Many buyers of real estate are misjudging the true market value of properties because they rely on conservative and sometimes irrelevant comparable sales information supplied by agents, experts say.
The problem is especially prevalent among first-home buyers and young people trying to purchase entry-level properties at Melbourne auctions.
Consumer Affairs Victoria has been cracking down on agent underquoting following the introduction of new laws aimed at stamping out the practice.
A key plank of the reforms is that agents are required to provide prospective buyers with the details of three recent comparable sales of similar properties in a statement of information.
However, market watchers say there’s still a lack of uniformity in the way houses and units are being quoted, with some agents featuring “not so relevant comparables” in their statements. These comparables suggest that the properties up for auction or private sale could go for much lower prices than they actually do.
“Some agents are doing the right thing with their quoting. Others look like they are manipulating the system by using not so relevant comparables in their statement of information. This will make it really difficult for first-home buyers,” said Caroline Swinden, buyer’s advocate for PropertyDuo.
Sources say major agency groups have sought legal advice on how they can legally quote properties but still entice buyers who may want to purchase at a lower price point.
Philip Kingston, director of Gary Peer, said the Melbourne property market was experiencing plenty of situations in which properties have achieved unexpected premiums.
Consumer Affairs Victoria has commenced action against 12 agencies for alleged underquoting, and investigations and court cases are underway. Since May, agents found guilty of underquoting have faced fines up to $31,000, as well as loss of commissions.
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