In this hot property market, some changes to the regulations of agents under the Property Stock and Business Agents Act 2002 are helping to ensure more efficient and transparent advertising.
From 1 January 2016 agents are prohibited from engaging in underquoting when selling residential properties. Underquoting is where an agent understates the estimated selling price. This can cause interested buyers wasting their time and money going to inspections, getting reports and attending auctions because of the low price. Sometimes they may only pay $250, but sometimes up to $1000; and if it happens to them for several properties these costs can be substantial to potential purchasers.
When marketing a property for sale, the estimated selling price given to the seller in the agency agreement becomes the benchmark. Agents are not allowed to suggest a price in ads that is less than the estimated selling price in that agreement. The regulations also stipulate that ads suggesting “offers over $600,000” or “$600,000+” are not allowed. Furthermore, every time a revised estimate is given to the seller, the ads for potential buyers must also be revised.
To prove an offence has been made by an agent, there only needs to be a comparison between the ad and the agency agreement. And there are consequences; if agents do underquote they may have to pay their commission to a compensation fund.
This is a positive particularly for new buyers in our community who have previously lost hundreds or thousands of dollars investing in reports and inspections for properties which were never going to be sold at such low quoted prices.
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