Consumer Affairs Victoria primed to spring on underquoters ahead of busy season with new laws

A CRACKDOWN on underquoting is ramping up again as Melbourne prepares for its first bumper spring selling season under tougher property marketing laws.

SELLERS should set a reserve when a home is advertised to stamp out rampant underquoting, real estate experts say.

Consumer Affairs Victoria has been cracking down on the practice following new laws to reduce the problem that disappoints so many homebuyers.

But there are concerns the new laws don’t go far enough, with some industry players stating a vendor’s reserve price needs to be declared at the start of a campaign for true transparency.

Property Mavens chief executive Miriam Sandkuhler said the laws were open to interpretation and many buyers were not aware of any shift towards more accurate quoting.

Properties that sold for more than quoted

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“It’s a step in the right direction. However, it has caused confusion,” she said.

“The only genuine way to solve the issue is to require a vendor to declare a reserve at the beginning of an auction campaign and then that way the market knows the absolute minimum they have to pay on the day and then anything beyond that is due to market forces.”

Consumer Affairs has launched action against 12 agencies for using the deceptive advertising ploy since its Taskforce Vesta was formed, with investigations and court cases continuing.

Since May, agents found guilty of underquoting face fines of $31,000 and loss of commissions.

A statement of information including an indicative selling price and three comparable sales must be provided to prospective buyers on request under the beefed-up regulations.

Advantage Property Consulting director Frank Valentic attributed a drop in clearance rates to the changes as buyers continued thinking price ranges would blow out and missed auctions.

“I think it’s overall very good for the market and buyers will become more aware of it,” he said.

“A lot of them don’t know there has been a change and we are seeing clearance rates have come back and, as I keep saying to our buyers — ‘turn up to more auctions than ever before’ — because I reckon there’ll be some opportunities.”

Mr Valentic said the market would be more settled by spring. But Ms Sandkuhler said confusion would be compounded as listings bloomed.

Real Estate Institute of Victoria chief executive Gil King said there had been “significant improvement” in the differential between advertised and selling prices since the laws changed.

“The new legislation is still in its infancy and pricing accuracy will only improve as the process is further streamlined and tested. Any current impracticalities with the legislation are likely to be ironed out before the traditional spring selling season,” he said.

Mr King added it would be detrimental to sellers to have to publish a reserve straight up.

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