The Andrews Labor Government is proposing new legislation to stamp out underquoting in the real estate industry.
Minister for Consumer Affairs, Gaming and Liquor Regulation Jane Garrett today announced major reforms to the Estate Agents Act 1980 to help give Victorians a fair go when buying a home.
Underquoting is when an agent misleads a prospective buyer about the likely selling price of a property.
Under the proposed new laws, fines could double for underquoting to $30,000.
Agents will also risk losing any sales commissions and other fees if they are found guilty of the dodgy practice. This could represent an additional penalty of around $14,000 on an average home under the proposed laws, or far more on blue chip properties.
Agents would be banned from advertising properties with ‘plus’ or ‘offers over’, and the advertised price must be within a ten per cent range (e.g. $500,000-550,000).
The advertised price would also need to be updated within one business day if a higher offer is rejected at any time.
Agents would also need to provide all prospective buyers with a ‘fact sheet’ which must include three recent comparable sales, the estimated selling price, and the median price for the suburb.
The Director of Consumer Affairs would be given powers to force agents to provide evidence to justify their choice of comparable properties. It will be the agent’s responsibility to prove they are not underquoting with evidence about how they arrived at a property’s advertised price.
Ms Garrett said fines for failing to comply or cooperate with Consumer Affairs Victoria could triple to more than $30,000.
The Government has been consulting with the Real Estate Institute of Victoria (REIV) which has backed the reforms. REIV CEO Enzo Raimondo said that the changes would bring transparency and consistency to price representation in the property sector.
A recent survey of REIV members found more than 70 per cent of agents said underquoting laws required a change.
The proposed laws are part of the Government’s broader work to make the real estate industry fairer. Last July, Ms Garrett directed Consumer Affairs Victoria to inspect 200 auctions in 2015/16.
Consumer Affairs is halfway through these inspections and, as a result, there are ten major investigations underway into underquoting and legal action is being taken in the Federal Court.
Inspectors are now ramping up for the autumn auction season with a record 1200 properties under the hammer this weekend alone.
The Government will consult further on the proposed law changes with the intention of legislation being introduced in Parliament later this year.
Quotes attributable to Minister for Consumer Affairs, Gaming and Liquor Regulation Jane Garrett
“The Andrews Labor Government is toughening up laws to help stamp out the practice of underquoting in the real estate market.”
“Buying a home is one of the biggest decisions people make and this is about making sure hardworking Victorians don’t waste time and money on properties they simply can’t afford.”
“We are sending a strong message to rogue agents who are doing the wrong thing. These proposed laws will help clean up the industry and make it fairer for all Victorians.”
Quotes attributable to Real Estate Institute of Victoria (REIV) CEO Enzo Raimondo
“The reforms would be effective in a variety of market conditions, and for all stakeholders in property transactions.”
“The changes will provide consistency in pricing of property and the information provided to both vendors and buyers.”
Reviewed 19 August 2020