Underquoting complaints surge amid government crackdown
Complaints about underquoting by real estate agents have soared amid a Victorian government crackdown on the practice.
Consumer Affairs Victoria received 546 complaints during the last financial year, up from 339 the previous year.
A taskforce set up to monitor the spring auction campaign is now investigating 50 real estate agents for possible contraventions of the law.
Underquoting, a murky territory to police, can occur when a property is advertised at a price that is below the vendor’s asking price or estimated selling price.
In a bid to stamp our underquoting, new laws were introduced in May that require real estate agents to provide a statement of information for every property listed for sale. This must include an indicative selling price based on three comparable sales in the area.
But there is still confusion about what underquoting is and how the new laws work, particularly at auction.
“The owner can set the reserve as late as auction day and it is within their rights to refuse any offer at or above the reserve price at any time before contracts are signed,” a spokesman for Consumer Affairs Victoria said. Related: Buyers confused by reserves at auctionRelated: Houseproud owners demanding too muchRelated: It’s time to focus on reserve prices
A reserve price is the minimal amount of money a vendor is happy to sell their property for.
Given reserves are decided by the vendor and not the agent, the reserve can legally be set above the indicative selling price. If the agent is not privvy to the vendor’s reserve price (and there is no obligation for the vendor to inform the agent of the reserve until the day of the auction), the indicative selling price does not have to be increased.
This week Consumer Affairs launched a statewide education campaign about underquoting to run across radio, social media and real estate websites.
Campaign material features slogans like “Underquoting is finally…gone!” and “Agents must now give an honest estimate”.
Since the crackdown on underquoting, Consumer Affairs has mounted six legal cases against agents, and more than $285,000 has been paid in fines.