Victoria’s new underquoting laws
How is the real estate industry embracing and implementing Victoria’s new underquoting laws?
Effective from the 1st of May, there are new laws introduced by Consumer Affairs Victoria (CAV) to prevent real estate agents and vendors from underquoting to prospective buyers. Many changes have been introduced.
CAV’s website tells us the following:
“All Victorian estate agents and agents’ representatives have additional obligations relating to:
- the estimated selling price
- comparable property sales
- Statement of Information for prospective buyers, and
- advertising prices, terms and symbols.
There are also new penalties for estate agents and agents’ representatives who do not comply with the new laws.
You either need to quote a fixed price or 10% range and the Vendors reserve needs to be in that range.
Agents must provide buyers with a Statement of Information about the property they are selling.
CAV says, “The Statement of Information must include: an indicative selling price for the property. This may be a single price or a price range of up to 10 per cent. It must not be less than:
- your estimated selling price
- the seller’s asking price
- a price in a written offer that has already been rejected by the seller.
- details of the three most comparable properties, including the address, date of sale, and sale price; or – if you did not take into account three comparable properties when setting the estimated selling price – a statement outlining that you reasonably believe there are less than three comparable sales within the prescribed period
- the median house or unit price for the suburb. This may be for a period of between three to 12 months, and must not be more than six months old.”
What we are seeing in real-time.
We are seeing a lot more properties now with the necessary Statement of Information document displayed on all electronic marketing. Most selling agents have printed copies available for buyers at open for inspections as well.
Buyer Solutions attends numerous open house viewings every week across many Melbourne suburbs and within a broad range of price brackets. We are uniquely positioned as Buyer’s Agents to observe and comment on what affect this legislative change is having on the market and the industry.
Some of the Statements of Information we are seeing don’t make full sense. For example, for the sale of a two bedroom flat in Glen Iris recently, the Statement of Information provided median sale price for houses instead of units at $1,900,000 and a quote range of $440,000 to $480,000. So something is clearly wrong. It’s easy I guess to check the wrong box, but a buyer could not rely on this information entirely to position their offer. The median in this case is simply not helpful. Also, they said there were no comparable sales in the last six months, but offered data on a renovated property selling for $503,000. Very confusing.
As usual, there will be up to date, responsive agents who implement change effectively and accurately. This should be helpful in stable market conditions to buyers, however, BUYER BEWARE as market conditions are rarely stable. We advocate you need a good REBAA accredited and REIV member Buyers Agent to help you evaluate a target property properly and to negotiate a great sales price and terms for you.
Interestingly, we are being told that many Vendors are reluctant to discuss their reserve and ensure that that figure is within the 10% price quote range. That will be a whole different blog post. More coming soon.
For independent advice on buying or selling real estate, contact Janet Spencer at Buyer Solutions +61 3 9816 8555 or email jspencer@buyersolutions.com.au
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