The Block 2023: Comparable sales used for price guides sparks call to change Victorian real estate laws
Reality real estate show The Block has exposed just how much legal leeway real estate agents have when listing the value of properties. Now experts are calling for change.
Property
Don't miss out on the headlines from Property. Followed categories will be added to My News.
Reality property show The Block has exposed just how much legal leeway real estate agents have when listing the value of properties.
On this year’s series each of the five renovated homes are all on the same side of Charming St in Hampton East, have all been extensively renovated and all but one have five-bedroom floorplans.
However, the level of interpretation agents used when assessing each of their value has raised concerns about the state’s real estate pricing laws.
RELATED: The Block 2023: Why the show could be facing auction disaster
The Block 2023 episode 6 recap: Rogue dad on site brings first body corporate meeting
The Block 2023 episode 7, 8 recap: ‘Do you have an issue with me?’
Under the Estate Agents Act, homes listed for sale must include three comparable sales in the statement of information or a declaration that the agent believes there is none.
But for The Block’s properties, two agencies determined there were no comparable sales, two cited three similar properties that had sold in the past six months, and a fifth agency felt only two addresses within 2km had relevant results.
While each agency acted within the law designed to prevent underquoting, some statements of information were updated after the Herald Sun inquired about them.
Two of the properties have also been listed to sell at huge losses because the show bought the unrenovated homes at inflated values.
For instance Steph and Gian’s project at 20 Charming St has been advertised with a $2.5m-$2.75m asking price – far below the $3.5m suburb record the show’s producers paid for the house in 2022.
The show should make up the difference in advertising.
Real Estate Buyer’s Agents Association of Australia president Cate Bakos, and a former local real estate agent in nearby Sandringham, said she did not believe The Block’s agents had acted in bad faith. However she noted there were other agents abusing the system.
“It’s really murky science and the variation suggests something isn’t right,” Ms Bakos said.
“They (The Block agents) have probably thought harder about this than most other agents, so where does our current quoting regimen really leave buyers?
“There are agents who do abuse it. But I’m not suggesting The Block’s have.”
With such wide room for interpretation Ms Bakos said some dodgy agents were “cherry picking” comparable sales to justify poor price guides and called for real estate laws to require vendors to disclose their reserve price to sideline bad behaviour.
McGrath auctioneer Michael Townsend, who is selling Kylie and Leslie’s property at No. 14 Charming St, said after selling for the show five times he too was concerned by the variation.
“As a consumer I would be questioning the methodology,” Mr Townsend said.
“There definitely needs to be reform around it to create consistency.”
He added that he hadn’t felt any homes were comparable to The Block given the level of renovation work undertaken and that the homes were sold fully styled and furnished.
“Saying there’s nothing comparable to these is more transparent than saying there’s something similar around the corner,” Mr Townsend said.
Belle Property Brighton’s Julian Cannata is representing Kirsty and Brett at No. 18 and also concluded there were no comparable sales.
Mr Cannata said he had considered including some homes from a lower price bracket to establish why the price for his listing should be where it was, but decided not to as it would have been confusing for buyers.
“It comes down to your interpretation, and until someone inquires there’s scope for a little bit of confusion,” Mr Cannata said.
However, he said he felt the system worked in 90 per cent of situations but added that real estate agent analysis relied on the sales the agent was able to find, rather than in-depth training undertaken by professionals who provided sworn valuations.
Ray White’s Aaron Hill and Buxton’s Noel Susay both found three comparable sales and said agents should do everything they could to provide comparable sales.
Mr Susay said as a local agent who had sold upwards of 50 per cent of homes in Hampton East in recent months, he felt the only comparable sales had been in neighbouring suburbs Brighton East and Highett.
Selling Leah and Ash’s property at No. 16, he said the properties were very hard to price and he didn’t think any agent’s approach had been wrong with each home different in key ways ranging from floorplans to block size and orientation.
Mr Susay said buyers should try to inspect homes and see why they are comparable.
“There’s merit to both, but there should be something that sold,” he said.
“There’s always room for continued improvement.”
Mr Hill, who quoted sales in Hampton, Sandringham and Highett added that his list had been selected when his listing, No. 20 being renovated by Steph and Gian, was still being heavily renovated.
“But you have to try and give the public something, some sort of comparable,” he said.
“I would have thought you have got to show something in the inner city.”
Most of the agents involved noted comparable sales might be updated before the properties went to auction in November.
Real Estate Institute of Victoria chief executive Quentin Kilian noted the listings needed to fit the needs of a TV show and while bound by the same real estate laws, the sales were very different to normal.
“What happens with The Block does not really represent what is happening in the real world,” Mr Kilian said.
“That’s not to say the system shouldn’t be constantly looked at and freshened up.”
In the past financial year Consumer Affairs Victoria’s underquoting task force tracked hundreds of sales campaigns, many after a tip off from the public.
“We expect all estate agents to follow the law and accurately represent the property they are selling,” a government spokesman said.
“Consumer Affairs Victoria is monitoring and taking action against agents and agencies found to be engaging in non-compliant behaviour to ensure they meet their obligations under the legislation.”
Prominent buyer’s advocate David Morrell said even if discrepencies weren’t a breach of the law “it still smells”.
He suggested the state could address a number of concerning behaviours in the industry by extending fines for misconduct to vendors as well as agents.
Some statements of information were updated after the Herald Sun inquired about them.
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: House once owned by former Collingwood player and professional wrestler listed
Housing crisis: Nation to fall more than 60,000 short of target in first year: HIA
Glen Iris: Former Tiger, Magpie and Swan footy player Michael Lockman lists
Huge change coming for Gold Coast’s biggest motel
One of the Gold Coast’s oldest motels, the largest of its kind, is set to undergo a dramatic change which would mean something quite different, if realised.
Kath & Kim’s Jane Turner lists Melbourne mansion
Kath & Kim star, comedian and actor Jane Turner, has listed her rather effluent Elwood mansion for sale. Grab some cardonnay and take a squiz at the home’s impressive fretful ironwork.