Watchdog Audits NSW Real Estate Agencies 1

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Monday, March 14th, 2016
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The NSW consumer watchdog is auditing real estate agents to make sure they are not underquoting on property prices.

NSW Fair Trading is going through Sydney agents this week and will focus on regional centres next week.

Agents face fines of up to $22,000 and risk losing their commission on the sale of properties if they are found to have underquoted since January 1 this year, when new laws came in.

The laws require agents to be able to provide documentation proving their estimate was reasonable, up-to-date and evidence-based.

A NSW Fair Trading spokesman said an unreasonable price estimate was a detriment to the consumer.

“Prospective buyers can spend money and time investigating properties based on the advertised or stated value,” he said.

Real Estate Institute NSW president John Cunningham said his industry welcomes the audit to see how it is tracking with the new laws.

In the past, Mr Cunningham said, some agents may have used underquoting as a strategy to make sales and were even taught: “quote it low and watch it go”.

However, he said, underquoting hasn’t always been deliberate, especially over the past two years as constantly rising prices have made them harder to estimate.

“A lot of it was a stab in the dark, but the market’s a lot more stable now,” Mr Cunningham said.  Next week NSW Fair Trading will audit agents in Wollongong, Newcastle, Dubbo, Orange, Wagga Wagga, Albury, Tamworth, Armidale, Grafton, Coffs Harbour, Lismore and Ballina.

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  1. Brandon Perry

    This is a good thing. The quoting of unrealistically low fees is horribly unethical and should be stamped out.

    But as much as underquoting hurts the buyer, it also hurts the seller. If the seller is asking $380k for a house and the agent quotes $330k or $340k, what good is that? Yes, it will bring in more buyers (and that's good from the point of view of the agent because it means an easier sale), but it is no good whatsover for the seller. If you quote $340k for the house, you might bring in more buyers but the buyers you bring in will want to pay how much? $340k. These are not the buyers you want. If you want $380k for a home, the buyers you want are the ones that are going to pay $380k, not $340k. One buyer at $380k is better than 100 at $340k. Agents know this but many don't care as from their point of view, it is easier to quote low, bring in buyers, and then convince the sellers to lower their price and get their commission at any price. They know they are doing a disservice to their clients but they just don't care.

    Underquoting hurts buyers and sellers alike. The only person it helps are agents who want sales and commissions at any price. It is time Australia put a stop to it.

    From the seller's point of view, 100 buyers at a $340k price point