"You underquote, it's illegal, you're going to get fined."
Real estate agents in NSW are breaking the law if they quote a price to a prospective home buyer that is anything less than the price estimate they have given to sellers in their written agreements.
NSW Fair Trading is currently prosecuting a leading Sydney real estate agency, Bresic Whitney, for alleged under quoting on a property in Double Bay and one in Surry Hills. The agency is accused of advertising the two properties at prices below estimates that were given to sellers in their agency agreements. 14 Collins St Surry Hills was advertised with a price guide of over $1.05 million, but the estimate in the agency agreement was $1.1 to $1.2 million. It sold for $1.07 million.
"I can't defend it. You underquote, it's illegal, you're going to get fined," said Malcolm Gunning, the president of the Real Estate Institute of NSW and principal of Gunning Commercial, in an address to Sydney agents on Monday.
Gunning contends that one way the government can help is by lifting education standards for the real estate industry so that agents can accurately appraise a home. "Our buyers now expect a price, vendors are more sophisticated these days. We're expected to give a valuation with as little as one day training. What could possibly go wrong with that?" Gunning said. "Education standards must be lifted."
There is a lot of confusion around the issue of underquoting, said Tim McKibbin, CEO of REINSW. "We always see more allegations of underquoting in a rising market. To the extent that I see it, the allegations are exacerbated in a higher market," said McKibbin. The NSW state government has raised 9.7 billion so far this year in stamp duty and land tax, and should therefore establish a dedicated property commissioner and government department, said McKibbin.
NSW Fair Trading consumer protection officer Roberto Buenaventura told the group of agents that the office received a lot of complaints about real estate agents, but most of the complaints were not found to be breaches of the law. "Real estate is just one part of our job, but having said that, the majority of our complaints is real estate," he said. "Mostly it's just people whinging."