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Simon Parker
Agents who underquote property prices at auctions are now being targeted by the South Australian government, only days after the NSW government launched a blitz against the activity.
SA deputy premier and minister for business services and consumers, John Rau, introduced a bill to parliament yesterday aimed at addressing the issue of “bait pricing”, otherwise known as underquoting.
“I have received numerous complaints from homebuyers highlighting the practice of bait pricing,” Mr Rau said. “These laws will stamp out bait pricing and give home buyers an even playing field.”
According to the SA government, the Bill will make it against the law for properties to be passed in at a higher price than advertised or for vendor bids to be received at a price higher than advertised.
"The government believes that the most effective way of eliminating the practice of bait pricing is to create a nexus between the price sought by, or acceptable to, the vendor and marketing a property based on that price.
"The expectations of the purchaser will be realistically met when the auction of a property is based on advertising that reflects the genuine selling price of the vendor.
The minister rejected the notion that the laws might be unfair to home sellers. "Market forces will always determine the price of a property. These laws are about making the rules transparent for everyone. Businesses that use bait pricing will need to change their practices, and so they should,” he said.
Real Estate Industry of South Australia (REISA) president, Greg Troughton, told Adelaide Now that while he agreed with the government's push to stamp out underquoting, he believed the new laws would hurt vendors.
"When you know the reserve, that has an impact on the auction and will have a dousing effect on the bidding," he told Adelaide Now.
Earlier this week, five teams of NSW Fair Trading investigators monitored 20 property auctions across Sydney on Saturday, to ensure that real estate agents were complying with the Property Stock and Business Agents Act 2002.
According to NSW Fair Trading, the investigators were on alert to detect the illegal practices of deliberately underquoting to potential buyers, overpricing to vendors and dummy bidding.
The NSW blitz came a month after respected industry commentator Terry Ryder said underquoting was rife in Victoria.
“A Property Observer survey finds 75 per cent of Melbourne auctions involve underquoting. It's illegal but still common, thanks to weak enforcement.”
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