The days of frustrated homebuyers wasting time and money at auction could soon be over if new reforms come into effect.
The NSW Government is introducing reforms that address underquoting in the NSW property market to ensure clarity for buyers, agents and vendors. The reforms are designed to prevent properties being underquoted – that is, marketed at a price less than the agent’s true estimate of the selling price. The reforms are before the NSW Parliament and are expected to commence in early 2016.
Underquoting is when an agent understates the estimated selling price of a property, with the intention of drumming up as much interest in a property as they can prior to auction. In the heat of the moment desperate buyers are often baited into bidding wildly and spend more than they can afford.
Underquoting also leads to interested buyers wasting time inspecting properties and money on pest and building reports on properties they really cannot afford in the first place. Come auction day they get blown out of the water from the first bid, leading to frustration and anger, and questioning when they will ever get onto the property ladder.
Of course just because a property sells for higher than an agent has quoted does not mean underquoting has occurred. Sometimes competitive buyer behaviour can result in a much higher sale price than what an agent could have reasonably estimated the property to sell for. The new reforms however will require an agent to show that their estimate was reasonable, up-to-date and evidence-based.
A recent case in Sydney of agents deliberately underquoting was prosecuted, which was a huge step towards stamping out the practice. Under quoting is often suspected but notoriously difficult to prove, which makes this court action all the more significant — it is the first prosecution over claims of underquoting in more than a decade.
A skilled buyers agent can give you an accurate valuation of a property and help you decide what your chances are of securing a property before you waste time and money. For more information call Innovative Property Advocates on 0411 5222 33 for a free consultation today.
Source: Fair Trading NSW, Daily Telegraph