Minister for Better Regulation Victor Dominello said a bill aimed at cracking down on underquoting will be introduced this week.
Under proposed changes to the Property Stock and Business Agents Act 2002, agents will no longer be able to use ‘offers over’ or ‘offers above’ or similar statements in their marketing.
Another major reform will force agents to provide evidence of their estimated selling price to the vendor, and to then include this estimate in the agency agreement.
Agents will only be allowed to use the estimated selling price in the agency agreement when marketing a property.
If an agent makes a written or verbal statement about the likely selling price during a campaign, this must match the estimated selling price listed in the agency agreement.
Agents will also be required to keep a register of prices quoted on a property, whether these are provided to the vendor or prospective purchasers.
Anyone caught breaking the law will not only be liable for the current penalty of $22,000, but will also have to forfeit any fees from the sale.
Mr Dominello said these new rules would ensure better consumer protection.
“There have been no successful prosecutions made under the current act in over 13 years – this reform is long overdue,” he said.
Cohen Handler managing director Simon Cohen, who was a finalist in the Best Buyer’s Agent category at this year’s Real Estate Business Awards, said underquoting is common in Sydney, and is becoming more prevalent.
“I was at an auction on Saturday – they were quoting $600,000 to $650,000 and it sold for $805,000,” he told REB. “The property was worth $750,000 every day of the week.”
Damien Cooley from Cooley Auctions, who was named Auctioneer of the Year at the Real Estate Business Awards, said big mark-ups in price are usually due to the competitive nature of an auction rather than underquoting from the agent.
“It’s unfortunate that there have been in the past some agents who have taken advantage of what they quote compared to what they have told the vendor they feel the property is worth,” he told REB.
“But, largely, a lot of the frustration that is coming out in this underquoting debate has stemmed from the strength in the market, and in many cases it has nothing to do with the agent’s opinion on value.”
Meanwhile, Real Estate Institute of NSW chief executive Tim McKibbin said agents need to be ready to implement the government’s proposed new rules.
“With this new legislation comes some complexities, so agents should exercise caution when taking advice,” he said.
“We’re already aware of misinformation in the marketplace regarding the new laws. Our advice to agents is to be extremely careful about who you listen to.”