Complaints about underquoting real estate agents soar in NSW despite new laws
A property sold above the advertised price is not in itself evidence of under-supply.Recognition:Dan Soderstrom
“Many of them used terms in their advertisements that are now banned, such as” offers about “or” offers about “an amount that could underestimate or obscure the appraised value of a property.”
Underselling can result in potential buyers wasting their time at auction and wasting thousands of dollars on pest reports and legal fees on a property that has always been out of budget.
Fair Trading received 266 complaints in connection with under-offers in 2016, an increase of 13 percent compared to the previous year and an increase of 216 percent compared to 2014.
Mr Stowe said the rising number of complaints was largely due to greater consumer awareness and most complaints could not be substantiated.
Fair Trade Commissioner Rod Stowe said the rising number of complaints was largely due to greater consumer awareness.
“If sales prices exceed the price advertised in a marketing campaign, it is not an under-supply, especially in this particularly hot market,” he said.
But David Morrell, a buyer attorney at Morrell & Koren, called the laws “pathetic” and the penalties “slap in the face with a wet salad”.
He said under-quotas are endemic across Australia and could only be stopped by forcing agents to post the reserve price before an auction.
“It’s hard to prove, and they get around it by getting ‘expressions of interest’ so nobody puts a price on anything,” he said.
“If they’re caught, their licenses should be taken away.”
Currently, realtors face fines of up to $ 22,000 and the risk of losing the commission and fees incurred in selling an undervalued property.
A recent survey by the consumer group Choice found that more than half of the 52 apartments and houses it inspected were sold for more than the maximum price quoted by the agent.
And a quarter was sold over 10 percent more than the maximum price.
“Real estate agents should be able to estimate a property’s value at around 10 percent of the sale price,” said Tom Godfrey of Choice.
“A house in Sydney that we looked at had a suggested price of $ 1.6 million but ended up selling for 38 percent more, at $ 2.2 million.”
In November the Victorian government passed similar undervaluation laws.
But as a first step, Consumer Affairs Victoria chose to use Australian consumer law instead of state law to hunt down shady real estate agents for misleading and misleading behavior.
Mr Stowe said NSW had followed the case with interest and added, “That means we have a few more things in our toolkit.”
Fair trading agents have the authority to review sales records and other documents to determine if an agent has broken the law.
John Cunningham, president of NSW’s Real Estate Institute, believes the first year of the new laws has been “very successful”.
He said that along with real estate agent training and licensing reforms, undervaluation could be removed.
“First, I think there is a lack of understanding, second, there is an attitude among agents that it is not important, and third, there is ignorance,” he said.
“Combine these three things together and it’s a cocktail for abuse,” he added.
Mr Cunningham believes most of the 26 agents received fines for being ignorant.
“With the new laws and awareness campaign, ignorance and avoidance can no longer be used as excuses.”
Tips for buyers
Look at comparable sales in the area to estimate the property’s value rather than relying on the realtor’s valuation
Stick to your limit and don’t be tempted to pay more than you can afford for a property
Sub-quotations are illegal. If you think you are undervalued, report it to your local consumer protection organization (e.g. NSW Fair Trading).
Esther Han is a journalist with The Sydney Morning Herald. She has covered government policy, health and consumer affairs.
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