The Victorian government is moving to help property buyers by announcing a crackdown on underquoting in the state.
Announced late last week, the Victorian government has revealed a number of proposed changes to the Estate Agents Act 1980 aimed at clarifying the information buyers are presented with by agents.
Under the changes, agents would have to provide buyers with a comprehensive analysis including three recent comparable sales, an indicative selling price, and the median price for the suburb.
Advertising price ranges of more than 10% (e.g. $500,000-550,000) would be banned, as would words or symbols in advertising such as “offers above,” “from” or “+.”
Advertising must be promptly updated if the seller rejects a written offer to purchase, or the agent’s price estimate changes and agents will have to prove on request from Consumer Affairs Victoria how they arrived at the estimated price.
Agents found guilty of underquoting could lose their sales commissions
“Buying a home is the one of the biggest decisions Victorians will make. Prospective buyers expect and are entitled to a level playing field,” Victorian Minister for Consumer Affairs, Gaming and Liquor Regulation Marlene Kairouz said.
“Victorian homebuyers deserve a fair go. This is about making sure they don’t waste time and money on properties they can’t afford,” Kairouz said.
Ben Kingsley, Property Investment Professionals of Australia (PIPA) chairman, said he believes the changes are a “step in the right direction” and will help push outdated practices out of the industry.
“I really do like the idea of comparable sales in terms of giving evidence of where they see the property lying and letting the market determine it,” Kingsley told Your Investment Property.
“I think that’s good news for consumers and we’ll certainly see the ‘quote it low and watch it go’ mentality of older styler agents start to become very difficult with these changes to the legislation,” he said.
While Kingsley supports the changes, he does believe there needs to be a realisation that some people will pay above what many would consider an accurate price for a property.
“I think people do make conclusions very quickly and then the reality is that six, 12 or 18 months later they can see the house has been bulldozed and two duplexes or something along those lines [has happened],” he said.
“We also don’t also know the motivation of all buyers, there could be family members in the street or a close friend and people will pay whatever it takes.
“I was at an auction on the weekend and I think I saw that particular moment. There were a lot of hugs and high fives going on and a lot of excitement at the end of an auction where I thought someone paid about $60,000 too much.”
Kingsley said he believes the changes will offer some protection to buyers, but he said PIPA will continue its push for further regulation, particularly of the property advice sector.
“There’s no doubt an unregulated market and a bullish property market invites all sorts in to the space.
Property prices do move in cycles and we’re still in the upwards cycle and we’re definitely going to see pressures around high-rise medium-density apartment valuations and there will be a lot of finger pointing if a lot of people lose a lot of money
“We’ve seen in excess of seven different state and federal investigations in to where advice on property has been recommended to be regulated. I don’t hold out any strong hope in the government, but that isn’t to say we'll stop lobbying heavily for it.”
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