Reforms on underquoting address ongoing market frustrations

In Short:
– Significant reforms on underquoting were introduced in 2017, following ongoing government complaints regarding the market.
– Proposed legislation includes requiring agents to disclose reserve prices seven days before auctions to enhance transparency.

In this episode of Beyond the Deal, host Dion Besser talks with Nicole Rich from the Consumer Affairs Victoria about the reforms and issues on underquoting schemes.

The Australian government has proposed reforms to tackle underquoting in real estate, prompted by ongoing complaints from buyers. Underquoting has been a contentious issue for years, with Nicole Rich noting frustrations arise when properties sell above advertised prices. Consumer Affairs Victoria has operated an underquoting task force for three years, yet complaints persist.

Deemed misleading

Current laws from 2017 require agents to provide reasonable price estimates and ensure advertising aligns with these estimates. Underquoting occurs when a property is advertised below the estimated price or rejected offers, which is deemed misleading. Recently, guidance on selecting comparable properties was revised, addressing concerns about agents cherry-picking data.

Proposed reforms include requiring agents to disclose the reserve price a week before auctions, improving transparency for buyers. While the Queensland model of not disclosing prices has mixed opinions, Rich believes that seven days provides a reasonable timeframe for market testing.

Discussions also explore a potential registration system for bidders to foster fair competition. Rich emphasizes that the industry must comply with laws, and buyers should educate themselves on local prices. Collaboration among all parties is crucial to eliminate underquoting and ensure transparency in the market.