Underquoting “Offers Over” Scrapped for 2016
The pricing trend “offers over” “offers above” and “offers from” which started roughly 5 years ago has really shaken up the market and is set to have its pin pulled by 1st January 2016. Premier Mike Baird says “We want to create a fairer system for potential buyers who are prepared to spend money on building and pest inspection reports believing the property is in their price range,”
All of the buyers we meet at open homes and even Vendors have disliked this method of listing, and this is why we have never adopted this strategy of listing. They feel that they have been mislead and deceived by the selling agent in thinking that a particular property they have seen advertised is in their price range. After making countless offers and being out bided they find out that the property sells for more than 10% above the listed price.
Reasons for the changes
Currently buyers become interested in and incur costs on properties that are unaffordable because of vague or misleading information about the likely selling price. Reviewing the current underquoting laws found that clearer requirements for agents selling property were needed to best protect consumers in the NSW property market.
Some important changes you need to know about the new reforms.
Under the reforms, an agent must:
- include their true estimate of a property’s likely selling price in the agency agreement (also called the sales agreement).
- record the evidence that informed this estimate and provide it to the vendor in writing.
- ensure a price range is no greater than 10% of the bottom figure (eg. $500,000-$550,000).
- record all price estimates (quotes) provided while a property is marketed.
- ensure their price estimate remains realistic by updating it and advising the vendor in a timely manner if they are aware – or should reasonably be aware – of evidence or circumstances that changes it. The agent must advise the vendor of their revised selling price estimate and the evidence on which it is based in writing (eg. email) and amend the agency agreement. They must also update, as soon as feasible or practical, any marketing of the property that reflected the old estimate with the new selling price estimate.
Agents will not be able to:
- provide any price estimate less than what they have assessed a property is worth (as recorded in their agency agreement with the vendor). This applies whether the agent is advertising the property or in any communication with prospective buyers about the property’s likely selling price.
- advertise vague price information, including any statements such as “offers above” or “offers over” an amount, or “plus” a particular price (eg. $500,000+), which could misrepresent or obscure a property’s estimated value. Also, an agent must never indicate a selling price estimate that does not match the agent’s true estimate.
The reforms will introduce stronger penalties to deter underquoting. This includes fining agents up to $22,000 if they breach the new requirements. Agents could also have to forfeit their commission and fees if found guilty of underquoting. These commissions and fee payments will go towards the Property Services Compensation Fund, which supports consumers who have experienced financial loss as a result of property agent misconduct.
( this information has been sourced directly from the Fair trading’s website)
For more information or FAQ please visit the Fair Trading’s website http://www.fairtrading.nsw.gov.au/sites/ftw/About_us/Legislation/Changes_to_legislation/Underquoting_reforms.page