Victorian real estate agents will be legally required to tell you a property’s reserve price — aka the minimum it will sell for — a week before it goes to action, part of a major state-wide crackdown on the the illegal practise of underquoting.
The nation-first laws were outlined by premier Jacinta Allan today ahead of them being introduced to parliament next year.
The reforms are major, and will require real estate agents to list reserves at least seven days before either an auction or a fixed-date sale. Failure to do so within that timeframe will prohibit the property from being sold.
Underquoting will be familiar to anyone on the first dicey steps of property ownership. It’s a dodgy tactic used by real estate agents Australia-wide to increase competition for property, whereby they’ll list the estimated value for much, much lower than the property’s worth.
The result of this increased competition is usually fierce bidding wars that end in sale prices fetching well above the initial reserve.
Also included as part of the reforms is the mandate that agents update all marketing materials to reflect the reserve price and stop distributing any materials without the reserve price. Victoria’s consumer affairs minister Nick Staikos said the changes were enacted in response to an “unfair” tactic that affects Aussies, particularly young first-home buyers.
“The tragic thing about underquoting is that it is often young, first-home buyers who are the victims of underquoting, who are about to make the biggest financial decision of their lives, and we think this will go a long way to help stamp it out,” Staikos said, per The Age.
“This is a massive reform. It’s nation leading,” he added.
The underquoting laws come in tandem with the Victorian government introducing stricter guidelines around how agents land on a property’s price. Under those guidelines, agents are required to use the most appropriate comparable local properties when determining a home’s likely price before auction, taking into account any renovations or the home’s age.
Agents also must provide evidence of how they determined the price guide, with penalties applied if they fail to do so.
Though not as sweeping as Victoria’s, the NSW government announced last week that it too would be cracking down on agents and property pricing. Now, NSW agents who underquote can be dealt fines of $22,000, and risk losing their commission if an underquoted house is sold.
Sydney is considered the nation’s underquoting capital. Last year, the average Sydney home sold for $165,000 to $200,000 above the guide, according to the Sydney Morning Herald.
It’s welcome news for young Aussies looking to get into a hyper-competitive market, but some industry figures have expressed concerns that, while well-intentioned, underquoting laws can be ineffective. Market volatility can make pricing difficult to estimate, and some agents continue to underquote even despite stricter penalties.
We’ll have to wait and see how the reforms shake out when they’re introduced to parliament next year, but here’s hoping they at least give some prospective buyers a shot in this clusterfuck of a housing crisis.
Lead images: HBO and Getty Images
The post Real Estate Agents Will Be Subject To Nation-First Underquoting Reforms In Victoria appeared first on PEDESTRIAN.TV .
