Despite tougher laws and greater restrictions, underquoting is still very much alive in Australia.
Underquoting happens when a property is advertised at a lower price than what the vendor is willing to consider. It’s a sales tactic used by real estate agents to draw in buyers – and, yes, it’s illegal. You only have to read the headlines to learn that underquoting still has its nasty grips within some real estate agencies – especially in Victoria, with several currently facing charges for breaching laws.
One of the problems is, underquoting can be difficult to prove. Real estate agents often use the excuse that a property received higher demand than they expected, or the vendor changed their mind and upped their reserve at the last minute.
How can you protect yourself as a buyer? Well, you’re not completely powerless. Here’s what we recommend:
Do your own research.
Stay informed about market prices and you won’t need to rely so heavily on what the real estate agent tells you. Pay attention to other sales in the area you want to buy in and make a note of what properties sell for. Soon, you’ll start to recognise when an advertised price range is on the low side. And follow market reports and industry news through respected resources like Your Investment Property, realestate.com.au and Domain. PropertyNow also provides free property reports which include an estimate value, property history, and information on comparable properties sold and for sale – request yours from our homepage!
Become familiar with a real estate agent’s obligations.
Under federal, state and territory laws, real estate agents are bound by certain ethics and obligations. Educate yourself about your right as a buyer and you’ll quickly spot illegal selling tactics by agents.
If you strongly believe an agent is underquoting, keep a record of the price range you’ve been quoted and lodge a complaint to your relevant state Fair Trading or Consumer Affairs department. Each state applies different laws and systems and whether action will be taken depends on how serious the breach is.
Consider hiring a buyer’s advocate.
If you’re feeling especially unconfident about the sales process, you may choose to hire a buyer’s advocate who understands the market and how to negotiate the sales process. Buyer’s advocates usually offer different levels of service, from sourcing properties and negotiating purchase to just bidding at auction.
Don’t be a victim. Become a part of the solution.
You need to recognise that real estate agents represent the vendor – not you. Their obligation is to get the highest price for their vendor and, just like any sales driven industry, they will apply sales tactics to achieve this. This doesn’t excuse them from using illegal practices. Laws are in place to protect buyers. Understand these laws, and you’ll know when things are being taken too far.
The good news is government departments are cracking down on underquoting, implementing tougher laws and penalties and conducting random inspections of real estate agencies.