Consumer and Business Services (CBS) is running a campaign to stamp out underquoting in the real estate industry.
What is underquoting?
Underquoting is when a property is advertised at a lower price than:
- the agent’s genuine estimate of the property’s value
- the vendor’s acceptable selling price
- the auction reserve price
- a genuine offer or expression of interest by a prospective buyer that the vendor refused.
Some agents will underquote to get more potential buyers to look at the property, even though the real asking price is a lot higher. This frustrates buyers as they end up wasting their time looking at properties that are actually outside of their price range.
Buying a property is a big investment. Potential buyers should be provided with correct information so they can make the right decision.
By providing false or misleading information about a property, a real estate agent or sales representative is committing an offence.
An agent or sales rep must have reasonable grounds for advertising a property at the price stated in the advertisement, or they can face penalties under the Australian Consumer Law of up to $500,000 for an individual or $10 million for a company.
An agent or sales rep must also ensure that they advertise the property at the price which is the greater of the vendor’s acceptable price and the agent’s estimated price. Penalties of up to $20,000 or imprisonment for 1 year apply under the Land and Business (Sale and Conveyancing) Act 1994.
How do I know if a property is underquoted?
You can protect yourself from underquoting by researching prices of properties in a similar area or talking with other real estate agents to get to know the market in your chosen area.
If you know of anyone in the industry who is underquoting please report them to CBS.
Report online at cbs.sa.gov.au/contact-us/