The NSW Department of Fair Trading has finally grown some teeth by tackling the problem that many prospective home buyers face weekend after weekend; real estate underquoting.
Two Sydney real estate agencies are under investigation following consumer complaints they misrepresented property prices, with more prosecutions expected when new laws are passed in January, reports Domain.
The latest two investigations came to the consumer watchdog’s attention following complaints from the public. One of the agencies is located in the Sutherland Shire, the other is in the inner west.
Underquoting wastes home buyer’s time, money and causes heartache
REINSW chief executive Tim McKibbin told Domain the problem of underquoting is “far smaller than some believe it to be”.
However, realAs data from an October 2015 survey indicates 46 per cent of real estate agents sold properties at auction for more than 10 per cent of the quoted price.
This included 26 per cent of agents quoting prices 15 per cent lower than the sold price and 9 per cent of agents quoting prices 20 per cent below the final sold price.
There are three main causes of inaccurate quoting by real estate agents:
- intentional misleading and deceptive conduct,
- genuine “one off” properties where buyers pay well above what the market expected, or
- lack of knowledge of their local area
Inaccurate quoting is not rare, it happens almost every second auction in NSW
New laws to commence on January 1, 2016 will make it easier for Fair Trading by taking the “burden of proof” off them and onto the agent.
Underquoting in NSW is expected to reduce through the combination of new legislation and more data available to home buyers from startup companies like realAs.
Honest, experienced real estate agents will welcome the new changes. We have already seen evidence of agents using their ability to accurately quote prices as a differentiator.
Whereas those agents which use misleading and deceptive practices to attract home buyers will find it more difficult to operate in world where home buyers have so much more data at their finger tips.
The key changes to the new NSW laws are:
- an agent must not quote a figure less than their estimated selling price provided in the agency agreement,
- the estimated selling price can be a single figure or a price range,
- if a price range is used, the highest price must not be more than 10 per cent higher than the lowest price,
- advertisements and representations that say “offers over” or “offers above” or any similar statement are not allowed,
- agents will also be required to keep a written record of every statement of price they make to buyers, prospective buyers, vendors and prospective vendors,
- agents found guilty of underquoting will now be liable to forfeiture of any commission or fees from the sale in addition to the existing penalty of $22,000.