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Agents will stop giving buyers price guides in South Australia thanks to new laws designed to outlaw underquoting.
Speaking with Real Estate Business, Hall of Fame member for the Society of Auctioneers and Appraisers and four-time Golden Gavel winner in South Australia Brett Roenfeldt said the new South Australian laws were an overreaction to a problem that could have been fixed almost half a decade ago.
“John Rau and his political people have had the authority to prosecute real estate agents for bait advertising for the last four and a half years. And they have not in that time actually prosecuted one single agent," he said.
“They’ve had 46 complaints issued to them, which is roughly eight per year, and they have sent out warnings but never gone further and prosecuted one individual.”
Mr Roenfeldt believes that to circumvent the laws agents will simply refuse to quote a price.
“I suspect what’s going to happen is that over a period of time, once this becomes enacted, which won’t happen for another few months, they simply won’t quote price," he said.
“I think that agents shouldn’t be involved in the price of anything because at the end of the day, it’s not the agent or the vendor who buys the property. And every buyer will see value differently to another.
“We’ve seen so many cases where an agent has said ‘Based on all the research I have done, it’s worth $500,000’ and it ends up bringing in $580,000. And no amount of research will ever come up with that figure, yet from a buyers' perspective they see value at $580,000.
“It’s never been an exact science and it never will be."
But Mr Roenfeldt admits that without a price guide many vendors, especially first home buyers, will be lost.
“What you’ll find, and it’s already happening across the country, is that some agents will provide a selection of recent sales attached to the marketing brochure and say to the consumer, ‘I’m not prepared to divulge a price, however to help you here’s a selection of recent sales. We suggest you have a look at the properties and make up your mind how these properties fit in the market against the one you just looked at'," he said.
The new laws passed in parliament last week now dictate that the reserve price will be revealed to bidders. The laws also state the price placed in a sales agency agreement by an agent to be a single figure, rather than a range, compelling agents to be more accurate and realistic in their sales agency agreements.
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