New rules for real estate agents
NSW Fair Trading introduced new real estate agency regulations on January 1st, 2016. These reforms are to stop the common practice of agents underquoting on a property, especially for an auction, as a way to drive up buyer interest. The problem has been that potential purchasers are caught up in the process of expensive due diligence only to find they were not in the advertised buying range anyway.
Since January, most of the good agencies I deal with have been incorporating the new rules successfully. With the first prosecution about to go to court in Victoria, it is timely to provide and update, as well as to suggest what to do if you are faced with the problem.
Hockingstuart REA of Melbourne
Real estate agency Hockingstuart are the first to be caught up in the new rules. Consumer Affairs Victoria accused the high profile Melbourne agency of underquoting on eleven properties since the regulations were introduced in that state. They have not yet responded to the charge except to say that it “is a global problem of the industry.”
Truth in advertising
The new rules require a selling agent to ensure that their marketing price is within 10% of the estimated listing price as disclosed to the vendor on the listing agreement. An agent’s usual defence is that it is hard to estimate the final sell price when an auction is well attended and with multiple bidders. That may be so, but they can no longer at liberty to say one thing to a seller (high) and then something different to the buyer (low). They are also now not allowed to use the terms like “Offers over $695,000”.
Agents found to be at fault with this practice can now face a fine of $22,000 and could lose commission and fees. The Buyers Agent association (REBAA) as well as high profile Sydney Buyers Agency EPS have been vocal in vocal in seeing the need for change and lobbying the state government.
Contact NSW Fair Trading
There is no reason to suspect that every time a property is sold above the estimate that the agency involved has been acting inappropriately. However, if you believe the agent you have been dealing with has been marketing an auction property unfairly, you have the right to ask to see what the listing agreement price range was after the sale. If you wish to make a complaint you can contact Fair Trading NSW.