Underquoting rife as dodgy real estate agents break buyer trust
NSW Fair Trading last May established a dedicated underquoting team to address “rising concerns” about the practice. This practice is harming the income of Mortgage Brokers.
Underquoting by real estate agents is becoming more frequent across Australia as a lack of regulation and weak enforcement frustrates those in the property market and forces up prices, according to industry figures.
- Underquoting by real estate agents is a pervasive issue across Australia, particularly in Sydney, where aspiring first homebuyers are often left with wasted time and money due to unrealistically low price guides.
- NSW Fair Trading has established a dedicated underquoting team to address concerns about the practice, but fines for agents are topped at $22,000 for those found to have knowingly underquoted, which is considered a paltry fee by industry experts.
- The lack of enforcement is encouraging more agents to mislead customers, and the lack of regulation is driving up the price of pre-emptive fees such as conveyancing, building permission planning and application costs, consultations with lawyers, and renovation quotes from builders.
- Buyers agents, who assist prospective homeowners in finding suitable properties, see underquoting happening more frequently and have seen it across competitive city housing markets.
- Mortgage brokers have closely monitored the commission lawsuit developments, as they believe the settlement could encourage housing professionals to pursue dual-licensing, which could lead to even more dark grey areas in RESPA compliance and potentially impact the mortgage industry.
- Consumer advocates argue that the practice of having the seller pay the buyer’s broker commission is best served when the seller pays, as it attracts the maximum amount of savings for both parties in terms of time and cost.
- Underquoting can slow down the home buying process for months as buyers end up wasting a lot of time trying to figure out their budget, and it is illegal in Victoria.
- To find out if a property is underquoted, buyers should look at realestate.com in the sold section on map view at properties that are similar with the same bedroom and bathroom count on a similar sized block and within a similar price range.
- Buyers need to do their own research and not assume that all agents underquote in the same way, and they should familiarize themselves with recent sale prices so that they can judge whether the agent is underquoting or overquoting.
Summary of article by the Australian
