Land agents who deliberately mislead potential buyers by underquoting properties are being targeted by the Government's consumer watchdog, under a push to stamp out dishonest industry practices.
Consumer and Business Services (CBS) are increasing activity to flush out agents who are doing the wrong thing, protecting buyers from disappointment and potentially wasting money on building inspections.
CBS compliance and investigation officers actively conduct audits of property sales and management files to detect misrepresentations. with more than 37 registered land agents inspected so far this year.
Of these, 7 real estate agencies are currently being further scrutinised for possibly misrepresenting prices to create a 'buzz· that sets unrealistic expectations of a price to
entice more interest from buyers to consider the property.
There are an additional 5 real estate agencies already under investigation for price misrepresentation.
Underquoting is the illegal practice of a land agent advertising a house for a price below what the seller is willing to accept, in order to encourage more buyers to view and bid for the property.
Those found to be underquoting prices could face fines of up to $20,000 or up to one year imprisonment per breach under the Land and Business (Sales and Conveyancing) Act 1994.
The penalty for utilising misleading pricing under the Australian Consumer Law is fines up to
$1.1 million for a corporate entity or $220,000 for an individual.
The law also protects consumers against other dishonest practices. For example, the upper limit of a price range cannot be more than 1O per cent higher than the lower limit, ensuring that advertised price ranges remain realistic and narrow.
Quotes attributable to Consumer and Business Services Minister John Rau
Underquoting is an issue in South Australia. We don't want to see a dodgy few ruining the reputation of the whole real estate industry.
People invest emotionally and financially in properties that they are considering buying, causing stress and disappointment if they are misled by a dishonest agent.
CBS acknowledges markets are fluid, meaning the advertised price may have been indicative at a point in time, but buyers may have seen something in the property that drives them to spend more than the advertised price.
We are committed to ensuring that all consumers can expect fair and honest dealings from the South Australian real estate industry.
Quotes attributable to Real Estate Institute of SA Chief Executive Officer Greg Troughton
The Real Estate Institute of SA wholly supports the Government's action on underquoting.
This is a serious matter and I am pleased to see that CBS has those that use the 'quote it low and watch it go' practice in their sights.
Whilst an auction can see extra spirited bidding from time to time, and some extraordinary prices achieved, an agent that consistency and systematically obtains much more than the vendor wanted for a property is either no local market expert or is simply underquoting.