The NSW government has promised to instigate the “biggest crackdown on real estate underquoting in over a decade” if it’s re-elected on 28 March.
Premier Mike Baird said agents who underquote would face losing their fees and commissions while also remaining liable for the existing maximum fine of $22,000.
The new laws will make it illegal for agents to advertise a property for less than the selling price they outlined in their agreement with the vendor.
Property advertisements will have to specify a dollar price or price range as opposed to an ‘offers over’ figure.
Agents will also need to substantiate what they believe a property may be worth by providing a vendor with comparable selling price data for similar properties.
“The reforms will improve confidence among homebuyers and close any loopholes that agents may be exploiting,” Mr Baird said.
The NSW government’s decision to make underquoting an election issue follows a similar move by the then-government of Victoria during its election campaign in November.
It also comes soon after NSW Fair Trading announced a “real estate compliance blitz” against 114 Sydney offices in the Sutherland shire.
Real Estate Institute of NSW president Malcolm Gunning told Real Estate Business that the state government regarded agents as “easy targets” to help it win votes.
“What they’re doing is creating theatre around agents and they want the electorate to perceive that they’re doing something. But in reality, they’re doing nothing about it,” he said.
Mr Gunning said the way to reduce underquoting would be to make it harder to become an agent, because a sales rep can’t be expected to properly value a home with just a few days of training.
PRDnationwide managing director Tony Brasier was also critical of the NSW government’s proposed reforms, which he called “political grandstanding of the highest order”.
“By their own admission there were only 82 complaints to NSW Fair Trading last year on underquoting – coming from over 200,000 property transactions,” Mr Brasier said.
“All this in a rising market where it is extremely difficult to very accurately price property based on historical comparable sales.”
Mr Brasier said the premier and fair trading minister should consult with the industry to find long-term solutions to underquoting rather than make headline-grabbing announcements.
“The government’s current actions, where it recently ‘raided’ numerous agents in the Sutherland shire and announced a blitz on underquoting, has to be seen very cynically so close to an election. It is akin to taking a chainsaw to a small bonsai plant,” he said.