New underquoting laws (Victoria)

Discussion in 'The Buying & Selling Process' started by David Chin, 2nd May, 2017.

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  1. David Chin

    David Chin Member

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    On 1 May 2017, the Victorian Estate Agents Act changed the obligations on Victorian estate agents and agents regarding residential property. These obligations relate to:
    • the estimated selling price
    • comparable property sales
    • Statement of Information for prospective buyers
    • advertising prices, terms and symbols
    Consumer Affairs Victoria have useful information on their website about these changes - Understanding underquoting - Consumer Affairs Victoria

    Some interesting things to note are that:
    • the estimated selling price may be a single price (eg, $500,000) or a range of up to 10 percent (eg, $500,000 to $550,000)
    • comparable property sales need to be sold in the last 6 months and be within 2km (for a property in the Melbourne metropolitan area)
    • the Statement of Information will need to be included with online advertising (as well as being displayed at open for inspections)
    • advertising prices cannot use any words to qualify the price, such as 'offers above', 'from' or '+'
    • the advertised price must not be less than the estimated selling price or a price in a written offer that was rejected by the seller
    • penalties can be more than $31,000
    It will be interesting to see your observations following these changes to the law.
     
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  2. joshrowe

    joshrowe Member

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    Rogue Victorian real estate agents which want to underquote under the underquoting laws will continue to do so.

    Victorian Underquoting Laws Will Fail

    NSW agents must not quote a figure less than their estimated selling price provided in the agency agreement.

    However, Victorian underquoting laws are silent on what is quoted to prospective home buyers versus what is in the vendor/agency agreement. At the moment the reserve price can be changed moments before the auction commences. Rogue real estate agents currently exploit this loophole by only nominating the official reserve price on the day of the auction. Even though most agent/vendors have an implicit agreement on the reserve at the time of signing the agency agreement.
     
  3. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    When I started looking at real estate almost 20 years ago people in Melbourne were complaining about under quoting. It happened on every property, much like it does today.

    I think some legislation or a code of practice was introduced, the effect was negligible.

    I can't see that this legislation will be truly effective. Even if the quote was genuine and the offer was around that, someone else who bids 20% more is going to win the property.

    One thing agents are doing today when asked for a selling price is they're saying that they've got interest around $X, but unless they get a very generous offer, it's going to auction. If it sells at auction for 20% more it doesn't mean they've done anything wrong.

    At the end of the day the agent is not required to advertise a price at all.
     
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  4. joshrowe

    joshrowe Member

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    Agreed.

    The new underquoting rules do require the real estate agent to provide a Statement of Information (3 comparable & recent sales).

    Victorian Underquoting Laws: What You Need to Know
     
  5. JK200SX

    JK200SX Well-Known Member

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    As a side to this, has anyone else noticed when you go and do a ctrl+F on "Listprice" on the source code page for a property for sale on realestate.com.au (ie one that doesn't list a selling price), it doesn't appear anymore in the source code?
     
  6. supersam80

    supersam80 Well-Known Member

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    What I'm noticing in inner east listings is the comparables listed in the ad are mostly (if not all) 6 months old, sometimes minus a bedroom, sometimes next suburb out but no doubt within 2km. And the top of the advertised range is what the 6 month old comparables sold for

    I'm not sure this will make a difference :)
     
  7. Big Will

    Big Will Well-Known Member

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    I don't understand why the REA need to provide three comparable sales... Surely this should be up to the buyer to do their own DD. It isn't rocket science and there is plenty of free information out there.

    Even if you don't have free information people would be typically speaking with a bank or MB who has access to this information and can provide it. Even on my recent purchase I was able to obtain all the 'paid' information for free from my MB along with the PC community.

    With RE.Com, Domain, Homehero out there for free price guides along with sold sections surely someone can work out what price something is and if you can't then should you really be investing hundreds of thousands sometimes millions into something?
     
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  8. neK

    neK Well-Known Member

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    Still reckon the easiest solution is for a reserve price to be advertised.
    That reserve price is binding and if it is hit at the auction, it must be sold.
    Reserve prices can still be amended up to 48 hours prior to auction and must be updated on the website / advertising material and prospective clients be notified by sms.
     
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  9. S0805

    S0805 Well-Known Member

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    This law is rubbish... I can see (atleast in area i am after) in Statement of Information agents have started listing the low sold prices for properties which not necessarily reflect the market. Now under quoting will occur by complying with law...;)
     
  10. David Chin

    David Chin Member

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    I have noticed today sold prices being within the quoted estimate (whereas I had not in the past four months), although this could be due to other/additional reasons.
     
  11. JacM

    JacM VIC Buyer's Agent - Melbourne, Geelong, Ballarat Business Member

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    "price" does appear in the source code though, and the figure plugged into this field seems to drive the filtering and sorting mechanism which is pretty irritating, particularly when a very misleading price-range is entered that is far below that of what the property is realistically worth.
     
  12. joshrowe

    joshrowe Member

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    This is one of the areas where I thought the law was weak:

    Victorian Underquoting Laws Will Fail

    The other is that the vendor/agent can set the reserve price on the day of the auction - which makes every quote provided up until auction useless !
     
  13. MrFox

    MrFox Well-Known Member

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    I understand you are looking at this from the point of view of a buyer but what about the vendor? You can't dictate to someone how they should price their home or what reserve they should advertise. It's their property and they can change the reserve even during the auction.
    Every one could be a seller one day so be careful what you wish for. ;-)
     
  14. Agent30yrs.

    Agent30yrs. Well-Known Member

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    When you say "price-range is entered" are you talking about the advertised price (range) or the figures in the back end of the particular web portal?
     
  15. MrFox

    MrFox Well-Known Member

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    Thats what she means. Back end.
     
  16. Agent30yrs.

    Agent30yrs. Well-Known Member

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    @neK that happens everywhere, it's called a list price, lol.

    Very simply put, auctions work because, by taking a price out of the equation, prospective buyers won't discard a property from their inspection list purely because it "looks" too expensive or over priced. The psychology of it is that they then inspect it, get emotionally involved, revise their budget/expectations, sell a testicle bla bla bla (greed-need-want-desire).

    In a perfect world the ultimate solution is that every property goes to auction, and every auction has no reserve.
     
  17. Agent30yrs.

    Agent30yrs. Well-Known Member

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    I was concerned that was the case [email protected] where you say the range, I assume they are putting in a min and max search range that are both below the properties realistic value? That's smart marketing and a good way to get sales and create customers who are advocates ... NOT.

    So when buyers who can't afford the house do a search it comes up. Buyers who can afford it won't see it in theirs! FFS ! I'm bewildered.
     
  18. MrFox

    MrFox Well-Known Member

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    Real estate is not the only thing being sold in auction. What would be the reserve for Mona Lisa?
     
  19. Agent30yrs.

    Agent30yrs. Well-Known Member

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    @joshrowe what information are you basing this statement on? Even though most agent/vendors have an implicit agreement on the reserve at the time of signing the agency
     
  20. Agent30yrs.

    Agent30yrs. Well-Known Member

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    No reserve
     
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