profited from a 50 per cent stake in the business that is linked to him and PRD made "adequate disclosures" about the business relationship to clients.

Exactly what was divulged to clients, and what should have been disclosed, is under dispute.

The Herald has spoken to numerous buyers and sellers who said they had no idea the firms were linked.

They have questioned the lack of transparency, and some are calling for the fees they paid to be refunded by the firms.

PRD is also under scrutiny for its role in the sale of a property to Mr Henderson for $710,000 in Memorial Drive, Bar Beach, in July 2021.

The owner told the Herald she wasn't aware that her unit was sold to Mr Henderson, who at the time was a business partner of Mr Kentwell's in a social media video and podcast company that trades as Know Media.

She said she would be "extremely unhappy" if it was revealed the property was sold for below market value.

Hers was the second property Mr Henderson has purchased in the block of six units that sits on one of the most expensive streets in Newcastle, directly across the road from Bar Beach.

Mr Henderson has made no secret of his desire to acquire all the units in the apartment block, at what he describes as $1 million less than land value by acquiring the units individually.

He has made several social media posts about the site, in one detailing "how I'm going to buy this block of units and the land it sits on, for $1 million less than what it's actually worth".

The unit appeared on a "pre-market" properties listing on PRD's website. But PRD declined to comment this week on why the Herald was unable to find any ads for the sale on popular real estate websites, or how long the unit took to sell, saying it would breach confidentiality requirements.

Mr Kentwell said PRD was under no obligation to tell the owner that her property was being sold to his business partner, saying he continued to work with "specialist lawyers to ensure compliance" and that the law did not require disclosure in this case.

He described the sale price as "far more than comparable properties nearby" and more than 10 per cent higher than another sale in the building around the same time.

His view about disclosure is at odds with several leading real estate compliance and training experts who spoke to the Herald generally about the laws that govern the real estate industry.

Edwin Almeida, of Ribbon Property Consultants, and Hunter-based compliance expert George Rousos, founder of Industry Training Consultants, both said the laws were designed to ensure transparency and protect consumers.

While both said they couldn't comment on the case directly, they said consumers should not be left in the dark when it comes to what business associations or links sales agencies have to buyers and pointed to Section 49 of the Property and Stock Agents Act 2002.

The section states that a real estate agent who is retained by a client for the sale of property must not obtain, or be in any way concerned in obtaining, a beneficial interest in the property.

According to the Act, a person is considered to obtain a beneficial interest in property if a member of a firm, or partnership of which the person or a close relative of the person is also a member, obtains a beneficial interest in the property.

The Herald has tracked millions of dollars of property sales across the Hunter where PRD-related entities represented the seller and Henderson represented the buyer.

Clients contacted by the Herald said they had no idea the firms were linked and questioned the lack of transparency during what some describe as one of the biggest financial decisions of their lives.

Some are fearful of speaking publicly, lest they breach a "non-disparagement clause" included in more recent Henderson Advocacy agency agreements.

Describing it as an "unfair gag clause", one buyer said it effectively left clients with "no voice".

The clause stipulates that clients are not allowed to make any statement or publication that would "adversely affect" Henderson's reputation, or likely to "disparage or discourage any person from engaging with the agent".

A client said the revelation that Henderson and PRD were linked and that Mr Kentwell and Mr Henderson have been business partners in Know Media since 2020 left him "questioning the whole process".

"I just think all of those things should have been made really clear to me," he said.

"If I was across it, I could have made an informed decision about if I wanted to engage these people. You have to really wonder why they would feel the need to include a gag clause like that."

A PRD client, who said he was unaware about the business links, said he didn't understand why it wouldn't have been made "abundantly clear".

"I would have liked that to be one of the first things I was told," he said. "Instead, I am left wondering why it wasn't."

Gary Frankel who purchased a property in Cardiff for $808,000 in August last year using Henderson Advocacy, said he had no idea the firm was linked to the selling agent PRD Presence Newcastle, or that Mr Kentwell and Mr Henderson have an extensive business relationship.

Unhappy with the service he received, Mr Frankel, who paid more than $16,000 to Henderson Advocacy, wrote a complaint to Mr Henderson at the time detailing his dissatisfaction on price and the fact that the agency promotes itself as finding "off-market" opportunities for buyers, when Mr Frankel said he found the property himself online.

