Sydney’s real estate agents are on notice: there are new rules being proposed that would hit agents with three times their sales commission for offering misleading price guides.
The Minns government’s planned reforms, announced on Thursday, include mandated price guides on all advertising and a statement of information offered to buyers backing the estimated sales price claims.
The industry overhaul comes three months after an investigation by The Sydney Morning Herald and The Age that revealed almost half of all property sales at auction in Sydney sell for more than 10 per cent above the guide.
The Bidding Blind campaign exposed systematic underquoting across Sydney.Credit: Mark Stehle
NSW Better Regulation and Fair Trading Minister Anoulack Chanthivong said stronger underquoting laws were needed to restore trust and improve transparency in property sales.
“We’ve developed a package of reforms and are now consulting with the sector to ensure we get the balance right between consumer protection and practical implementation for industry.” he said.
Among the proposed changes are increased penalties for underquoting from $22,000 to $110,000 or three times an agent’s commission, whichever is greater.
Given a 2 per cent commission, the penalty for underquoting on a $2 million house could be $120,000, but rise to as much as $1.2 million on a $20 million house.
Underquoting has become so rife that in a call-out to readers to share their auction experiences, this masthead surveyed more than 9100 people about their experience with misleading price guides. Respondents reported widespread and blatant underquoting, with 6344 people reporting they had spent time and money investigating the purchase of properties they were ultimately unable to afford.
In this masthead’s data analysis of 36,000 auction campaigns, nine out of 10 properties sold at auction did so for more than the guide.
Following an expose by the Herald, former Ray White agent Josh Tesolin and his company, Tesolin Consulting, were slapped with a four-month suspension in August, pending possible disciplinary action, after a slew of allegations for serious and repeated breaches of the law.
Star agent Josh Tesolin pictured leaving his Bella Vista home on Friday.Credit: Sam Mooy
Agents have long adopted a notional 10 per cent buffer on price guides, but even then 48 per cent of auction sales were shown to sell for more than the 10 per cent guide. Of those, 16 per cent of sales sold for 20 per cent or more above the guide.
Moves to mandate advertised price guides and roll out uniform rules around pricing were welcomed by Real Estate Institute of NSW president Thomas McGlynn.
“Of the three main states with auction markets, NSW is the only one that doesn’t have standardised rules around pricing,” McGlynn said.
Buyers can go to three different properties in the same price range and all will be marketed in terms of price differently, said McGlynn. “One will have no price guide, one will have a set price ahead of auction and one will have a guide.”
By contrast, in Queensland there is no price guide on auction sales, and in Victoria a price guide is mandatory.
Long-time industry leader Tim McKibbin said more needed to be done in terms of agent training and enforcing compliance among agents.
McKibbin said three days training for agents just set them up for failure in the market, and called on Fair Trading to look to technology to more actively monitor agent behaviour.
“In my 21 years as chief executive of the Real Estate Institute of NSW the one consistent thing has been government determination to exclude any serious industry consultation,” McKibbin said.
NSW Strata and Property Services Commissioner Angus Abadee said the reforms were designed to bring greater transparency to property sales.
“By outlining our vision for clearer documentation and stronger penalties, we’re making it easier to hold agents accountable for underquoting,” Abadee said.
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Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: www.smh.com.au
