Agents face $29,000 fine for underquoting

Victoria’s government has promised new laws to deal with a “huge spike” in underquoting.

Planning Minister Matthew Guy said the coalition, if re-elected on November 29, would force agents to disclose the price range of all properties, Ninemsn reports.

Consumer Affairs Victoria would be able to monitor activity before and after auctions, with agents liable for fines of up to $29,000 if caught underquoting.

"There has been a huge spike in the number of complaints for real estate agents who have been underquoting the cost, or the expected cost, of a home to what it actually goes for at an auction,” Mr Guy told reporters.

"What we do not want to keep seeing is people constantly being taken advantage of, rolling up to auctions where the reserve price is $100,000 [or] $200,000 more than what is listed as the price range for the property."

However, Andrew McCann, from Jellis Craig Bennison MacKinnon Armadale, said underquoting is not a significant problem in Melbourne and that appropriate laws are already in place.

“I think the challenge around underquoting is that in a strong market, it’s very hard to control guidance to potential buyers around price,” he told Real Estate Business.

“An agent can do their best to predict where a reserve price might fall, but they can’t predict where a sale price might fall if there are four or five bidders and it’s a very competitive auction.”

Mark Di Giulio from Barry Plant Doncaster East said he would support new rules to combat underquoting, although he feels the practice is already under control. He adds that it can be hard to put an accurate value on property in a strong market, and agents can become an easy target for disgruntled buyers.

“I can understand why some agents are advertising no price, because they don’t want to be held accountable or liable,” he told Real Estate Business.

“When you’re in an improving marketplace, the market will determine the true value – the agent just influences it.”

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