You may be aware that from 1 January 2016, new underquoting laws have applied to the sale of residential property in NSW. One year on, has anything changed?
Buying a property is one of the biggest financial investments you will ever make and you should be able to expect the real estate agent to market the property with high levels of professionalism and transparency.
Having said this, potential buyers have wasted significant amounts of time and money pursuing properties that have ended up selling for prices well in excess of the advertised value. Underquoting or “price baiting” is a deliberate marketing strategy to attract the highest number of buyers. Indeed, one real estate agency allegedly operated under the mantra, “Quote it low, watch it grow”.
What have the Laws Changed?
The 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.
A further loophole has been closed by the NSW Government recently in light of a recent BresicWhitney case where they were successful in their defence due to a legal technicality of the definition of an “employee”. This amendment has thus replaced the term “employee” and now refers instead to “anyone engaged or otherwise appointed” by the selling agency.
The penalties are severe. A selling agent found to be underquoting will receive a $22,000 fine and forfeit commission and fees earned during the sale of the property.
What does this mean for Sydney Home Buyers?
This is excellent news for prospective buyers looking for property in Sydney as it is easier to narrow down your options based upon accurate pricing estimates. However, it is important to note that the new laws certainly do not guarantee that the property you are inspecting will sell for the price listed, particularly at auction.
Sydney’s property market is constantly in the news for its aggressive and dynamic nature and forever escalating price growth. So while the new laws should initially make it easier for you to decipher whether or not a property is within your budget, you can still expect intense competition for most Sydney properties you are viewing in the current market. This level of competition, based largely upon a severe lack of stock, particularly in Sydney’s inner ring suburbs, pushes prices in many cases well above the vendor’s reserve.
Are the New Laws Working?
According to Domain, recent data suggests that these laws are working, with far greater pricing accuracy being witnessed through NSW, and a much smaller gap between the advertised price and the final price. These positive results have also sparked pressure for Victoria to follow suit.
While these new laws appear to have had a positive effect, there are still many ways that the true value of a property can be obscured from the buyer.
How can I Achieve the Best Price for a Sydney Property?
In order to purchase your dream Sydney property at the best price, you’re best move is to enlist the services of a buyer’s agent with local knowledge and experience.
Buyers Domain are Sydney’s premier buyers’ agents for busy professionals. With 10 years’ experience as a property lawyer, our Principal, Nick Viner is 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 Nick and Buyers Domain today and get on the fast track to buying your next Sydney home or investment property.