Proposed State Government reforms could see a crackdown on real estate agents underquoting Victorian properties.
Underquoting is notoriously difficult to prove and occurs when real estate agents mislead buyers about the likely sale price of a property. Agents are not allowed to advertise or quote property prices that are less than the seller’s reserve price or the agent’s own estimate, nor can they do so below a genuine offer.
Under the proposals, real estate agents caught underquoting could be stripped of their commission, fined, would be banned from advertising properties with ‘offers over’ and ‘price-plus’. They would instead have to provide a single figure or a price range within 10 per cent.
Furthermore, the proposals would force agents to alter a property’s estimated selling price within 24 hours if they receive an offer in writing that is higher than the advertised price. Agents would have to provide prospective buyers with information on three comparable recent sales, the estimated sale price of the home and the median price for the suburb.
To ensure the comparable property info was indeed comparable, if Consumer Affairs Victoria look into the comparison, the agent would then have to provide evidence justifying their comparison.
The fines for underquoting could double to $30,000 but would only apply to private residential property, not rural or commercial sales.
Consumer Affairs Minister Jane Garrett spoke to News.com.
“We will be making sure there is a clear paper trail as to how the agent and a vendor have come up with what they advertise the house price for,” she said.
“Unfortunately, the victims of that practice are people just desperate to buy their first home or move to a suburb they want to move into and they are spending months and months having their dreams dashed by this unfair practice.”
“I think we will change the culture of this industry with what we are proposing.”
Ms Garrett said houses were could often be underquoted in Melbourne by over $100,000 on any given weekend and it was only on rare occasions that properties capture an auction crowd’s imagination to sell way above a price estimate.
“But at the moment what we know is there’s too many houses being advertised at too low a price, enticing buyers in, and they are getting their hopes dashed.”
Property industry experts that support the changes say it will bring transparency and consistency to the property sales market.
Concerns remain that agents could still find other ways around the changes, and veteran agent and former REIV ethics committee chairman told News.com that a better solution might be force vendors to disclose the reserve price of their property from the start of the sale.
“The intention is good but it’s only a small step in the right direction,” he said.
“As long as the vendor can change their reserve price at any time up to signing of a contract, the system will be open to rogue agents to easily manipulate the market and conceal the prices they know their vendors really want.”
The Victorian Government plans to introduce the new laws later this year.