Mr Frankel, a farmer, said he was lured to Henderson by the firm's "flamingo investment" strategy, based off its brand mascot "Hender-ingo the property flamingo".

"Something that stands out like a pink flamingo, a property that is different to the norm, that's what sold me on their approach," he said.

"If I had known the firms were linked I probably wouldn't have gone up that far in terms of price, or I would have looked at something else. I would have hesitated a little bit more if I'd known they were linked."

An Australian Competition and Consumer Commission (ACCC) spokeswoman said broad non-disparagement clauses that prevent or limit customers from making public comments about goods or services risk being considered unfair contract terms.

She said unfair contract terms are those which cause imbalance in rights and obligations and could cause detriment if enforced.

"Under the Australian Consumer Law, businesses cannot seek to rely on unfair contract terms in their standard form agreements," she said.

"Businesses should not take actions that would prevent consumers from seeing genuine, relevant and lawful reviews by their customers."

PRD Presence Newcastle opened 18 years ago and was the first PRD franchise in the Hunter. It now employs dozens of workers and has made Mr Kentwell a rich man.

Mr Kentwell previously told the Herald he accepted a voluntary redundancy package from a mining company where he was working underground in maintenance, sold an investment property and remortgaged his house to join his father Allan Kentwell in the first PRD franchise in the region.

The doors of the small office in Worth Place in the West End officially opened on August 5, 2005.

Henderson Advocacy is a buyers agency with offices in Newcastle and Sydney.

It is run by Mr Henderson, and Mr Kentwell's company, BA Expansion, a corporate trustee, has a 50 per cent stake in Henderson Metro, which owns Henderson Advocacy.

Mr Henderson declined to comment and Mr Kentwell said all of his businesses complied with the relevant laws.

"PRD represents the interests of its clients to the highest degree, which is a major reason that PRD is the market leader with home sellers in the region," said Mr Kentwell, whose Presence Newcastle collected the office of the year gong at the PRD National Awards in Sydney at the weekend.

"We comply with all of the regulations regarding disclosures and acting in the best interests of clients."

A NSW Fair Trading spokesman said while there was no restriction on agents investing in other agencies, laws required transparent disclosure and licensees must act in their clients' best interests at all times.

He said when dealing with related parties in a property sale, agents are required by law to disclose to their clients the nature of their relationships and the amount of any benefit received for referring their clients to other service providers, including other agents.

"NSW Fair Trading is aware of concerns about potential conflicts of interest in the relationship between Henderson Advocacy and PRD Presence Newcastle, and alleged failure to provide consumers with disclosures required by law," he said.

"NSW Fair Trading is making active inquiries into this matter and as such it is not possible to provide further comment at this time."

Buyers' agents specialise in searching, assessing and negotiating the purchase of a property on behalf of a buyer and real estate agents act for the sellers.

Like real estate agents, some buyers agents charge a percentage fee based on the eventual selling price and others charge a fixed fee.

A long-term advocate of buyers agents, Mr Kentwell took the step of extending his real estate interests to become a director and owner of BA Expansion in July last year. Henderson Advocacy is owned by Henderson Metro, which is jointly owned by corporate trustees Jack Henderson Enterprises and BA Expansion.

The Real Estate Buyers Agents' Association of Australia (REBAA) has long warned about "potential conflicts of interest" from "double agents" working both sides of the fence.

REBAA president Cate Bakos said it was illegal for agents to collect fees on both sides of a property transaction, commonly known as "double dipping", and agents should disclose any potential conflicts of interests to their clients.

She said REBAA's code of conduct requires members to act exclusively as buyers' agents and the professional body does not accept members who sell properties because any potential lack of independence or transparency can leave consumers vulnerable to misleading advice, with little means for recourse.

"You've got to work out who you're working for, the buyer or the seller," she said.

"The consumers deserve to know what your associations are and they can decide if the conflict is too much for them or if there's a conflict that they're comfortable with. At the end of the day, though, the consumer has to understand the process and the model."

Ms Bakos said the professional body had previously forced members to leave due to conflicts of interest.

"You've got to be very, very clear that you're only getting paid by one client," she said.

"So let's say I was legitimately running a buying and selling agency. I can't lift a ticket on both sides. I can't be paid by the buyer and the seller. That is illegal."

