New underquoting laws - more transparency for home buyers
On 1 May 2017 the Government announced changes to house pricing laws in an effort to reduce underquoting. Underquoting is when a property is advertised at a price that is less than the estimated selling price, the seller’s asking price, or at a price already rejected by the seller.
The key changes according to Consumer Affairs Victoria (CAV)
- There is now a requirement for all homes listed for sale to have an estimated price, as well as three recent comparable sales for buyers to review and the suburb’s median house price.
- The new legislation will bar the use of price ranges with more than 10 per cent margin between the two figures, and those with no upper limit, such as ‘offers above’.
- Advertising must be updated if an offer is made above the estimate.
- Agents have additional obligations relating to the Statement of Information for prospective buyers.
- Agents doing the wrong thing will face higher penalties and the loss of commissions.
The aim of these changes is that house hunters will be less likely to be misled about the selling price and
therefore won’t waste as much time and money on properties out of their reach.
The changes aimed at stamping out underquoting won’t stop houses selling above their listed price and buyers should be aware that a house sold above its advertised selling price might not have been underquoted. It also needs to be recognised that it is the vendor’s prerogative to set the reserve price and this may be significantly higher than the agent’s estimated or quoted selling price.
The new underquoting laws complement laws under the Australian Consumer Law that prohibit misleading and deceptive conduct by a business, such as making false and misleading representations about the sale price of a property.
For more information please contact our property and conveyancing department on 9550 4600.