Before we discuss how new underquoting laws in New South Wales impact buyers, let’s first discuss what underquoting is.
What is underquoting?
Underquoting is a method of selling which is often employed by real estate agents in order to generate more interest in a property. This tactic is illegal under Australian Consumer Law and the Estate Agents Act of 1980, but many real estate agents still use it.
Underquoting occurs when a real estate agent tells a buyer a home is for sale for a dollar amount that is under the value listed in the seller’s agreement. Terms such as “offers above” or “$500,000+” are usually tossed around in a nonchalant, verbal exchange or on marketing materials.
New Laws Implemented
In order to hold real estate agents to higher real estate standards and mitigate the use of underquoting, fines are being assessed and stricter pricing rules are being implemented.
The Impact on Buyers
Even though the practice has been illegal for a while now, buyers will see changes in advertised prices in New South Wales and possibly Victoria as a result of stricter enforcement.
Instead of saying “offers above” or advertising a price with a plus sign, real estate agents must give a specific price range to eliminate ambiguity. A top and bottom price range will be shown that must be within 10% of the other.
This change in advertised price ranges will make it easier for buyers to locate properties within their budgets when searching for a home for sale. It’s important to note, however, that agents still aren’t required to advertise the price, so—in order to avoid underquoting—you may find that you have to reach out more often to find out the price of a property.
Buyers might also see price variations that fluctuate over the life of a property for sale, because real estate agents are allowed to change advertised sales prices based on the fluctuations in the market.
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For more insight into how other changes are impacting real estate, you might also like to read our post, “The China Beef Boom Boosts Rural Australia.”
If you have questions about real estate or rural real estate investment, contact us to speak to a qualified real estate agent. We’d be happy to offer advice.