From 1 January 2016, new underquoting laws start in NSW for Real Estate.
Underquoting is when an agent gives a buyer a property price lower than the agent’s estimated selling price in a Sales Agreement (the agent’s written contract with the seller).
Below is a checklist from NSW Fair Trading for property buyer’s protection and an explanation of why the laws changed.
Buying a property is the biggest financial investment most people will ever make. When dealing in the residential property market, sellers (vendors) and potential buyers (purchasers) should be able to expect a real estate agent to market property ethically and professionally.
Potential buyers can spend money and time investigating properties based on the advertised or stated value. There can be significant consumer detriment if that value was not a reasonable estimate of its likely selling price.
A review of the previous underquoting laws found that clearer requirements for agents selling property would better protect consumers in the NSW property market.
The previous arrangements also made it difficult to effectively enforce the laws and penalise agents for underquoting. Now, from 1 January 2016, agents face tougher penalties that apply even if they were not aware of the law, or did not intend to break the law.
The reforms require agents to draw on their skills to make a reasonable estimate of the likely selling price and have honest and fair dealings with all buyers and sellers. The role of the seller’s appointed agent to achieve the highest possible price on the property owner’s behalf does not mean they should manipulate buyer interest with false price information.
What to DO
Before you spend money on buying a property:
Know the highest price you are prepared to pay. Consider related and ongoing costs, not just the property selling price. I advise my clients to add another 5% to the purchase price.
If the agent provides an estimated selling price, use it as a guide only. Research recent sale prices for similar properties in the area. Visit different properties and auctions to see how the property market works.
What NOT to do
Don’t rely on prices that seem too good to be true. Don’t rely on one person’s judgement – talk to other buyers and licensed property professionals and do your own research.
If it all becomes somewhat daunting and you are losing time, call a licenced buyers agent for help.