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The Victorian government has issued a stern warning to the real estate industry after proposing new legislation to stamp out underquoting.
On Friday, Victoria's minister for consumer affairs, gaming and liquor regulation, Jane Garrett, announced major reforms to the Estate Agents Act 1980 designed to help give Victorians a fair go when they buy a home.
“Underquoting is when an agent misleads a prospective buyer about the likely selling price of a property,” a government statement said.
“Under the proposed new laws, fines could double for underquoting to $30,000.”
Agents will also risk losing any sales commissions and other fees if they are found guilty of the dodgy practice.
“This could represent an additional penalty of around $14,000 on an average home under the proposed laws, or far more on blue chip properties,” the government said.
Agents would be banned from advertising properties with ‘plus’ or ‘offers over’, and the advertised price would need to be within a 10 per cent range (e.g. $500,000-$550,000).
The advertised price would also need to be updated within one business day if a higher offer is rejected at any time.
Agents would, under the proposed legislation, need to provide all prospective buyers with a ‘fact sheet’ which must include three recent comparable sales, the estimated selling price, and the median price for the suburb.
The Director of Consumer Affairs would be given powers to force agents to provide evidence to justify their choice of comparable properties. It would also be the agent’s responsibility to prove they are not underquoting, with evidence to explain how they arrived at a property’s advertised price.
Ms Garrett said fines for failing to comply or cooperate with Consumer Affairs Victoria could, under the proposed new laws, rise to more than $30,000.
The Real Estate Institute of Victoria (REIV) has labelled the changes a “significant step forward” for the industry.
REIV chief executive Enzo Raimondo said the changes, announced by the government last week, will bring transparency and consistency to property transactions, and greatly benefit those looking to buy real estate in Victoria.
Mr Raimondo said the reforms are effective in a variety of market conditions and for all stakeholders in property transactions.
“The changes will provide consistency in pricing of property and the information provided to both vendors and buyers,” he said.
The changes apply to residential private sales and auctions, rather than to the rural or commercial sectors.
Mr Raimondo said the reforms were the result of a collaborative approach by the REIV and the Office of the Minister for Consumer Affairs.
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