I didn't suggest price restrictions for vendors when putting their house on the market. They can ask what ever price they want. My concern is with EAs who can artificially inflate the amount spent by introducing fake bids.
For example:
A house goes on the market for 500k which is a reasonable price relative to other houses on the market.
After a month, there are no offers on the house.
As a purchaser, the upper limit on my budget is 550K
I view the house and offer 475k.
The next day the EA tells me there is another bid in of 485k and asks if I want to increase my bid.
I do, and the EA tells me the other bidder increased their bid, and asks if I want to increase my bid again, etc.
In the end I purchase the house for 525k.
The EA is happy because they have a good result for the vendor and a better kick back from the transaction.
The vendor is happy to get a good price but then goes to buy their next house and feel they are being duped by the EA when making bids.
As an adult I am satisfied that I have spent an affordable amount of money of the house.
I'm happy to have the house but feel very frustrated that while entering into the biggest financial commitment of my life, I was being duped by the EA because I sense that there was no other bidder involved.
Ideally the EA should be saying to the vendor, 'there is only one offer of 475K. You were seeking 500k, I suggest you split the difference and sell for around 487K or take the house off the market'.
I want EAs to be regulated, not vendors. Inflating prices has a short term benefit for vendors but a long term negative effect on the property market as it falsely increases the cost of purchasing. As mentioned, vendors become purchasers and so everyone ends up paying more in situations like this.
There are many ways to introduce safeguards. Frankly, to ask questions like 'who would pay for this?' is just naysaying without thinking the problem through. One suggestion on how to facilitate this would be to use a Blockchain methodology where transactions are anonymously recorded based on a registration number given to purchasers and allocated at the time of mortgage approval. Then anyone can see what bids are being made and bid accordingly. This does not solve all the problems, but it is a good step in the right direction. It certainly beats the current model where EAs accept bids and inform other bidders that they have been outbid by text, voicemail etc as recently occurred with a friend bidding on a house.
Another thought would be to introduce a code of conduct for EAs which requires them to record all bids made, for audit purposes. Admittedly, there is only so much that can be done to check the credentials of bids. What I am specifically talking about is the practice of EAs making up false bids from non-existent bidders.
On a related note, EAs could become obsolete. In many markets, the 'middle man' has been pushed out - think Airbnb, eBay, Uber, etc.