You know the drill, you see an attractive house advertised in your preferred suburb and price range, only to find that it sells for hundreds of thousands of dollars above the quoted price.
It can happen over and over again, which makes you wonder why agents do it? Well, underquoting is a great way to get a list of all potential buyers in your area and how much they have to spend.
And it also draws buyers to auctions, pleasing the vendors on auction day.
Well, the NSW Government has had enough of this contentious form of marketing and a NSW Fair Trading team was formed in 2021 dedicated to proactively stamping out underquoting in the real estate industry.
It has quickly swung into action, issuing 117 fines worth almost $200,000 during the past nine months, and in a first for NSW, imposed restrictions on serial ‘underquoters’.
Minister for Small Business and Minister for Fair Trading Eleni Petinos said addressing the conduct of both the listing agent and licensee in charge helped the business comply with legislation and the expectations of consumers.
“Understating the expected price of a property for sale by providing false estimated selling prices of the property completely wastes the time and money of potential homebuyers,” Ms Petinos said.
“Underquoting will simply not be tolerated. We will continue to investigate and penalise where false prices are provided to consumers.
“The rules are clear - agents must not understate the selling price in advertisements about a property for sale. They must be able to provide evidence on how they arrived at the estimated selling price and ensure the estimated price remains current.
“While complaints for underquoting rose last year, so has action by the regulator. In 2021 Fair Trading received more than 320 complaints in relation to underquoting and issued penalty notices for around a quarter of them. The laws in place are working and being used appropriately when poor conduct can be proven.”
Property Services Commissioner John Minns said he was working closely with industry and stakeholders to ensure a united approach to issues such as underquoting as the real estate market continued to experience growth.
“COVID has not affected the property market, in fact the real estate industry has encountered record sale and income during COVID. Agents successfully worked within the requirements and have managed to achieve record sales,” he said.
“Underquoting is not just a breach of the Property and Stock Agents Act, it is unprofessional and costs consumers time and money. All stakeholders agree an industry and regulator collaboration can achieve much to educate, communicate and enforce increased standards.
“We are forming a roundtable to identify how we can improve outcomes for buyers and industry and this will include representatives from Fair Trading, the NSW Real Estate industry and buyers’ advocates.”
Enforceable undertakings can be a beneficial option as consumers receive redress quickly and Fair Trading and the trader co-operate to reach a reasonable solution and prevent future non-compliance.
This undertaking requires at least two licensed agents, or one licensed agent and a certificate holder, to approve comparable pricing for every new property listed for sale.
During the 12 months of 2021, Fair Trading received 329 enquiries and complaints related to underquoting. An assessment of the complaints identified 211 breaches of the Property and Stock Ants Act 2002.
There were 114 penalty infringement notices issued valued at $248,800 and eight matters were referred for formal investigation.
Agents suspected of underquoting should be reported by calling NSW Fair Trading on 13 32 20.
