Are you tired of feeling misled when house hunting? A crackdown on underquoting by real estate agents in Victoria is set to change the game. This means stricter rules to ensure the prices you see are more accurate.
Agents will now face tougher guidelines to justify their price guides, especially when using 'comparable' properties to set the price. The investigation revealed that some agents were deliberately using misleading comparisons to make the listed price seem lower than it actually was.
So, what's changing? Agents must now consider several factors when comparing properties. These include the home's age, architectural style, renovation status, size (both land and floor), zoning, proximity to key infrastructure, and any special features like a pool or tennis court. This is a significant step up from the previous, more vague definition of a comparable property.
But here's where it gets controversial... Previously, a comparable property in Melbourne only needed to be of a 'similar standard or condition' and sold within 2 kilometers of the home for sale and within the past six months. This allowed for some pretty loose interpretations, didn't it? Consumer Affairs Victoria will now demand evidence from agents on how they chose comparable properties and will issue fines for non-compliance.
This follows an investigation that uncovered widespread underquoting in Melbourne. Agents admitted to cherry-picking inferior properties to justify lower price guides. Jacob Caine, the Real Estate Institute of Victoria chief executive, highlighted the issue with an example: a renovated home next to an older one on the same-sized block could have a million-dollar price difference. The new requirements aim to address this lack of specificity.
Since September 2022, the regulator's underquoting taskforce monitored over 2,800 sales campaigns and found agents using unsuitable comparisons. However, in the last financial year, only 48 infringement notices were issued. In contrast, an investigation using data from 26,000 sales revealed that more than half of the properties sold above the top end of their price guide. The taskforce also reviewed 60% fewer sales campaigns compared to the previous year.
And this is the part most people miss... Property experts are also seeing agents providing statements of information with no comparable sales listed, falsely claiming none are available. While the new laws are a positive step, more work is needed, according to Caine. Consumer Affairs Victoria director Nicole Rich said that over 25% of complaints since September 2022 were about inappropriate comparisons. Consumer Affairs Minister Nick Staikos stated that tightening these requirements is one of many government reforms to tackle underquoting.
Multiple contributors to Victoria's 2022 Property Market Review called for changes, including disclosing reserve prices before auctions, providing free building and pest inspections, and banning agents from withholding sales prices. These submissions were obtained through freedom of information laws, as the government has not publicly released the report.
What do you think? Do you believe these new guidelines will make a real difference? Are there other areas of the real estate market that need more attention? Share your thoughts in the comments below!
