Ever been to an auction where the property sold for hundreds of thousands of dollars above what the agent had quoted?
I certainly have and I know many disappointed prospective buyers who have missed out at auction by being misled by agents’ quoted price ranges.
Well…that’s now going to stop in the Sydney property market, with new legislation passed in NSW parliament which will come into effect on January 1, 2016.
Real estate agents in New South Wales will face tougher penalties for underquoting after new legislation successfully passed through the state’s parliament this week.
Under the amended Property Stock and Business Agents Act 2002, agents who are found guilty of underquoting will now be liable to forfeiture of any commission or fees from the sale, on top of the current $22,000 fine.
Just to make things clear…
The practice of underquoting is where agents lure potential purchasers to look at a property (usually for sale by auction) with the suggestion that the property will sell for much less that they believe it will.
It is illegal and many would say unethical, but it certainly still occurs.
In fact there have been no no successful prosecutions related to underquoting made in NSW in 13 years, so reform is long overdue.
The new bill will help clarify how agents should market properties, according to the Real Estate Institute of NSW
Advertisements and representations that say “offers over” or “offers above” or any similar statement are no longer allowed.
Agents will also have to keep a register of prices quoted on a property, whether these are provided to the vendor or prospective buyers, and must only use the estimated selling price provided in the agency agreement.
When marketing a property 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.
REINSW President Malcolm Gunning explained:
“The reforms bring clarity and surety to the real estate industry.
“We support this legislation that will require agents to be much more accountable in the determination of current market value and provides transparency to those seeking to make a purchase.
“These reforms are a step forward for the real estate industry and are in line with our goal of stamping out poor agency practice. We are working with NSW Fair Trading to prepare real estate agents for the new laws and information sessions across the state commenced today.”
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