NSW has been told to expect its proposed underquoting reforms to fail because “rogue agents” will be able to game the system.
Keatings Real Estate managing director John Keating said underquoting will continue as long as vendors are allowed to increase their reserves until a property is knocked down by the auctioneer.
Under the NSW government’s proposed changes, agents will have to include a valuation in the agency agreement, and will only be able to quote this figure when marketing a property.
Mr Keating, who is also an auctioneer, said the new rules would fail, just as he claimed they had in his home market of Vic.
“Vic already has almost identical rules to those proposed in NSW and, every weekend in Melbourne, there are still thousands of purchasers duped by rogue agents who, often in collaboration with their vendors, artificially manipulate their paperwork to conceal the prices they know their vendors really want,” he said.
Mr Keating said underquoting would end if agents had to publish the reserve price in their auction advertisements – the reserve could be lowered during a campaign but not increased. If price ranges were quoted, the reserve would have to be the lower figure, he added.
“If vendors didn't like such an auction model, they wouldn't have to use it. They could still sell by tender, expressions of interest or by the traditional private sale method where they could price their properties as high as they like,” he said.
“An auction model with transparency of the price point of where a property will be ‘on the market’ would be a buyer magnet if the reserve is realistic.
“Such an auction model would have 100 per cent integrity and be welcomed by nearly everyone from first home buyers to the Reserve Bank – except, perhaps, some dishonest estate agents.”