Real estate underquoting: How buyers cause confusion as Victorian agents hit with fines
Victorian real estate agents were fined hundreds of thousands for underquoting in the past financial year. But insiders say there is still much uncertainty between budding homebuyers as to what constitutes underquoting.
Property
Don't miss out on the headlines from Property. Followed categories will be added to My News.
Dozens of Victorian real estate agents were fined more than $520,000 for underquoting in the past financial year.
But industry insiders have highlighted there’s still room for confusion between strong auction results and the reviled property industry practice, especially with a growing number of homes selling above reserve as auction numbers climb towards spring.
RELATED: Underquoting rife as ‘grubby’ agents hit with fines
Underquoting agents face heavy fines in new Victorian laws
Crackdown on real estate underquoting in Victoria
Victorian underquoting laws make it illegal to advertise or advise a property price below a seller’s auction reserve or asking price, under any rejected written offer or for less than the agent’s current estimated selling price.
Vendors also often set their reserve price on the day of the auction, sometimes frustrating agents who advised them the market would not see value at that level.
A $3.8m taskforce established by the Andrews government under Consumer Affairs Victoria issued 48 fines for breaches of underquoting legislation in the 12 months to June 30.
But prominent buyer’s advocate David Morrell warned he saw signs as much as 50 per cent of the homes he looked at were being underquored, there have been calls for more action against the dodgy practice.
Last week, PropTrack recorded a 64.8 per cent clearance rate from 844 reported auction results — with numerous properties sold above their quoted asking prices.
Ray White Blackburn auctioneer Allan Smith sold a three-bedroom house in Chadstone on Saturday at 21 Vision St for $1.43m, after listing it for $1.175m-$1.29m.
Despite a $1.3m reserve on the day, five competitive buyers made offers well above the initial asking range.
Mr Smith said although he always complied with legislation, including listing three comparable sales from the past six months within a 2km radius of the property, “you can’t legislate against human nature”.
“We’ve got a market where we’re still getting great prices because we have a bad shortage of stock,” he said.
“Supply and demand rules every market in every country and what we’ve had in the past couple of months is multiple bidders on properties because of a lack of supply.”
The agent noted there were still many real estate agents underquoting and those who did “needed to get sorted out”.
MORE: Melbourne’s surprise home price rise prediction
Rent shock: What you’ll be paying in 2024 in every suburb
Where homesellers get big profits in three years
“But with good agents who quote comparable sales … buyers can still pay more if they have an agenda,” he said.
“Say if your mum lives around the corner and says she’ll babysit the kids while you’re at work, of course you will pay more … so the other buyers are getting blown out of the water by stronger bidders.
“We try to be as correct as we can and we can’t afford to be anything other than squeaky clean, but sometimes we just don’t know what the outcome will be.”
A three-bedroom house in Coburg sold under the hammer on Saturday for $1.5m after being advertised at $1.28m-$1.4m.
However, a “knockout” opening bid of $1.4m immediately surpassed the $1.32m reserve, before that buyer continued with further “aggressive” bidding to win the 25 Rose St auction.
Real Estate Institute of Victoria chief executive Quentin Kilian said many of the calls received by Consumer Affairs regarding sales similar Coburg auction were “not really underquoting” issues.
“It’s more about an expectation of how much they might be able to buy for compared to some enthusiastic or euphoric bidding on the day which takes it to a certain price range,” Mr Kilian said.
He added that when a property was listed for auction agents typically didn’t give away the reserve in advance, but were still required to state an expected price range on the listing’s statement of information document.
“That (price) is largely based on comparable sales, but sometimes there’s not a comparable property and if the market gets excitable on the day and takes it beyond that mark, that’s something the auctioneer can’t control,” Mr Kilian said.
Barry Plant chief executive Mike McCarthy also highlighted that the industry had been caught “a bit off guard” in the past year by the strength of the market and some “surprising results”.
“But the responsibility absolutely sits with the agent to do the homework and make sure the quoted price range is appropriate and supported by data,” Mr McCarthy said.
“And most importantly, to adjust that range over the course of the campaign if they’re getting feedback and the price is not representative of what it might sell for.”
Sign up to the Herald Sun Weekly Real Estate Update. Click here to get the latest Victorian property market news delivered direct to your inbox.
MORE: Brighton:Former AFL umpire Jordan Bannister and wife Natalie Hunter list house
Pascoe Vale South: Retro family home on the market for first time in 70+ years
The Never Never’s Ross Philpott, wife Sharon Michael drum up interest in Middle Park cottage
emily.holgate@news.com.au
First look: New Coast shopping centre for surprise site
A long-empty site in a surprise location will be transformed into a retail showroom complex under fresh plans lodged with the council. FIND OUT WHERE
Revealed: How much rent you need to pay in every Qld suburb
Rents have increased again in 252 Queensland suburbs, reversing the brief downward trend recorded just three months ago. See how your suburb compares!