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The New South Wales Department of Fair Trading has yet to find evidence of underquoting in any operations it has conducted across New South Wales this year.
The department is undergoing various undercover operations in an attempt to clamp down on the practice that minister Matthew Mason-cox has described as "insidious".
Correspondence from the department sourced exclusively by Real Estate Business said buyers are strongly encouraged to find out what prices properties in the area have sold for in order to guide a potential buyer to the market value of the home they want.
A spokesperson said there are a variety of strategies the department has already put in place to arm punters, adding when an agent provides an estimated selling price, they must be able to demonstrate that their estimate of the selling price of a property was reasonable.
“NSW Fair Trading regularly monitors the marketplace, which includes analysis of consumer complaints to ensure unfair conduct by real estate agents is dealt with effectively,” a spokesperson said.
“Consumers are encouraged to report any instances of real estate agents underquoting with an unrealistic sales price.
“The Australian consumer law makes it unlawful for a business to make false and misleading representations about goods or services when supplying, offering to supply, or promoting those goods and services… making false or misleading representations is an offence under the ACL and the maximum fine is $220,000 for an individual and $1.1 million for a body corporate.”
Underquoting is an issue that often pops up in a market seeing a large volume of auctions.
Auctioneer Will Hampson from My Auctioneer said agents who remove prices and give recent sales as an example of comparison do not have this problem. Underquoting, according to Mr Hampson, can leave buyers disgruntled if the agent has eluded to the price they think the property is worth.
“When new markets and areas that traditionally do not conduct auctions start to, we may also see in these markets that agents who are predominately private treaty orientated are still giving out price expectations,” Mr Hampson said.
General manager of real estate sales at News Corp Tom Panos said he understands why an agent would cast a big bet in the early stages of a campaign to generate interest, but using misleading figures is not necessary.
Mr Panos said underquoting is a function of a few things, one of which is the market getting results well in excess of what vendors would be happy to accept and what agents appraise the properties at.
“This is simply a market issue that has to do with demand and supply; I speak from experience,” Mr Panos said.
“Then you also have other instances where it may be less about the market and more about the real estate agent believing that quoting a low figure is going to assist in the sales process.
“In our new world where values are so transparent it is highly unlikely that a genuine buyer will solely rely on what an agent will say in regards to values in an area – there are tools and information available now from data companies and various websites that show visibility to true correct potential values, and any agent that underquotes is not only breaking the law but is also losing credibility in the eyes of the buyer.”
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