Victoria’s new underquoting laws

UNDERQUOTING might just be the most maligned word in real estate.

It’s also possibly the most misunderstood — especially in the rising property market Melbourne is experiencing today.

But home buyers are about to see a shake-up, with Consumer Affairs Victoria (CAV) introducing a raft of changes to residential real estate pricing legislation from May 1.

At the centre of the new laws is a requirement for all homes listed for sale to have an estimated price, as well as three recent comparable sales for buyers to review and the suburb’s median house price.

The new legislation will also bar the use of price ranges with more than a 10 per cent margin between the two figures, and those with no upper limit, such as “offers above”.

Minister for Consumer Affairs Marlene Kairouz said the changes were aimed at transparency for homebuyers.

“Buying a home is one of the biggest decisions Victorians will make,” Kairouz said.

“Our new laws will help ensure Victorian house hunters don’t waste time and money on properties they can’t afford.”

The government legislated the changes after consultation with the Real Estate Institute of Victoria, and chief executive Gil King said it would help ensure buyers had the same information to hand as sellers.

“This new legislation is designed to be effective in both a rising and falling market and will ensure prospective buyers have access to the same information as the vendor,” King said.

REA Group executive general manager of residential Andrew Rechtman feels it’s important that buyers and sellers receive sale price information that’s as realistic and accurate as possible.

“Victoria’s underquoting reforms will increase certainty around price expectations and that’s great news for buyers on realestate.com.au,” he said.

“We know one in five people visiting realestate.com.au search by price range and having clearer price information available during their property search is a great outcome.”

But the changes, which are aimed at stamping out underquoting, won’t stop houses selling above their listed price.

King said the definition of underquoting was often misunderstood.

According to CAV, the definition of underquoting is when an agent misleads a potential buyer about a home’s likely selling price.

King noted homebuyers needed to be aware a house sold above its advertised price might not have been underquoted.

“A property that sells above its advertised price has not necessarily been underquoted,” King said. “It is the vendor’s prerogative to set the reserve price the morning of the auction, and this may be significantly higher than the agent’s estimated or quoted selling price.”

Further to this, he pointed to the effect a rising property market could have on prices.

“Strong buyer demand — as we have seen this year — means that it is not uncommon for a house to sell above its advertised price,” he said.

Many other factors were also leading to price rises, he added.

THE KEY CHANGES

• Agents must provide three comparable sales, an estimated sale price and the suburb’s median price
• Advertising price ranges of more than 10 per cent are banned
• Advertised prices must not use any words or symbols to qualify the price, such as “offers above”, “from”, or “+”
• Agents doing the wrong thing face higher penalties and the loss of commissions
  Source: Consumer Affairs Victoria

Source REA