How to Protect Yourself From Underquoting
In the first two months of 2018, Domain reported that 18 agents from across New South Wales, including Sydney’s Northern Beaches and Eastern Suburbs, have been found guilty of the unlawful practice of underquoting. Last year 47 incidences occurred.
Even with the introduction of tougher laws, two years ago, aimed at eliminating the practice, it seems that underquoting, also known as “price baiting” remains widespread. The ploy occurs when a real estate agent deliberately markets the property at a lower price in order to increase competition at auction and ultimately sell at an inflated price.
The same article also reported that the Northern Beaches is the latest Sydney region to have been targeted in a crackdown by NSW Fair Trading, which discovered that a significant 14 out of 17 real estate agents randomly inspected had breached laws.
A selling agent found to be underquoting receives a $22,000 fine and forfeits commission and fees earned during the sale of the property.
While you should be able to expect real estate agents to market property with high levels of professionalism and transparency, unfortunately potential buyers still waste significant amounts of time and money pursuing properties that end up selling for prices well in excess of the advertised value.
What does the Law Say?
The 2016 amendments to the Property Stock & Business Agents Act (NSW) 2002 address clearer rules for property pricing. An agent is committing an offence if they state or publish a price for a property that is less than their reasonable estimate of the property’s likely selling price contained in the agency agreement with the seller. Vague and misleading terms such as “offers above $1m” are prohibited.
It is important to note that the underquoting laws certainly do not guarantee that the property you are inspecting will sell for the price listed, particularly at auction, but it should make it easier to obtain a more honest pricing guide and determine whether or not a property is within your budget.
Even with the cooling market, across Sydney’s most popular regions, including the Inner West and Eastern Suburbs, you can still expect intense competition for most properties. This level of competition, particularly in Sydney’s inner-ring suburbs, pushes prices, in many cases well above the vendor’s reserve.
Are the Laws Working?
According to the Domain article, complaints of underquoting dropped by more than 50 percent but generally the industry admits that recent findings clearly show the problem continues to runs rampant.
How Do I Know if a Price is Accurate?
Firstly, you need to research comparable sales and suburb profile reports through such resources as www.realestate.com.au. A list of property sales is also included in the weekend papers.
However, in order to purchase your dream Sydney property at the best price, your most valuable move is to enlist the services of a buyer’s agent with local knowledge and experience.
Buyers Domain is Sydney’s leading buyers’ agency for busy professionals. As Principal, I have over 10 years’ experience as a property lawyer, and am well equipped to navigate you successfully through the entire process of purchasing a property in Sydney.
So if you’re tired of showing up at auctions that exceed your budget and getting pipped at the post by savvy investors and competitive buyers, get in touch with me today to fast track your next Sydney home or investment property.
Experienced Buyer’s Agent, Nick Viner can make sure you are being quoted a fair and accurate price, and assist you in purchasing a property that suits your budget and requirements. contact Nick now on 0405 134 645.