Mr Kentwell is adamant he has done nothing wrong. He told the Herald he is not, or any of his family members, a beneficiary of the corporate trustee, BA Expansion, which is a joint owner of Henderson Metro that owns Henderson Advocacy.

As the sole director and shareholder of BA Expansion, he manages the trust and the distribution of assets to beneficiaries.

"I am not a beneficiary of the relevant trust," he said. "At no time have I obtained any dividend or profit distributions from Henderson Advocacy."

He also distanced himself from the inner workings of Henderson Advocacy, saying he was not involved in its "governance or management".

"I do not act as a buyers agent for Henderson Advocacy and have never signed up a client in Henderson Advocacy or acted for them at all in that entity, let alone on a PRD transaction," he said.

He went further to say that of the more than 100 transactions by Henderson Advocacy since his company took a stake in the firm, only six transactions involving PRD-related entities.

"In respect of these transactions, adequate disclosures pursuant to the Property and Stock Agents Act were provided," he said.

"PRD has never taken a referral fee in situations where a property is sold to a Henderson Advocacy client."

Mr Henderson and Mr Kentwell have a close and lengthy relationship.

Since late 2020, the men have both been directors and joint owners of Know Media, which makes social media videos and podcasts for the real estate industry.

They own a $6 million property in Paddington together that was bought in February last year and is the Sydney headquarters of Henderson Advocacy.

According to social media posts, there are plans to convert the site to a "European inspired terrace" worth up to $12 million.

The relationship spans several years when Mr Henderson says he reached out to Mr Kentwell seeking advice on how to break into the real estate industry.

The pair widely describe themselves online and in social media videos as the co-founders of Henderson Advocacy, which Mr Henderson took control of in March 2021, and they appear together on annual co-founder update videos.

"And even though I still do real estate sales and advisory myself, I don't buy properties for Henderson Advocacy, I'm purely involved in scaling the business side," Mr Kentwell said in one of the videos.

Both men are prolific social media content creators, between them churning out content across Facebook, Instagram, YouTube and TikTok.

More than 10 former employees of Mr Kentwell's NEXR Pty Ltd, which trades as Real Business Engine (RBE), have detailed how they worked out of a call centre based in Honeysuckle called the Growth Centre, where they were coached to access PRD's database and make between 100 and 200 calls a day touting for business.

According to the ex-staffers, the database, containing the details of thousands of people who have interacted with PRD, includes notes that prominent agents have written about their clients.

Staff were "coached" on what to say when they called from a list of numbers they were given each day and would recommend to clients looking to buy a property to use Henderson Advocacy.

They said the phone calls were recorded without the knowledge of the other person, a claim which Mr Kentwell denies.

The young staffers said they would routinely be called into a room with a trainer who would play their calls back to them and explain how they could improve their sales pitch.

"We were making absolute pennies, like around $40,000 a year and you're expected to make upwards of 250 calls a day," one former staffer said.

"And if not, you're sort of like degraded, like told you're not going to make it, you're not going to make any money."

It's understood some Henderson staff also had access to the database and would make calls claiming to be from PRD and try to refer business to Henderson.

Mr Kentwell did not answer the Herald's question in relation to Henderson Advocacy staff accessing PRD's database. He said Real Business Engine provides "operational systems" for real estate firms.

It's understood the business provides backend services for a number of real estate firms in the Hunter for a fee.

"Every client of RBE lawfully disclosures [sic] their data to RBE and any customer contacted by RBE is provided proper disclosure when necessary, in an unrecorded phone call," Mr Kentwell said.

A NSW Fair Trading spokesman said agents must not use or disclose confidential information obtained while acting on behalf of a client or dealing with a customer unless it has been authorised by the client or consumer, or the agent is required to by law.

Mr Henderson declined to answer the Herald's questions and said he was "not interested in participating in your story".

Mr Kentwell said he was disappointed the Herald had chosen to "broadcast unfounded allegations that have been made by past employees and competitors about myself, my businesses and the real estate industry as a whole".

"I still remain a fierce advocate for the real estate industry and will continue to hold myself, my team, my colleagues and associates to the highest standard," he said.

IN THE NEWS:

To see more stories and read today's paper download the Newcastle Herald news app here.