1 May 2017 saw the commencement of the Estate Agents Amendment (Underquoting) Act 2016 (Vic). This new legislation places extra obligations on real estate agents and their representatives when selling residential properties. The new provisions are designed to strengthen the laws against underquoting.
The new requirements can be summarised as:
Estimated selling price
All new sales authorities must include an estimated selling price which is reasonable and takes into account the sale prices of the three comparable properties in the area. The estimated selling price must take the form of either a single price estimate or a range estimate provided the range is no more than 10 per cent.
If there is a change over time and the estimate is no longer considered reasonable the seller must be told in writing and the sales authority and any advertising must be updated.
Statement of information
A statement of information must be displayed at all open for inspections, included with all online advertising and provided to prospective buyers on request.
The statement must include:
- An indicative selling price, which must not be less than the estimated selling price, any rejected written offer or any price that the lender has advised is unacceptable. In line with the estimated selling price, it will also need to be updated if there are any changes;
- Details of the three most comparable properties used to calculate the indicative selling price; and
- The median house or unit price for the suburb.
Whilst there is no requirement to directly incorporate price references in advertising, the statement of information must accompany any online advertising and must be provided to purchasers upon request and this must include the indicative selling price.
Any references in advertising that modifies the price by the use of words or symbols, such as “from”, “over”, “starting at” or “+” must not be used. The use of “price on application” or “contact agent” seems to be allowed but if asked by prospective buyers the agent must give the indicative selling price. Price ranges can continue to be used provided the range is no more than 10%.
The new provisions only apply to residential property sales. The sale of rural, commercial and industrial properties remain unaffected by the new laws although the provisions of the Australian Consumer Law remain applicable.
All agents should be familiar with the new laws and be educating staff carefully on how they must now operate and conduct themselves during selling campaigns. Given that individual breaches of the new measures can result in up to a 200 penalty unit fine (based on the current penalty unit $30,334 per offence) or in certain circumstances the loss of commission earned on properties sold, it is important for all agents to get it right.