Recent news the Department of Fair Trading has attended auctions undercover and raided offices of estate agents looking for dodgy business practices such as evidence of underquoting is welcome news to estate agents, many of which believe education is largely to blame.
Agents consider fly-by-night online education courses that barely touch on the legal responsibilities required of an agent adds to the problem. Too much is also expected from estate agents who may or may not be experienced valuers, understand appropriate means of conduct and have a firm grasp of relevant legislation.
Fluctuations in market value between the time a house is valued, the listed price and what people are prepared to offer can also muddy the waters. Price negotiation during auction can also create further problems and give the impression underquoting is rife within the industry.
John Cunningham, managing director of Cunningham’s Property based in Sydney’s northern beaches, said existing levels of low stock mean 20 bidders chasing a property at auction can push prices up a level. Mr Cunnigham said vendors can also put their price up, which has nothing to do with the pitch the real estate agent has made and their estimated selling price.
“I think most of the industry welcomes the work by the Department of Fair Trading because there is a lot of disinformation about what underquoting is, and the sale price isn’t the issue – the difference is what an agent quotes to the marketplace and what the seller receives; this is the issue,” Mr Cunningham said.
“The Department of Fair Trading hit nearly every office on the northern beaches and it was probably less dramatic than it sounds – the department just showed up at our office and wanted to see the files for sales settled in September… it went through around 40 sales, our certificates of registration and all licences and I encourage it.
“The big problem is people completing a certificate of registration course in a few hours who are then out there able to sign up properties to sell based on their estimated selling price, and they may not be as capable as they are supposedly trained to be… I’m flabbergasted all the time by how little knowledge of legislation agents have, but bear in mind, a lot of registered training organisations are broad in what they consider their ‘interpretations’ or process, and the Department of Education is investigating these operators.”
Auctioneer and director of Auction Services Rocky Bartolotto said the issue with the perception of underquoting could be as simple as expecting your house or property will sell at a similar level to a neighbour or another house in your area because it has similar features.
“I’m hearing a lot that next door got a certain price for their home and we should get more… probably they may get 10 per cent more in a tight market,” Mr Bartolotto said.
“Certain properties just attract more bidders – especially properties at the moment attracting first home buyers. Agents are certainly not doing any manipulation deliberately.
“It’s just not in an agent's interest to underquote.”